Esparza vs Petite Catering

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Esparza Catering vs. Petite Caterer Alicia Bouie, Israel Manalansan, Anthony McNair and Isaac Stovall Webster University BUSN 6070: Management Accounting Professor Gary Hickle May 7, 2013 Abstract In Management Accounting my group was assigned the below listed case study where Veronica Esparza operates a catering company that serves food and beverages at parties and business functions. One of the major events Esparza’s customers request is a cocktail party. She offers a standard cocktail party and has estimated the cost per guest as follows: Food and beverages………………………………….$ 15.00 Labor (.5hrs @10.00/hr)……………………………… 5.00 Overhead cost (.5hrs @13.98/hr)………………………. 6.99 Total cost per guest…………………………………… 26.99 The standard cocktail party last three hours and Esparza hires one worker for every six guest, so that works out to one-half hour of labor per guest. These workers are hired only as needed and are paid only for the hours they actually work. When bidding on cocktail parties, Esparza adds a 15% markup to yield a price of about 31.00 per guest. She is confident about her estimates of the costs of food and beverages and labor but is not as comfortable with the estimate of overhead cost. The 13.98 overhead cost per labor–hour was determined by dividing total overhead expenses for the last 12 months by total labor–hours for the same period. Monthly data concerning overhead costs and labor–hours follow: Month Labor Overhead Hours Expense January 2,500 55,000 February 2,800 59,000 March 3000 60,000 April 4200 64,000 May 4500 67,000 June 5500 71,000 July 6500 74,000 August 7500 77,000 September 7000 75,000 October 4500 68,000 November 3100 62,000 December 6500 73,000 Total 57,600

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