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Cathy, the manager of Cathy's 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 Cathy's Catering, Inc., uses activity-based costing to compute the costs of her catered parties. Each party is limited to 20 guests and requires 4 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) $ 103 per party $ 103 per party Planning (parties) $ 96 per party $ 130 per party Renting equipment $ 54 per party plus $ 76 per party plus (parties, guests) $ 14 per guest $ 24 per guest Obtaining insurance (parties) $ 210 per party $ 425 per party Serving (parties, servers) $ 60 per server per party $ 73 per server per party Preparing food (guests) $ 23 per guest $ 28 per guest Per party costs do not vary with the number of guests. Required: a. Compute the cost of a 20-guest afternoon picnic Afternoon picnic b. Compute the cost of a 20-guest evening formal dinner. 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.) Afternoon picnic Formal dinner Charging Amount per guest per guest
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