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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 Labor (0.5 hour e ?10.00 /hr. Overhead (0.5 hour $18.66/hr.) Total cost per guest 17.00 5.00 9.33 31.33 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 $40 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 $18.66 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 January February March April May June July August September Labor- Hours 3,000 2,100 2,300 3,500 3,800 4,800 5,800 6,800 6,300 Overhead Expenses $ 50,000 54,000 55,000 59,000 62,000 66,000 69,000 72,000 70,000

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