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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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