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 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.)
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