4) Cathy, the manager of Cathys 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 PicnicFormal DinnerAdvertising (parties)$97per party$97per partyPlanning (parties)$56per party$124per partyRenting equipment$57per party plus$73per party plus(parties, guests)$11per guest$22per guestObtaining insurance (parties)$250per party$385per partyServing (parties, servers)$43per server per party$66per server per partyPreparing food (guests)$21per guest$25per 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.)

5) Maglie Company manufactures two video game consoles: handheld and home. The handheld consoles are smaller and less expensive than the home consoles. The company only recently began producing the home model. Since the introduction of the new product, profits have been steadily declining. Management believes that the accounting system is not accurately allocating costs to products, particularly because sales of the new product have been increasing.

Management has asked you to investigate the cost allocation problem. You find that manufacturing overhead is currently assigned to products based on their direct labor costs. For your investigation, you have data from last year. Manufacturing overhead was $1,411,000 based on production of 340,000 handheld consoles and 113,000 home consoles. Direct labor and direct materials costs were as follows:

HandheldHomeTotalDirect labor$1,366,750$397,000$1,763,750Materials710,000656,0001,366,000

Management has determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year are as follows:

Activity LevelCost DriverCosts AssignedHandheldHomeTotalNumber of production runs$715,000451055Quality tests performed527,000131831Shipping orders processed169,0008050130Total overhead$1,411,000

Required:

a.How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product?(Round "Total cost per unit" to 2 decimal places.)

b.How much overhead will be assigned to each product if direct labor cost is used to allocate overhead?What is the total cost per unit produced for each product?(Do not round intermediate calculations. Round "Total cost per unit" to 2 decimal places.)