Jasmine Lee owns a catering company that serves food and beverages at exclusive parties and business functions. Lee?s business is seasonal, with a heavy schedule during the summer months and holidays and a lighter schedule at other times. One of the major events that Lee?s customers request is a cocktail party. She offers a standard cocktail party and has estimated the cost per guest for this party as follows: Food and beverages $ 16.00 Labor (.50 hour @ $9.60 per hour) 4.80 Overhead (.50 hour @ $18.66 per hour) 9.33 Total cost per guest $ 30.13 This standard cocktail party lasts three hours and Lee hires one worker for every six guests, which is one-half hour of labor per guest. These workers are hired only as needed and are paid only for the hours they actually work. Lee ordinarily charges $34 per guest. She is confident about her estimates of the costs of food and beverages and labor, but is not as comfortable with the estimate of overhead cost. The $18.66 overhead cost per labor-hour was determined by dividing total overhead expenses for the last 12 months by total labor-hours for the same period. Monthly data concerning overhead costs and labor-hours appear below: Month Labor Hours Overhead Expenses January 1,800 $ 52,800 February 2,016 57,640 March 2,160 57,600 April 3,024 61,440 May 3,240 64,320 June 3,960 68,160 July 4,680 71,040 August 5,400 73,920 September 5,040 72,000 October 3,240 65,280 November 2,232 59,520 December 4,680 70,080 Total 41,472 $ 773,800 Lee has received a request to bid on a 128-guest fund-raising cocktail party to be given next month by an important local charity. (The party would last the usual three hours.) She would like to win this contract because the guest list for this charity event includes many prominent individuals that she would like to land as future clients. Lee is confident that these potential customers would be favorably impressed by her company?s services at the charity event. Required: 1. Use the least-squares regression method to estimate the fixed and variable components of overhead expenses. Use your business calculator. (2 marks) (Round the "Variable cost per hour" to 2 decimal places and "Fixed cost" to the nearest dollar amount. Omit the "$" sign in your response.) Fixed cost $ Variable cost per hour $ 2. Estimate the contribution to profit of a standard 128-guest cocktail party if Lee charges her usual price of $34 per guest. (7 marks) (Round your intermediate and final answers to 2 decimal places. Omit the "$" sign in your response.) Please provide supporting calculations in the box that follows: Contribution to profit $ 3. How low could Lee bid for the charity event, in terms of a price per guest, and still not lose money on the event itself? Assume no additional fixed cost incurred. Justify your answer. (2 marks) (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Bid Price $ 5. The individual who is organizing the charity?s fund-raising event has indicated that he has already received a bid under $31 from another catering company. Do you think Lee should bid below her normal $34 per guest price for the charity event? Why? (3 marks) Yes No 5 marks Amanda King has just been appointed director of recreation programs for Highland Park, a rapidly growing community in Connecticut. In the past, the city has sponsored a number of softball leagues in the summer months. From the city?s cost records, Amanda has found the following total costs associated with the softball leagues over the last five years: Number of Leagues Total Cost 6 $ 12,500 5 $ 11,000 3 $ 10,500 4 $ 10,500 2 $ 6,000 Each league requires its own paid supervisor and paid umpires as well as printed schedules and other copy work. Therefore, Amanda knows that some variable costs are associated with the leagues. She would like to know the amount of variable cost per league and the total fixed cost per year associated with the softball program. This information would help her for planning purposes. Required: 1. Using the least-squares regression method and your business calculator, estimate the variable cost per league and the total fixed cost per year for the softball program. (2 marks) (Round your answers to the nearest dollar amount. Omit the "$" sign in your response.) Fixed cost $ Variable cost per league $ 2. Express the cost data derived in (1) above in the form Y = a + bX. (1 mark) (Round your answers to the nearest dollar amount. Omit the "$" sign in your response.) Y = $ + $ X 3. Assume that Amanda would like to expand the softball program during the coming year to involve a total of nine leagues. Compute the expected total cost for the softball program. (2 marks) (Round your intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Total expected cost $

Jasmine Lee owns a catering company that serves food and beverages at exclusive parties and business functions. Lee's business is seasonal, with a heavy schedule during the summer months and holidays and a lighter schedule at other times. One of the major events that Lee's customers request is a cocktail party. She offers a standard cocktail party and has estimated the cost per guest for this party as follows: Food and beverages Labor (.50 hour @ $9.60 per hour) Overhea d (.50 hour @ $18.66 per hour) $ 16.00 4.80 9.33 Total cost per guest $ 30.13 This standard cocktail party lasts three hours and Lee hires one worker for every six guests, which is one-half hour of labor per guest. These workers are hired only as needed and are paid only for the hours they actually work. Lee ordinarily charges $34 per guest. She is confident about her estimates of the costs of food and beverages and labor, but is not as comfortable with the estimate of overhead cost. The $18.66 overhead cost per labor-hour was determined by dividing total overhead expenses for the last 12 months by total labor-hours for the same period. Monthly data concerning overhead costs and labor-hours appear below: Month January Februar y March April May June July August Septem ber October Novemb er Labor Hours 1,800 Overhead Expenses $ 52,800 2,016 57,640 2,160 3,024 3,240 3,960 4,680 5,400 57,600 61,440 64,320 68,160 71,040 73,920 5,040 72,000 3,240 65,280 2,232 59,520 Decemb er Total 4,680 70,080 41,472 $ 773,800 Lee has received a request to bid on a 128-guest fund-raising cocktail party to be given next month by an important local charity. (The party would last the usual three hours.) She would like to win this contract because the guest list for this charity event includes many prominent individuals that she would like to land as future clients. Lee is confident that these potential customers would be favorably impressed by her company's services at the charity event. Required: 1. Use the least-squares regression method to estimate the fixed and variable components of overhead expenses. Use your business calculator. (2 marks) (Round the "Variable cost per hour" to 2 decimal places and "Fixed cost" to the nearest dollar amount. Omit the "$" sign in your response.) Fixed cost Variable cost per hour $ $ 2. Estimate the contribution to profit of a standard 128-guest cocktail party if Lee charges her usual price of $34 per guest. (7 marks) (Round your intermediate and final answers to 2 decimal places. Omit the "$" sign in your response.) Please provide supporting calculations in the box that follows: Contribution to profit $ 3. How low could Lee bid for the charity event, in terms of a price per guest, and still not lose money on the event itself? Assume no additional fixed cost incurred. Justify your answer. (2 marks) (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Bid Price $ 5. The individual who is organizing the charity's fund-raising event has indicated that he has already received a bid under $31 from another catering company. Do you think Lee should bid below her normal $34 per guest price for the charity event? Why? (3 marks) Yes No 5 marks Amanda King has just been appointed director of recreation programs for Highland Park, a rapidly growing community in Connecticut. In the past, the city has sponsored a number of softball leagues in the summer months. From the city's cost records, Amanda has found the following total costs associated with the softball leagues over the last five years: Number of Leagues Total Cost 6 $12,500 5 $11,000 10,500 3 $ 10,500 4 $ 2 $ 6,000 Each league requires its own paid supervisor and paid umpires as well as printed schedules and other copy work. Therefore, Amanda knows that some variable costs are associated with the leagues. She would like to know the amount of variable cost per league and the total fixed cost per year associated with the softball program. This information would help her for planning purposes. Required: 1. Using the least-squares regression method and your business calculator, estimate the variable cost per league and the total fixed cost per year for the softball program. (2 marks) (Round your answers to the nearest dollar amount. Omit the "$" sign in your response.) Fixed cost Variable cost per league $ $ 2. Express the cost data derived in (1) above in the form Y = a + bX. (1 mark) (Round your answers to the nearest dollar amount. Omit the "$" sign in your response.) Y=$ +$ X 3. Assume that Amanda would like to expand the softball program during the coming year to involve a total of nine leagues. Compute the expected total cost for the softball program. (2 marks) (Round your intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Total expected cost $