[storminmormon19]

I don't need an answer... I just need a starting point. Me and my group have spent hours looking at this problem and don't even know where to start. Could I please just get a starting place?


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 $17.00
Labor (0.5 hrs. @ $9.60/hr.) 4.80
Overhead (0.5 hrs. @ $18.57/hr.) 9.29
Total cost per guest $31.09

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 13% markup to yield a price of about $35 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 $18.57 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:


Labor Overhead
Month Hours Expenses
January 2,250 $66,000
February 2,520 $70,600
March 2,700 $71,900
April 3,780 $76,300
May 4,050 $79,400
June 4,950 $84,400
July 5,850 $88,200
August 6,750 $92,400
September 6,300 $90,000
October 4,050 $81,600
November 2,790 $74,400
December 5,850 $87,600
Total 51,840 $962,800

Chavez has received a request to bid on a 127-guest fund-raising cocktail party to be given next month by an important local charity. (The party would last the usual three hours.) She would like to win this contract because the guest list for this charity event includes many prominent individuals that she would like to land as future clients. Maria is confident that these potential customers would be favorably impressed by her company's services at the charity event.

Requirement 1:
Using the least-squares regression method, estimate the contribution to profit of a standard 127-guest cocktail party if Chavez charges her usual price of $35 per guest. (Round your answer to 2 decimal places. Omit the $ sign in your response.)

Contribution to profit $

Requirement 2:
How low could Chavez bid for the charity event in terms of a price per guest and still not lose money on the event itself? (Round your answer to the nearest dollar amount. Omit the $ sign in your response.)

Bid Price $

Requirement 3:
The individual who is organizing the charity's fund-raising event has indicated that he has already received a bid under $32 from another catering company. Do you think Chavez should bid below her normal $35 per guest price for the charity event?

[paraclete]

I don't need an answer...I just need a starting point. Me and my group have spent hours looking at this problem and don't even know where to start. Could I please just get a starting place?


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 $17.00
Labor (0.5 hrs. @ $9.60/hr.) 4.80
Overhead (0.5 hrs. @ $18.57/hr.) 9.29
Total cost per guest $31.09

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 13% markup to yield a price of about $35 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 $18.57 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:


Labor Overhead
Month Hours Expenses
January 2,250 $66,000
February 2,520 $70,600
March 2,700 $71,900
April 3,780 $76,300
May 4,050 $79,400
June 4,950 $84,400
July 5,850 $88,200
August 6,750 $92,400
September 6,300 $90,000
October 4,050 $81,600
November 2,790 $74,400
December 5,850 $87,600
Total 51,840 $962,800

Chavez has received a request to bid on a 127-guest fund-raising cocktail party to be given next month by an important local charity. (The party would last the usual three hours.) She would like to win this contract because the guest list for this charity event includes many prominent individuals that she would like to land as future clients. Maria is confident that these potential customers would be favorably impressed by her company's services at the charity event.

Requirement 1:
Using the least-squares regression method, estimate the contribution to profit of a standard 127-guest cocktail party if Chavez charges her usual price of $35 per guest. (Round your answer to 2 decimal places. Omit the $ sign in your response.)

Contribution to profit $

Requirement 2:
How low could Chavez bid for the charity event in terms of a price per guest and still not lose money on the event itself? (Round your answer to the nearest dollar amount. Omit the $ sign in your response.)

Bid Price $

Requirement 3:
The individual who is organizing the charity's fund-raising event has indicated that he has already received a bid under $32 from another catering company. Do you think Chavez should bid below her normal $35 per guest price for the charity event?

all life is a gamble, so start by doing the math. The profit margin here is very thin but you will have to try to determine how much of the overhead is variable