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Unformatted text preview: Solution Rate This Solution Poor Great -/- go to problem Maria Chavez owns a catering company that serves food and beverages at parties and business functions. Chavez's business is seasonal, with a heavy schedule during the summer months and holidays and a lighter schedule at other times. One of the major events Chavez'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 (0.5 hrs. @ $10.00/hr) 5.00 Overhead (0.5 hrs @ $13.98/hr) 6.99 -------- Total cost per guest $26.99 ===== The standard cocktail party lasts three hours and Chavez hires one worker for every six guests, 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, Chavez adds a 15% markup to yield a price of about $31 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...
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- Spring '09