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Required information Skip to question Dana Rand owns a catering company that prepares banquets and parties for both individual and business functions throughout the year.
Required information Skip to question Dana Rand owns a catering company that prepares banquets and parties for both individual and business functions throughout the year. Rands business is seasonal, with a heavy schedule during the summer months and the yearend holidays and a light schedule at other times. During peak periods, there are extra costs; however, even during nonpeak periods Rand must work more to cover expenses. One of the major events customers request is a cocktail party. Rand offers a standard cocktail party and has developed the following cost structure on a perperson basis. Food and beverages $ Labor hour @ $ per hour Overhead hour @ $ per hour Total cost per person $ When bidding on cocktail parties, Rand adds a percent markup to this cost structure as a profit margin. Rand is quite certain about estimates of the prime costs but is not as comfortable with the overhead estimate. This estimate was based on the actual data for the past months presented in the following table. These data indicate that overhead expenses vary with the directlabor hours expended. The $ estimate was determined by dividing total overhead expended for the months $ by total labor hours and rounding to the nearest dollar. Month Labor Hours Overhead Expenses January $ February March April May June July August September October November December Total $ Rand recently attended a meeting of the local chamber of commerce and heard a business consultant discuss regression analysis and its business applications. After the meeting, Rand decided to do a regression analysis of the overhead data. The following rounded results were obtained. Intercept a Coefficient b Required: Using data from the regression analysis, develop the following cost estimates per person for a cocktail party. Assume that the level of activity remains within the relevant range. Rand has been asked to prepare a bid for a person cocktail party to be given next month. Determine the minimum bid price that Rand should be willing to submit. What other factors should Rand consider in developing the bid price for the cocktail party?
Required information
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Dana Rand owns a catering company that prepares banquets and parties for both individual and business functions throughout the year. Rands business is seasonal, with a heavy schedule during the summer months and the yearend holidays and a light schedule at other times. During peak periods, there are extra costs; however, even during nonpeak periods Rand must work more to cover expenses.
One of the major events customers request is a cocktail party. Rand offers a standard cocktail party and has developed the following cost structure on a perperson basis.
Food and beverages $
Labor hour @ $ per hour
Overhead hour @ $ per hour
Total cost per person $
When bidding on cocktail parties, Rand adds a percent markup to this cost structure as a profit margin. Rand is quite certain about estimates of the prime costs but is not as comfortable with the overhead estimate. This estimate was based on the actual data for the past months presented in the following table. These data indicate that overhead expenses vary with the directlabor hours expended. The $ estimate was determined by dividing total overhead expended for the months $ by total labor hours and rounding to the nearest dollar.
Month Labor Hours Overhead Expenses
January $
February
March
April
May
June
July
August
September
October
November
December
Total $
Rand recently attended a meeting of the local chamber of commerce and heard a business consultant discuss regression analysis and its business applications. After the meeting, Rand decided to do a regression analysis of the overhead data. The following rounded results were obtained.
Intercept a
Coefficient b
Required:
Using data from the regression analysis, develop the following cost estimates per person for a cocktail party. Assume that the level of activity remains within the relevant range.
Rand has been asked to prepare a bid for a person cocktail party to be given next month. Determine the minimum bid price that Rand should be willing to submit.
What other factors should Rand consider in developing the bid price for the cocktail party?
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