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) $ 79 per party $ 79 per party Planning (parties) $ 94 per party $ 108 per party Renting equipment (parties, guests) $ 42 party plus $15 per guest $ 68 per party plus $20 per guest Obtaining insurance (parties) $ 180 per party plus $ 425 per party Serving (parties, servers) $ 58 per server per party $ 69 per server per party Preparing food $ 25 per guest $ 34 per guest Per party costs do not vary with the number of guests. Required: Compute the cost of a 20-guest afternoon picnic. Afternoon picnic _____________ Compute the cost of a 20-guest evening formal dinner. Evening formal dinner ______________ How much should Cathy charge for each guest for each type of party if she wants to cover her costs? Charging Amount Afternoon picnic _________ per guest Formal dinner _________ per guest
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) $ 79 per party $ 79 per party
Planning (parties) $ 94 per party $ 108 per party
Renting equipment (parties, guests) $ 42 party plus $15 per guest $ 68 per party plus $20 per guest Obtaining insurance (parties) $ 180 per party plus $ 425 per party
Serving (parties, servers) $ 58 per server per party $ 69 per server per party
Preparing food $ 25 per guest $ 34 per guest
Per party costs do not vary with the number of guests.
Required:
- Compute the cost of a 20-guest afternoon picnic.
Afternoon picnic _____________
- Compute the cost of a 20-guest evening formal dinner.
Evening formal dinner ______________
- How much should Cathy charge for each guest for each type of party if she wants to cover her costs?
Charging Amount
Afternoon picnic _________ per guest
Formal dinner _________ per guest
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