Question
In: Accounting
Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her...
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 four 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) $ 100 per party $ 100 per party Planning (parties) $ 75 per party $ 125 per party Renting equipment $ 50 per party plus $ 75 per party plus (parties, guests) $ 10 per guest $ 20 per guest Obtaining insurance (parties) $ 200 per party $ 400 per party Serving (parties, servers) $ 50 per server per party $ 75 per server per party Preparing food (guests) $ 20 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? (Round your answers to 2 decimal places.)
Solutions
Expert Solution
a. Cost of a 20 guest afternoon picnic will be:
| Activities (and cost drivers) | Afternoon Picnic | ||
| Advertising (parties) | 100 | per party | 100 |
| Planning (parties) | 75 | per party | 75 |
| Renting equipment | 50 | per party plus | 50 |
| (parties, guests) | 10 | per guest | 200 |
| Obtaining insurance (parties) | 200 | per party | 200 |
| Serving (parties, servers) | 50 | per server per party | 200 |
| Preparing food (guests) | 20 | per guest | 400 |
| 1,225 | |||
b. Cost of a 20-guest evening formal dinner is:
| Activities (and cost drivers) | Formal Dinner | ||
| Advertising (parties) | 100 | per party | 100 |
| Planning (parties) | 125 | per party | 125 |
| Renting equipment | 75 | per party plus | 75 |
| (parties, guests) | 20 | per guest | 400 |
| Obtaining insurance (parties) | 400 | per party | 400 |
| Serving (parties, servers) | 75 | per server per party | 300 |
| Preparing food (guests) | 30 | per guest | 600 |
| 2,000 | |||
c. Cathy charge for each guest for each type of party if she wants to cover her costs will be:
Afternoon picnic = 1,225/20 = $61.25 per guest
Forman Dinner 2,000/20 = $100 per guest
ekkarill92 answered 2 years agoRelated Solutions
Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her...
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)
$
79
per party
$
79
per party
Planning (parties)
$
72
per party
$
104...
Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her...
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)
$
121
per party
$
121
per party
Planning (parties)
$
52
per party
$
112...
Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her...
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) $ 105 per party $ 105 per party
Planning (parties) $ 64 per party $ 102...
Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her...
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)
$
97
per party
$
97
per party
Planning (parties)
$
56
per party
$
140
per...
Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her...
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)
$
93
per party
$
93
per party
Planning (parties)
$
50
per party
$
130...
Part 3: Activity-Based Costing Banquet Services uses activity-based costing to compute the costs of their catered...
Part 3: Activity-Based Costing
Banquet Services uses activity-based costing to compute the costs
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their catered parties. Each party is limited to 40 guests and
requires five
people to serve and clean up. Two types of parties, an afternoon
picnic
and an evening formal dinner, are offered. The breakdown of the
costs
follows:
Activities (and cost drivers) Afternoon Picnic Formal Dinner
Advertising (parties) $175 per party $100 per party
Planning (parties) $50 per party $75 per party
Renting equipment $75...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Doede Corporation uses activity-based costing to compute product
margins. In the first stage, the activity-based costing system
allocates two overhead accounts--equipment depreciation and
supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data to perform
these allocations appear below:
Overhead costs:
Equipment depreciation
$
82,000
Supervisory expense
$
12,100
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment depreciation
0.60
0.30
0.10
Supervisory expense
0.60
0.20
0.20
In the...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Doede Corporation uses activity-based costing to compute product
margins. In the first stage, the activity-based costing system
allocates two overhead accounts--equipment depreciation and
supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data to perform
these allocations appear below:
Overhead costs:
Equipment depreciation
$
30,000
Supervisory expense
$
14,800
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment depreciation
0.50
0.40
0.10
Supervisory expense
0.50
0.30
0.20
In the...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Doede Corporation uses activity-based costing to compute product
margins. In the first stage, the activity-based costing system
allocates two overhead accounts--equipment depreciation and
supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data to perform
these allocations appear below:
Overhead costs:
Equipment depreciation
$
103,000
Supervisory expense
$
13,100
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment depreciation
0.60
0.20
0.20
Supervisory expense
0.60
0.10
0.30
In the...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Doede Corporation uses activity-based costing to compute product
margins. In the first stage, the activity-based costing system
allocates two overhead accounts--equipment depreciation and
supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data to perform
these allocations appear below:
Overhead costs:
Equipment depreciation
$
92,000
Supervisory expense
$
4,000
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment depreciation
0.60
0.20
0.20
Supervisory expense
0.30
0.20
0.50
In the...
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