Question

Problem 1 (8 Marks) Don Mills corp has an annual summer BBQ for its employees. A local caterer provides lunch and a tent. The Don Mills pays a flat fee for the tent and an additional amount for each employee in attendance. However, in the past Don Mills Corp have never been able to determine how much the caterer is going to charge. In an effort to determine how much the caterer will charge this year, they have tracked the cost and attendance data over the past 8 years. Attendance Caterer Cost 210 $6,000 175 $4,800 240 $6,400 250 $6,600 300 $7,000 340 $7,200 400 $7,500 180 $4,700 Instructions a. Use the high-low method to calculate the food cost per person (variable cost).(5Marks) 7,500 - 4,700 400 - 140 = \frac{2800}{220} = 12.73\$ Variable Cost VC = 12.73 \times 400 = $5092 b. How much is the charge for the tent (fixed cost) ?(3marks) FC = 7500 - (12.73 \times 400) = 7500 - 5092 = $2408

          Problem 1 (8 Marks)
Don Mills corp has an annual summer BBQ for its employees. A local caterer provides lunch and
a tent. The Don Mills pays a flat fee for the tent and an additional amount for each employee in
attendance. However, in the past Don Mills Corp have never been able to determine how much
the caterer is going to charge. In an effort to determine how much the caterer will charge this
year, they have tracked the cost and attendance data over the past 8 years.
Attendance
Caterer
Cost
210
$6,000
175
$4,800
240
$6,400
250
$6,600
300
$7,000
340
$7,200
400
$7,500
180
$4,700
Instructions
a. Use the high-low method to calculate the food cost per person (variable cost).(5Marks)
7,500 - 4,700
400 - 140
= \frac{2800}{220} = 12.73\$
Variable Cost
VC = 12.73 \times 400
= $5092
b. How much is the charge for the tent (fixed cost) ?(3marks)
FC = 7500 - (12.73 \times 400)
= 7500 - 5092
= $2408

Problem 1 (8 Marks)
Don Mills corp has an annual summer BBQ for its employees. A local caterer provides lunch and
a tent. The Don Mills pays a flat fee for the tent and an additional amount for each employee in
attendance. However, in the past Don Mills Corp have never been able to determine how much
the caterer is going to charge. In an effort to determine how much the caterer will charge this
year, they have tracked the cost and attendance data over the past 8 years.
Attendance
Caterer
Cost
210
6,000
1754,800
240
6,400
2506,600
300
7,000
3407,200
400
7,500
1804,700
Instructions
a. Use the high-low method to calculate the food cost per person (variable cost).(5Marks)
7,500 - 4,700
400 - 140
= (2800)/(220) = 12.73$
Variable Cost
VC = 12.73 ×400
= 5092
b. How much is the charge for the tent (fixed cost) ?(3marks)
FC = 7500 - (12.73 × 400)
= 7500 - 5092
=2408

Added by Jeffrey M.

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