Reference no: EM133170573

Question - Focused Value Streams, Product Costing - Sixty employees (all CPAs) of a local public accounting firm eat lunch at least twice weekly at a very popular pizza restaurant. The pizza restaurant recently began offering discounts for groups of 15 or more. Groups would be seated in a separate room, served individual bowls of salad costing $2.40 each, pitchers of root beer costing $3.00 each (each pitcher has a five-glass capacity), and medium, two-topping pizzas for $8.00 (10 slices each). The food would have to be ordered in advance.

Thirty of the CPAs commit to eating four slices of pizza, three glasses of root beer, and one bowl of salad [a consumption pattern of (4,3,1)]. The other 30 are more hearty eaters and commit to six slices of pizza, four glasses of root beer, and one bowl of salad [a consumption pattern of (6,4,1)]. Each member of the group must pay an assessed amount for the lunch.

Required -

1. Determine the total number of pizzas, pitchers of root beer, and salads that must be ordered for the 60 employees.

2. One of the CPAs offered to determine the amount that each should pay. He suggested that the easiest way is to assign the average cost to each person eating in the group. Based on this suggestion, how much would each CPA pay for lunch?

3. One CPA objected to using average cost, noting that half of the CPAs are much lighter eaters than the other half. Based on the large differences in consumption behaviors, he suggested forming two groups: one for the light eaters (Group A) and one for the heavier eaters (Group B). Calculate the average lunch cost for each CPA for each group. Calculate the cost for each CPA that would be assigned using ABC.