Ethics Challenge: You and your friends go to a restaurant as a group. At the end

Question

Ethics Challenge:
You and your friends go to a restaurant as a group. At the end of the meal the issue arises of how the bill for the group should be shared. One alternative is to figure out the cost of what each individual consumed and divide up the bill accordingly. Another alternative is to split the bill equally among the individuals.

Required:
Which system for dividing the bill is more equitable? Which system is easier to use? How does this issue relate to the material covered in the chapter Process Costing?

Explanation / Answer

System of "figuring out the cost of what each individual has consumed" and divide the bill accordingly is a fair system as everyone will pay accordingly of his/her consumption. in this system, nobody will feel agonized about the excess payment of what he/ she has consumed.

Though easier to use system is to calculate total cost and divide it by number of person involved. It will simply give the cost per person without any hassle.

It is related to the concept of process costing. in this type of costing method, each department calculates the processing costs incurred to produce goods then it is transferred to next department and its processing cost will be added to products /goods. Same concept is applied to individuals also, each person counts his own cost of food then it is added to nest person's cost of food. And finally total cost is found out. So, it is a replica of process costing.

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