What are the estimated costs for a month assuming the

Reference no: EM13587867

The managers of Peterson's Catering Company are analyzing the costs involved in providing catering services. Managers have selected the following cost drivers: units of meal produced, total deliveries, number of VIP services, number of new customers, and new products developed. Here are the cost data and levels of cost driver activity for the past 16 months.

Month total Meals VIP New New
overhead produced deliveries services Customers products

1 $69,094 12,690 1,340 345 3 0

2 64,927 11,980 1,180 310 4 0

3 60,332 10,950 1,050 280 4 1

4 57,953 10,280 930 245 5 0

5 55,984 9,020 840 205 7 2

6 53,110 8,130 780 185 8 2

7 52,706 7,540 700 160 10 3

8 53,874 6,980 630 144 12 4

9 53,445 8,930 680 135 10 2

10 54,869 9,800 760 120 9 0

11 59,985 10,560 890 175 8 2

12 61,121 11,560 1,070 200 7 0

13 63,926 11,710 1,240 240 6 0

14 66,602 12,460 1,390 285 4 0

15 72,773 13,520 1,450 330 4 1

16 71,391 13,620 1,510 315 2 0

Totals $972,101 169,730 16,440 3,674 103 17

Management estimates the following levels of cost driver volumes for the next month for the budget.

12,000 Meals produced

1,100 Deliveries

300 VIP services

5 New customers

2 New products

A. Indicate the information in addition to that provided which is required to perform account analysis.

B. Now assume that Peterson's Catering Company had the following breakdown of costs for the 16 months:

Total costs of meals produced $334,368

Total costs for delivering 164,400

Total costs of VIP services 140,352

Total costs of developing new customers 154,904

Total costs of developing new products 18,700

Total facilities-level costs (total for all 16 months) 159,377

Total costs $972,101

What are the cost driver rates for (1) meals produced, (2) deliveries, (3) VIP services, (4) new customers, and (5) new products developed using account analysis?

C. What are the estimated costs for a month assuming the following level of cost driver volumes? (Don't forget to include the facilities-level costs in your estimate.)

12,000 Meals produced

1,100 Deliveries

300 VIP services

5 New customers

2 New products

D. Peterson's Catering Company is considering outsourcing deliveries. Compared to your answer in requirement c., how much would the company save by outsourcing the delivery service (before considering the cost of outsourcing)?

Reference no: EM13587867

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