PB.2 Fixed costs of the banquet unit are $600/day. An event for 100 guests has a
ID: 2585937 • Letter: P
Question
PB.2 Fixed costs of the banquet unit are $600/day. An event for 100 guests has a food cost of $8.50/person, labor costs of $1.75/person and other variable costs of $1.95/person
a. Calculate the total cost per person at this event
Total Cost per Guest
b. What should the total price and total price per person be if a 30% operating income is desired?
Total Revenue (30% income)
. Customer is a regular and does not want to pay more than $16.25/person. No other event could be booked. What are the comparative costs? Would you accept that price?.
Net Loss
Recommendation:
Total Cost per Guest
b. What should the total price and total price per person be if a 30% operating income is desired?
Price Per Guest (30% income)Total Revenue (30% income)
. Customer is a regular and does not want to pay more than $16.25/person. No other event could be booked. What are the comparative costs? Would you accept that price?.
Function accepted at $16.25 Function not accepted Total Revenue Food Cost Variable Wage Other Variable Costs Fixed Costs Total CostNet Loss
Recommendation:
Explanation / Answer
A.
B. Total price to be charged = Total cost + 30% of the total price (i.e. 30/70 of total cost)
= ($ 600 + $12.2*100) + 30/70 of ($ 600 + $12.2*100)
= $1,820 + $780
= $ 2,600
Total price per guest = $ 2,600/100 guests = $26
C.
Calculation of total cost per person at the event Particulars Cost (in$) Total Fixed Cost 600 Food/guest 8.5 Labor/guest 1.75 other cost/guest 1.95 Total Variable cost/guest 12.2 Fixed Cost /guest 6 Total Cost /guest 18.2Related Questions
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