Cathy, the manager of Cathys Catering, Inc., uses activity-based costing to compute the costs of...
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Accounting
Cathy, the manager of Cathys Catering, Inc., uses activity-based costing to compute the costs of her catered parties. Each party is limited to 20 guests and requires 4 people to serve and clean up. Cathy offers two types of partiesan afternoon picnic and an evening formal dinner. The breakdown of the costs follows. Activities (and cost drivers) Afternoon Picnic Formal Dinner Advertising (parties) $ 119 per party $ 119 per party Planning (parties) $ 56 per party $ 108 per party Renting equipment (parties, guests) $ 52 per party plus $15 per guest $ 80 per party plus $24 per guest Obtaining insurance (parties) $ 180 per party $ 380 per party Serving (parties, servers) $ 51 per server per party $ 67 per server per party Preparing food (guests) $ 17 per guest $ 28 per guest Per party costs do not vary with the number of guests.
Required:
a. Compute the cost of a 20-guest afternoon picnic.
b. Compute the cost of a 20-guest evening formal dinner.
c. How much should Cathy charge for each guest for each type of party if she wants to cover her costs?
Afternoon picnic Evening formal dinner Charging Amount Afternoon picnic per guest Formal dinner per guest
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