Relevant costs for decision making Carmen's Catering provides lunches and dinners for various groups or organizations in the locality. A new customer has approached Carmen's Catering to provide dinner for a special event featuring a well-known s-peaker, with estimated attendance of 100 people. Carmen sug¬ gested two different menus to the customer. The first menu would require materi¬ als and direct labor cost of $13 per meal. The second menu would require materials and direct labor cost of $16 per meal. Carmen has developed the fol¬ lowing cost analysis for her ongoing operations:

The timing of the new customer's event would present no problems for Car¬ men's Catering. Carmen would like to know the minimum price she should charge for 100 meals of the first menu, or 100 meals of the second menu.
REQUIRED

(a) In determining the minimum prices, what assumptions need to be made about the behavior of support costs for Carmen's Catering?

(b) What other factors are relevant for this decision?

(c) What prices would you recommend for the first menu or the second menu for the new customer's dinner? Provide reasons for your recommendation.

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Event-related support Customer-related support Facility-sustaining support per month $ 100 22 2000