Question
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
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 partiesan 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) | $ | 94 | per party | $ | 114 | per party |
| Renting equipment (parties, guests) | $ | 48 | per party plus $15 per guest | $ | 71 | per party plus $24 per guest |
| Obtaining insurance (parties) | $ | 220 | per party | $ | 410 | per party |
| Serving (parties, servers) | $ | 54 | per server per party | $ | 70 | per server per party |
| Preparing food (guests) | $ | 19 | per guest | $ | 33 | per guest |
Per party costs do not vary with the number of guests.
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?
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Operational Auditing A Complete Guide
Authors: Gerardus Blokdyk
2019 Edition
0655515879, 978-0655515876
