Question

Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her...

Cathy, the manager of Cathy’s 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 parties—an afternoon picnic and an evening formal dinner. The breakdown of the costs follows.

Activities (and cost drivers) Afternoon Picnic Formal Dinner
Advertising (parties) $ 97 per party $ 97 per party
Planning (parties) $ 56 per party $ 140 per party
Renting equipment (parties, guests) $ 42 per party plus $13 per guest $ 71 per party plus $22 per guest
Obtaining insurance (parties) $ 220 per party $ 395 per party
Serving (parties, servers) $ 41 per server per party $ 67 per server per party
Preparing food (guests) $ 24 per guest $ 27 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?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution a:

Computation of cost of 20 guest afternoon picnic
Particulars Amount
Advertising (parties) $97.00
Planning (parties) $56.00
Renting equipment (parties, guests) $302.00
Obtaining insurance (parties) $220.00
Serving (parties, servers) $164.00
Preparing food (guests) $480.00
Total costs $1,319.00

Solution b:

Computation of cost of 20 guest evening formal dinner
Particulars Amount
Advertising (parties) $97.00
Planning (parties) $140.00
Renting equipment (parties, guests) $511.00
Obtaining insurance (parties) $395.00
Serving (parties, servers) $268.00
Preparing food (guests) $540.00
Total costs $1,951.00

Solution c:

Amount to be charged for each guest for afternoon picnic = $1,319/20 = $65.95 per guest.

Amount to be charged for each guest for evening formal dinner = $1,951/20 = $97.55 per guest.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her...
Cathy, the manager of Cathy’s 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 parties—an afternoon picnic and an evening formal dinner. The breakdown of the costs follows. Activities (and cost drivers) Afternoon Picnic Formal Dinner Advertising (parties) $ 97 per party $ 97 per party Planning (parties) $ 52 per party $ 134 per...
Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her...
Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her catered parties. Each party is limited to 20 guests and requires 5 people to serve and clean up. Cathy offers two types of parties—an afternoon picnic and an evening formal dinner. The breakdown of the costs follows. Activities (and cost drivers) Afternoon Picnic Formal Dinner Advertising (parties) $ 95 per party $ 95 per party Planning (parties) $ 94 per party $ 100 per...
2. Leeds Catering uses activity-based costing for allocating its overhead costs. The company has provided the...
2. Leeds Catering uses activity-based costing for allocating its overhead costs. The company has provided the following data concerning the activity rates in its activity-based costing system: Activity Cost Pools Preparing Arranging Meals Functions Wages £0.80 £180.00 Supplies £0.40 £290.00 Other expenses £0.20 £140.00 The number of meals served is the measure of activity for the Preparing Meals activity cost pool. The number of functions catered is used as the activity measure for the Arranging Functions activity cost pool. Management...
Problem 3-14A Compute and Use Activity Rates to Determine the Costs of Serving Customers [LO3-2, LO3-3,...
Problem 3-14A Compute and Use Activity Rates to Determine the Costs of Serving Customers [LO3-2, LO3-3, LO3-4] Gino’s Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study. The intern, in consultation with the owner, identified the following major activities:   Activity Cost Pool Activity Measure   Serving a party of diners      Number of parties served   Serving...
In this assignment, you will develop a Python program that will process applications for gala-type events...
In this assignment, you will develop a Python program that will process applications for gala-type events at a local dinner club. The club, Gala Events Inc., is currently booking events for the upcoming holidays. However, the club has the following restrictions: Due to the physical size of the building, its maximum occupancy for any event is 100—not including the club staff. Since local regulations do not permit the sale of alcoholic beverages after midnight, the maximum length of any event...
Problem 4-14 Compute and Use Activity Rates to Determine the Costs of Serving Customers [LO4-2, LO4-3,...
Problem 4-14 Compute and Use Activity Rates to Determine the Costs of Serving Customers [LO4-2, LO4-3, LO4-4] Gino’s Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study. The intern, in consultation with the owner, identified the following major activities: Activity Cost Pool Activity Measure Serving a party of diners Number of parties served Serving...
Bevo, Inc. uses an activity based costing system. The company has the following overhead costs: Overhead...
Bevo, Inc. uses an activity based costing system. The company has the following overhead costs: Overhead Cost Amount Factory Supplies $300,000 Maintenance Costs $400,000 Indirect Salaries $200,000 After a thorough review of the activities that drive these costs, management of Bevo, Inc. has determined the percentage of these costs that are used by each activity. These are included in the table below: Setups Cost Pool Production Cost Pool Factory Supplies 20% 80% Maintenance Costs 65% 35% Indirect Salaries 80% 20%...
Job Costs Using Activity-Based Costing Heitger Company is a job-order costing firm that uses activity-based costing...
Job Costs Using Activity-Based Costing Heitger Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Heitger identified three overhead activities and related drivers. Budgeted information for the year is as follows: Activity Cost    Driver Amount of Driver Materials handling $ 72,000      Number of moves 3,000   Engineering 165,000      Number of change orders 10,000   Other overhead 280,000      Direct labor hours 50,000   Heitger worked on four jobs in July. Data are as follows: Job 13-43 Job 13-44...
ABC Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...
ABC Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Machining, Order Filling, and Other. The costs in those activity cost pools appear below: Machining $ 15,800 Order Filling $ 6,400 Other $ 9,800 Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products....
a) Smith Industries uses activity-based costing to determine the costs of its two products: A and...
a) Smith Industries uses activity-based costing to determine the costs of its two products: A and B. The estimated total cost and expected number of activities for one of the company's activity cost pools are: Cost Product A Product B $14,000 400 300 Using activity-based costing, what is the activity rate for this activity? b) Jones and Sons, Inc. uses activity-based costing to compute product costs. Estimated costs totaled $40,000 and expected number of activities equals 2,500 for a particular...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT