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 per party Renting equipment $ 45 per party plus $ 76 per party plus (parties, guests) $ 15 per guest $ 23 per guest Obtaining insurance (parties) $ 160 per party $ 405 per party Serving (parties, servers) $ 41 per server per party $ 82 per server per party Preparing food (guests) $ 22 per guest $ 28 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. Compute the cost of a 20-guest afternoon picnic.

cost driver	afternoon picnic
advertising	105
planning	64
Renting equipment	45
additional	300 (15x20)
insurance	160
Serving	205 (41x 5)
Preparing food	440 (22 x 20)
total cost	1,319

b. Compute the cost of a 20-guest evening formal dinner.

cost driver	Evening formal dinner.
advertising	105
planning	102
Renting equipment	76
additional	560 (28 x 20)
insurance	405
Serving	410 (82 x 5)
Preparing food	560 (20 x 28)
total cost	2,218

c. How much should Cathy charge for each guest for each type of party if she wants to cover her costs?

Afternoon party

Cost per guest = total cost / total guest

Cost per guest = 1,319 / 20

Cost per guest= 65.95

Afternoon party

Cost per guest = total cost / total guest

Cost per guest = 2,218 / 20

Cost per guest= 110.9

ekkarill92 answered 1 year ago

Next > < Previous

Related 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 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...

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 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 of 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...

Subjects