Exercise $9-40($Algo$)$ Activity$-$Based Costing in a Nonmanufacturing Environment $($LO $9-4,5)$

Richard's Events provides catering services, among other services. The company has adopted activity$-$based costing $($ABC$)$ for the

catering services. The ABC system classifies activities into two groups based on the cost driver used: Diners and Events. Each event is

limited to $25$ guests and requires four people to serve and clean up$.$ Richard's Events offers two types of catered events$-$an informal,

outside party and a formal, seated meal.

The cost accountant at Richard's Events has developed the following cost$-$driver rates for the individual activities:

Per$-$event costs do not vary with the number of diners.

Required:

a$.$ Compute the cost of a $25-$guest informal party.

b$.$ Compute the cost of a $25-$guest formal meal.

c$.$ How much should Richard's Events charge for each diner for each type of event if the company is to cover its costs?