• Salad. Kambry ordered a small salad ($2.00), Joseph ordered a medium salad ($3.00), and Carsen ordered a large salad ($4.00). (We assume the salad size is a good indication of the overall food intake).

• Drinks. Carsen ordered a fruit smoothie ($3.00) and a glass of water ($0.00), Kambry ordered only water to drink ($0.00), and Joseph ordered a soft drink ($1.00).

• Large supreme pizza ($18.00) and agreed to share the cost of the pizza. The pizza came with 12 slices. Carsen is still hungry and he "loves" pizza and ate A LOT MORE slices than others. Joseph ate three slices and Kambry ate one slice.

• Tips ($9.00) and agreed to share and pay a little extra for the server being very nice and to make the bill even.

When it came time to pay for the lunch, each agreed to pay for their respective salads and drinks.

Instructions

If this luncheon is analogous to the job-costing, with one department activity ("Eating") and producing 3 products ("C", "J", "K").

1. What is the cost object? Which cost is directly traceable to the cost object? Which cost is not traceable and require allocation (aka, like overhead requiring plantwide rate allocation)?
   • Hint: OH is allocated by 1st calculating the rate (say, based on salad as a driver (indicator) for potential food intake), then 2nd applying the rate to the cost.
2. When it came time to pay for the lunch, help us split the bill between C, J, and K similar to the way Job Costing approach of estimating the cost. (the main difference is that we use the 'actual' OH cost since we know the amount (not 'estimated' allocated OH cost since it is for the entire year). Copy and paste the budget below, then show your split of the lunch bill (AND the math that goes behind it)...this is not the exercise of guessing the number and throw it on the board.
   • How does splitting lunch bill analogous to the Job Order costing recording and allocation of Overhead?
3. Select one and answer
   • [Planning for the next BBQ] The group plans the next hangout at the BBQ place and to order the family size of ribs for $50, assuming each will pay the same for salad and drink, and will consume about the same proportionate amount of food as was consumed at pizza (no tips, since it will be self-served), how much should Kambry budget for the next BBQ hangout?
   • [Precision of data]. After splitting the cost, Carsen claims how much he really loves the pizza and the group discloses the consumption of the total 12 slices: 8 by Carsen, 3 by Joseph, and 1 by Kambry. When considering this, would the way you split your bill changes and was the original plan of splitting still fair?

Template of splitting the bill calculation:

Template

	Carsen	Joseph	Kambry	Total
Salad				$ 9
Drink				$ 4
Pizza				$18
Tips				$ 9
Total				$40

hint: the answer I look for is not $40/3. (that is why I made it so to not divided evenly. And no, no one should pick up the tap in the spirits of this discussion). Think of the "Overhead" concept.