The Red Lion Hotel has always been a popular venue for conferences and functions and has a dedicated function suite which is typically used several times each month for various celebrations and meetings. The approach to setting the selling price for a particular function is to calculate a full cost for the function (using an Absorption Costing basis) and then to add a percentage mark-up. The full cost is calculated by totalling up all of the direct variable costs associated with that particular function, and then to add an amount to account for a fair share of the hotel's overheads which relate to the function suite. The various overheads that the business incurs for the whole hotel comprise of:- Premises : The budgeted premises costs (rent, rates, gas, electricity, insurance) will total 169,200 in the next year. The total floor area of the hotel is 8,000 m2 whilst the floor area of the function suite is 600 m2. Reception : You have estimated that the hotels reception function incurs costs of 50,000 per annum and that they spend 5% of their time dealing with function suite related activities. Marketing : The Marketing function costs 60,000 per annum, and approximately 30% of their efforts (time and advertising spend) are spent on promoting the function suite. Depreciation : The annual depreciation charge for all of the non-current assets in the hotel is 300,000 per annum. The original purchase cost of all of the non-current assets in the hotel was 1,500,000 ; of which the non-current assets in the function suite (furniture etc.) accounted for 30,000 of this total. Maintenance : The hotel spends 40,000 per annum on repair and maintenance tasks. Last year there were 500 such tasks logged, of which 25 related to the function suite. General Management : The total cost of the hotels management team is 180,000 per annum. They estimate that ~20% of their time is devoted to the function suite In the coming year the function suite is budgeted to host 150 separate functions. (a) Use the workings column in the following table to detail how much of each overhead should be absorbed by the function suite each year using the information provided. The final share for each overhead should be recorded in the final column and summed to provide a total function suite overhead to be absorbed each year. This figure can then be used to calculate the function suite overhead to be absorbed per function (based on the hotel hosting 150 functions each year). At a typical Wedding Reception each guest would incur the following costs :- One 150ml glass of house champagne on arrival (costing 15 per 750ml bottle) Two 150ml glasses of house wine with the meal (costing 8 per 750ml bottle) Total food costs of 12.50 per guest (includes food ingredients and kitchen staff costs) Sundry costs of 2.00 per guest (paper napkins, candles, table decorations etc.) In addition the following additional costs are also incurred at each Wedding Reception:- One member of waiting staff per 10 guests (each required for 4 hours per function). Waiting staff are paid 8 per hour. One function supervisor to oversee the whole event (required for 10 hours per function). Supervisors are paid 15 per hour. One DJ for the evening entertainment at a cost of 150 (b) Complete the following table (showing workings) to calculate the total cost (including your previously calculated overhead to be absorbed) of a typical 100 guest wedding reception and hence calculate the selling price required to achieve an 80% mark-up.