Note to the instructor: This case requires the ability to build on concepts that are introduced only briefly in the text. To some degree, this case an-ticipates issues that will be covered in more depth in later chapters.
1. In order to estimate the contribution to profit of the charity event, it is first necessary to estimate the variable costs of catering the event. The costs of food and beverages and labor are all apparently variable with respect to the number of guests. However, the situation with respect overhead expenses is less clear. A good first step is to plot the labor hour and overhead expense data in a scattergraph as shown below.