Richard's Events provides catering services, among other services. The company has adopted activity-based costing (ABC)...
90.2K
Verified Solution
Link Copied!
Question
Accounting
Richard's Events provides catering services, among other services. The company has adopted activity-based costing (ABC) for the catering services. The ABC system classifies activities into two groups based on the cost driver used: Diners and Events. Each event is limited to 25 guests and requires four people to serve and clean up. Richard's Events offers two types of catered eventsan informal, outside party and a formal, seated meal.
The cost accountant at Richard's Events has developed the following cost-driver rates for the individual activities:
Activities (and cost drivers)
Informal Party
Formal Dinner
Advertising (events)
$ 120
per event
$ 120
per event
Planning (events)
90
per event
150
per event
Renting equipment (events, diners)
60
per event
plus 12 per diner
90
per event
plus 24 per diner
Obtaining insurance (events)
240
per event
480
per event
Serving (events)
240
per event
360
per event
Preparing food (diners)
24
per diner
36
per diner
Per-event costs do not vary with the number of diners.
Required:
Compute the cost of a 25-guest informal party.
Compute the cost of a 25-guest formal meal.
How much should Richard's Events charge for each diner for each type of event if the company is to cover its costs?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
