Question

Required information The following information applies to the questions displayed below.) Maria Chavez owns a catering company that serves food and beverages at parties and business functions. Chavez's business is seasonal with a heavy schedule during the summer months and holidays and a lighter schedule at other times. One of the major events Chavez's customers request is a cocktail party. She offers a standard cocktail party and has estimated the cost per guest as follows: Food and beverages Labor (0.5 hour $1e.ee /hr.) Overhead (2.5 hour $18.66/hr.) Total cost per guest $ 17.ee 5.ee 9.33 $31.33 The standard cocktail party lasts three hours and Chavez hires one worker for every six guests, so that works out to one-half hour of labor per quest. These workers are hired only as needed and are paid only for the hours they actually work When bidding on cocktail parties, Chavez adds a 13% markup to yield a price of about $40 per guest. She is confident about her estimates of the costs of food and beverages and labor but is not as comfortable with the estimate of overhead cost. The $18.66 overhead cost per labor-hour was determined by dividing total overhead expenses for the last 12 months by total labor-hours for the same period. Monthly data concerning overhead costs and labor-hours follow Month January February Mh Labor-Hours 3, eee 2,100 Overhead Expenses $ 5e,eee 54, eee 56 RAA Dron

Answer 1

Computation of Variable cost:
Particulars	Amount
Food and beverages	$17
Labor (0.5 hour * $10 per hour)	$5
Overhead (0.5 hour * $4.11 per hour )	$2.06
Total variable cost per guest	$24.06
Computation of total contribution margin
Particulars	Amount
Sales (200 guest * $40 per guest)	$8000
Variable cost (200 guest * $24.06 per guest)	$4812
Contribution Margin	$3188