Gino's Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity$-$based costing study. The intern, in consultation with the owner, identified the following major activities:

$\backslash$table$[[$Activity Cost Pool,Activity Measure$],[$Serving a party of diners,Number of parties served$],[$Serving a diner,Number of diners served$],[$Serving drinks,Number of drinks ordered$]]$

A group of diners who ask to sit at the same table is counted as a party. Some costs, such as the costs of cleaning linen, are the same whether one person is at a table or the table is full. Other costs, such as washing dishes, depend on the number of diners served.

Data concerning these activities are shown below:

$\backslash$table$[[,$Serving a Party,Serving a Diner,Serving Drinks,Total$],[$Total cost$,$$$49,700,$$$80,000,$$$73,100,43,000$ drinks$]]$

Prior to the activity$-$based costing study, the owner knew very little about the costs of the restaurant She knew that the total cost for the month was $$202,800$ and that $10,000$ diners had been served. Therefore, the average cost per diner was $10,000$ diners $=$$$20\mathrm{.}28$ per diner$).$

Required:

$1.$Compute the activity rates for each of the three activities.

$2.$According to the activity$-$based costing system, what is the total cost of serving each of the following parties of diners?

a$.$ A party of four diners who ordered three drinks total.

b$.$ A party of two diners who do not order any drinks.

c$.$ A lone diner who orders two drinks

$3.$ Convert the total costs you computed in part $(2)$ above to costs per diner. In other words, What is the average cost per diner for serving each of the following parties?

a$.$ A party of four diners who order three drinks total

b$.$ A party of two diners who dont order any drinks

c$.$ A lone diner who orders two drinks

Answer rating: 100% (QA)

1 Compute the Activity Rates To compute the activity rates for each of the three activities we divid... View the full answer