Question

Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. 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 three major activities and then completed the first-stage allocations of costs to the activity cost pools. The results appear below.

Activity Cost Pool	Activity Measure	Total Cost		Total Activity
Serving a party of diners	Number of parties served	$	17,680	5,200	parties
Serving a diner	Number of diners served	$	103,320	12,300	diners
Serving drinks	Number of drinks ordered	$	39,600	11,000	drinks

The above costs include all of the costs of the restaurant except for organization-sustaining costs such as rent, property taxes, and top-management salaries.

Some costs, such as the cost of cleaning the linens that cover the restaurant's tables, vary with the number of parties served. Other costs, such as washing plates and glasses, depend on the number of diners served or the number of drinks served.

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 (including organization-sustaining costs) was $180,000 and that 12,000 diners had been served. Therefore, the average cost per diner was $15.

Required:

1&2. According to the activity-based costing system, what is the total cost and average cost per diner for serving each of the following parties of diners? (Round your intermediate calculations to 2 decimal places. Round your Total Cost final answers to 2 decimal places and your Average Cost final answers to 3 decimal places.)

****** MY BOLDED ANSWERS ARE ALL WRONG****** :( The comment said figures were missing but this is the entire question...

		Total Cost	Average Cost
A	A party of four dinners who order three drinks in total	47.40	11.850	Per dinner
B	A party of two dinners who did not order any drinks	19.8	9.900	Per dinner
C	A party of one dinner who orders three drinks	22.00	22.000	Per dinner

Answer 1

Hiram's Lakeside
Working note 1- Calculation of Predetermined OH allocation Rate
	Total Cost /	Allocation base=	Predetermined OH allocation rate
Srving a party of diners	$ 17680	5200 parties	$3.4	per party
Serving a diner	$ 103320	12300 dinner	$ 8.4	per diner
Serving a drink	$ 39600	11000 drinks	$ 3.6	per drink
	159520

A	A party of four dinners who order three drinks in total

part 1
a .
	Activity Driver	Activity Rate	Total cost
Srving a party of diners	1	3.4	$ 3.4
Serving a diner	4	8.4	$ 33.6
Serving a drink	3	3.6	$10.8
Total Cost			$ 47.8
Average cost			11.95 pre dinner	( 47.8/4)

B	A party of two dinners who did not order any drinks

b.
	Activity Driver	Activity Rate	Total cost
Srving a party of diners	1	3.4	3.4
Serving a diner	2	8.4	16.8
Serving a drink	0	3.6	0
Total Cost			20.2
Average cost			10.1	(20.2/2)

C	A party of one dinner who orders three drinks

c .
	Activity Driver	Activity Rate	Total cost
Srving a party of diners	1	3.4	3.4
Serving a diner	1	8.4	8.4
Serving a drink	3	3.6	10.8
Total Cost			22.6
Average cost			22.6	(22.6/1)

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