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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 per party
Renting equipment $ 58 per party plus $ 82 per party plus
(parties, guests) $ 11 per guest $ 22 per guest
Obtaining insurance (parties) $ 175 per party $ 430 per party
Serving (parties, servers) $ 47 per server per party $ 66 per server per party
Preparing food (guests) $ 16 per guest $ 30 per guest

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.)

Afternoon picnic per guest

Formal dinner per guest

Solutions

Expert Solution

Solution
Particulars Afternoon Picnic (Amt in $) Formal Dinner (Amt in $)
Advertising Per party                                             121                                         121
Planning per party                                               52                                         112
Renting Equipment Per Party                                               58                                            82
(Parties, Guests) per guest                                               11                                            22
Obtaining Insurance per Party                                             175                                         430
Seving per Server per party                                               47                                            66
Prepairing Food guest                                               16                                            30
a Compute the Cost of 20 guest Afternoon Picnic
Particulars Afternoon Picnic (Amt in $) Total Amount (In $)
Advertising Per party                                             121                                         121
Planning per party                                               52                                            52
Renting Equipment Per Party                                               58                                            58
(Parties, Guests) per guest                                               11                                         220
Obtaining Insurance per Party                                             175                                         175
Seving per Server per party                                               47                                         188
Prepairing Food per guest                                               16                                         320
Cost of a 20 guest Afternoon Picnic                                      1,134
b Compute the Cost of 20 guest Evening Formal Dinner
Particulars Formal Dinner (Amt in $) Total Amount (In $)
Advertising Per party                                             121                                         121
Planning per party                                             112                                         112
Renting Equipment Per Party                                               82                                            82
(Parties, Guests) per guest                                               22                                         440
Obtaining Insurance per Party                                             430                                         430
Seving per Server per party                                               66                                         264
Prepairing Food per guest                                               30                                         600
Cost of a 20 guest Evening Formal Dinner                                      2,049
c How Much Cathy Should Charge for the same
20 guest Afternoon Picnic 1134/20 $ 56.70
20 guest Evening Formal Dinner 2049/20 $ 102.35

ekkarill92 answered 1 year ago
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