This is a 2 part problem. Must solve problem 1 in order to solve problem 2. Please list answers in financial-statement-form. Problem 1 is attached. Problem 2 is as follows: Problem 2: Comparing Costs Use the information that you calculated in Problem #1 (the cost of a dinner -- problem #1 is on attached document) Compare the full cost of the dinner preparation for at least three people. Discuss the differences in full cost and why such differences arose. Are the assumptions made by each class member the same? Do different class members have different fixed costs? Did all class members treat the ?bottled? dressing as a variable cost? On the basis of the information accumulated, do you think you could determine a ?standard? cost of preparing the dinner? Comment, in report form, on the differences in individual person?s full cost, assumptions, the problems in distinguishing full cost, the judgments that had to be made, and any other information of interest. From the three persons costs you gathered, select (or determine) what is, in your opinion, the ?best? calculation of full cost. This could, of course, be your own calculation. Assume (unrealistically) that you are going to sell the dinner you prepared at a profit. 1. How much would you charge for the dinner? Why? 2. Assume that you prepare a dinner for yourself and for a friend at the same time and then decide to sell both dinners at a profit. Would the amount charged per dinner change? 3. In both instances (selling the single dinner and selling both dinners), how did you determine your ?profit?? Did you consider how much the buyer(s) would be willing to spend for one dinner? How many dinners would you have to prepare to ?breakeven??

Problem 1: Cost of a Dinner Describe the full cost of preparing in your own kitchen a dinner for one consisting of salad (lettuce, tomatoes, and dressing), baked chicken, baked potatoes, green beans, and ice cream. Assume that on one shopping trip you purchased all of the components of this dinner except the ice cream, which you had purchased on a previous shopping trip. The costs of the components were: Lettuce, one head (your serving is of the head) Tomato (your serving is of the tomato) Chicken, one piece (your serving is the full piece) Potato, one (your serving is one potato) Ice cream, one quart (your serving is of the quart) Dressing, one bottle (your serving is one-tenth of the bottle) Frozen green beans, one bag (your serving is of the bag) $1.00 $0.80 $1.25 $0.25 $2.50 $2.50 $2.20 When calculating full cost, remember that the costs of incidental items (such as salt, butter, and spices) must be considered. Describe such costs and make some reasonable estimate of the costs. 1. After considering and describing the full cost of preparing your dinner, answer the following with respect to the full costs you have calculated or described: a. Will the full cost change if you boil, instead of bake your potato? b. Will the full cost change if you microwave (as opposed to cooking on the range top) your green beans? c. Did your description of full cost include the cost of storing the ice cream? d. Did your full cost include the cost of water to wash the vegetables and chicken before preparation and the cost of paper towels to dry the vegetables and chicken? e. Did your full cost include the cost of writing the check (or using your credit card) at the supermarket? f. Did your full cost include the cost of two trips to the supermarket (gas, depreciation on your car, depreciation on your tires)? g. What are the assets employed in preparing your dinner? Did your full cost include depreciation on these assets? If you do not own the assets, did your full cost include a portion of the monthly rental of the assets? h. Did your full cost include an amount necessary to return your kitchen to its original state (i.e., a cost to clean/maintain the kitchen)? 2. Assume that you invite one friend to dinner. Will the cost of preparing the dinner \"double?\" Indicate which costs included in your full cost will \"double\" and which will not. Explain why some costs \"double\" and some do not. Note that this illustration of developing the full cost of a relative simple process (shopping for and preparing dinner) illustrates the types of the problems that arise and judgments that must be made in developing full cost for production in complex business situations, where many judgments must be made in determining the costs to allocate to production. The \"important\" point is for you to understand the fixed and variable costs. Also, you should have determined a \"total estimated\" overheadall costs of preparation that are not direct costs. This amount can be converted to a \"cost per meal,\" \"cost per hour,\" or some other \"cost per\" measure, depending on the level of activity used to determine the cost. Problem 2: Comparing Costs Use the information that you calculated in Problem #1 (the cost of a dinner.) Compare the full cost of the dinner preparation for at least three people. Discuss the differences in full cost and why such differences arose. Are the assumptions made by each class member the same? Do different class members have different fixed costs? Did all class members treat the \"bottled\" dressing as a variable cost? On the basis of the information accumulated, do you think you could determine a \"standard\" cost of preparing the dinner? Comment, in report form, on the differences in individual person's full cost, assumptions, the problems in distinguishing full cost, the judgments that had to be made, and any other information of interest. From the three persons costs you gathered, select (or determine) what is, in your opinion, the \"best\" calculation of full cost. This could, of course, be your own calculation. Assume (unrealistically) that you are going to sell the dinner you prepared at a profit. 1. How much would you charge for the dinner? Why? 2. Assume that you prepare a dinner for yourself and for a friend at the same time and then decide to sell both dinners at a profit. Would the amount charged per dinner change? 3. In both instances (selling the single dinner and selling both dinners), how did you determine your \"profit?\" Did you consider how much the buyer(s) would be willing to spend for one dinner? How many dinners would you have to prepare to \"breakeven?\