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Part 3: Activity-Based Costing Banquet Services uses activity-based costing to compute the costs of their catered...

Part 3: Activity-Based Costing Banquet Services uses activity-based costing to compute the costs of their catered parties. Each party is limited to 40 guests and requires five people to serve and clean up. Two types of parties, an afternoon picnic and an evening formal dinner, are offered. The breakdown of the costs follows:

Activities (and cost drivers) Afternoon Picnic vs Formal Dinner

Advertising (parties) $175 per party for Afternoon Picnic $100 per party for Formal Dinner

Planning (parties) $50 per party (Afternoon Picnic ) $75 per party (Formal Dinner)

Renting equipment $75 per party plus (Afternoon Picnic ) $75 per party plus (Formal Dinner)

(parties, guests) $20 per guest (Afternoon Picnic )t $20 per guest (Formal Dinner)

Obtaining insurance (parties) $200 per party (Afternoon Picnic )$400 per party (Formal Dinner)

Serving (parties, servers) $60 per server per prty (Afternoon Picnic ) $90 per server per party (Formal Dinner)

Preparing food (guests) $20 per gues (Afternoon Picnic )t $30 per guest (Formal Dinner)

Per party costs do not vary with the number of guests. Complete the following: a. Compute the cost of a 40-guest afternoon picnic.

b. Compute the cost of a 40-guest evening formal dinner.

c. How much should Banquet Services charge per guest at a minimum for both Afternoon Picnics and Formal Dinners to cover their costs?

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Answer #1

Activities Afternoon picnic Formal dinner 175 Advertising Planning Renting Obtaining 100 75 75 400 650 200 500 Total party co

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