Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 Picnic Formal Dinner
Advertising (parties) $ 105 per party $ 105 per party
Planning (parties) $ 92 per party $ 108 per party
Renting equipment $ 45 per party plus $ 82 per party plus
(parties, guests) $ 13 per guest $ 25 per guest
Obtaining insurance (parties) $ 155 per party $ 415 per party
Serving (parties, servers) $ 43 per server per party $ 84 per server per party
Preparing food (guests) $ 21 per guest $ 26 per 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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Assurance Services With ACL CD

Authors: McGraw Hill

1st Edition

1259071200, 978-1259071201

More Books

Students also viewed these Accounting questions