Nicole's Kitchens specializes in catering dinner parties of 10 or more people. Once you settle on a menu, Nicole will do the shopping, cooking, catering and cleanup. Nicole provides you the following data:

Cost

Variable costs ..............................................................................$20 per guest

Shopping costs.................................................... $200 per engagement (~4-5 hours)

Cooking time.................... 2 hours for a party of 10 + 10 minutes for each additional guest.

Serving time............................................. 1 hour for setup + 5 minutes for each guest

Clean-up time............ 1 hour for a party with 10 or fewer guests; 1.5 hours for larger parties.

Nicole charges $75 per guest. She estimates the cost of her, and her employees, time at $40 per hour.

Required:

a. Determine Nicole's profit if she caters a party of 10 people.

b. Determine Nicole's profit if she caters a party of 16 people.

c. Based on your analysis, how might Nicole refine her pricing strategy?