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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
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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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.
Note: Round intermediate calculations and final answers to decimal places.
Required information
Dana Rand owns a catering company that prepares banquets and parties for both individual and business functions
throughout the year. Rand's business is seasonal, with a heavy schedule during the summer months and the year
end 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.
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.
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
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