Question

Sisters Erin Joyner and Teresa Hayes have started separate companies in the same city. Each company provides party planning services for weddings, birthday parties, holiday parties, and other occasions. Erin and Teresa graduated from Upper State University and completed a managerial accounting course, so they both understand the importance of managing their company’s costs. Erin has estimated her cost equation to be “Total cost = $4,000 + $40 per planning hour.” On the other hand, Teresa has estimated her cost equation to be “Total cost = $250 + $60 per planning hour.”

Required
A. What could explain such a difference in the cost equations?
B. If each sister works a total of 135 planning hours, what total costs would each report?



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  • CreatedMarch 11, 2015
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