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 Picnic Formal Dinner Advertising (parties) $ 105 per party $ 105 per party Planning (parties) $ 64 per party $ 102 per party Renting equipment $ 45 per party plus $ 76 per party plus (parties, guests) $ 15 per guest $ 23 per guest Obtaining insurance (parties) $ 160 per party $ 405 per party Serving (parties, servers) $ 41 per server per party $ 82 per server per party Preparing food (guests) $ 22 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. 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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