Restaurant Sedap Gila is a catering company that serves food and beverages at parties and business functions. Sedap Gila'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 Sedap Gila's customers request is a cocktail party. She offers a standard cocktail party and has estimated the cost per guest as follows:

$

Food and beverages 16.00

Labor (0.5 hour @ $9.80/hr.) 4.90

Overhead (0.5 hour @ $18.54/hr.) 9.27

Total cost per guest 30.17

The standard cocktail party lasts three hours and Sedap Gila hires one worker for every six guests, so that works out to one-half hour of labor per guest. These workers are hired only as needed and are paid only for the hours they actually work.

When bidding on cocktail parties, Sedap Gila adds a 14% markup to yield a price of about $32 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 $18.54 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 follow: