Reference no: EM131805098
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 4 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) $ 89 per party $ 89 per party
Planning (parties) $ 64 per party $ 146 per party
Renting equipment $ 47 per party plus $ 70 per party plus
(parties, guests) $ 14 per guest $ 20 per guest
Obtaining insurance (parties) $ 240 per party $ 360 per party
Serving (parties, servers) $ 57 per server per party $ 76 per server per party
Preparing food (guests) $ 16 per guest $ 32 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?
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