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7 . Richard's Events provides catering services, among other services. The company has adopted actlvity - based costing ( ABC ) for the catering services.
Richard's Events provides catering services, among other services. The company has adopted actlvitybased costing ABC for the catering services. The ABC system classifies activities into two groups based on the cost driver used: Diners and Events. Each event is IImited to guests and requires four people to serve and clean up Richard's Events offers two types of catered eventsan informal, outside party and a formal, seated meal.
The cost accountant at Richard's Events has developed the following costdriver rates for the Individual activitles:
Perevent costs do not vary with the number of diners.
Required:
a Compute the cost of a guest informal party.
b Compute the cost of a guest formal meal.
c How much should Richard's Events charge for each diner for each type of event if the company is to cover its costs?
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