Randolph Dana owns a catering company that prepares banquets and parties for business functions throughout the year. Dana's business is seasonal, with a heavy schedule during the summer months and the year-end holidays. During peak periods there are extra costs; however, even during non peak periods Dana must work more to cover his expenses.

One of the major events Dana's customers request is a cocktail party. He offers a standard cocktail party and has developed the following cost structure on a per-person basis.

Food and beverages $14.00 Labor (.6 hr. @ $11 per hour) 6.60 Overhead (.6 hr. @ $14 per hour) 8.40 Total cost per person $29.00