Solution-Compute the costs of her catered parties

Compute the costs of her catered parties

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Reference no: EM133073828

Question - Cathy, the manager of Cathy's Catering, Inc., uses activity-based costing to compute the costs of her catered parties. Each party is limited to 20 guests and requires 5 people to serve and clean up. Cathy offers two types of parties-an afternoon picnic and an evening formal dinner. The breakdown of the costs follows.

Activities (and cost drivers)	Afternoon Picnic	Formal Dinner
Advertising (parties)	$117 per party	$117 per party
Planning (parties)	$86 per party	$120 per party
Renting equipment (parties, guests)	$51 per party plus $12 per guest	$69 per party plus $25 per guest
Obtaining insurance (parties)	$150 per party	$355 per party
Serving (parties, servers)	$43 per server per party	$68 per server per party
Preparing food (guests)	$22 per guest	$30 per guest

Per party costs do not vary with the number of guests.

Required -

a. Compute the cost of a 20-guest afternoon picnic.

b. Compute the cost of a 20-guest evening formal dinner.

c. How much should Cathy charge for each guest for each type of party if she wants to cover her costs?

Reference no: EM133073828

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Compute the costs of her catered parties

Reference no: EM133073828

Reference no: EM133073828

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