Question: 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

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 Formal Dinner

Advertising (parties) $175 per party $100 per party

Planning (parties) $50 per party $75 per party

Renting equipment $75 per party plus $75 per party plus

(parties, guests) $20 per guest $20 per guest

Obtaining insurance (parties) $200 per party $400 per party

Serving (parties, servers) $60 per server per prty $90 per server per party

Preparing food (guests) $20 per guest $30 per guest

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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