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Managerial Accounting

Beth

Managerial Accounting

Visit 1

I recently visited and closely observed a restaurant’s operations, whereby I identified various activities and costs classified into unit-level customer level, product level, and facility-level expenses, as described in detail below.

Unit-Level Activities and Costs

Unit-level activities occur with the performance of a service and incur direct materials, direct labor, and machine maintenance expenses (Brewer et al., 2019). The unit-level activities include taking orders and serving food. A waiter was appointed to collect the customers’ orders, which he inputs into the computer system before presenting them to the kitchen. The meals are prepared in the kitchen and served to the customer by the waitress. The drinks are either purchased directly from the counter or by placing an order through the waiter. These activities incur labor costs, direct materials, the agricultural produce employed in preparing food, and the energy used to cook and operate the computers.

Customer-Level Activities and Costs.

The customer level occurs with a group of items and incurs costs such as purchase orders, machine setup, and quality tests (Brewer et al., 2019). The customer-level activities entail the issuance of deluxe offerings, for instance, chicken chips and soda packages. It also includes the happy hour offerings offered to customers. The deluxe offerings include the pizza, burger, and 500 ml soda package, which is issued at a discount as opposed to buying the individual items. The happy hour offerings entail selling the items at a discounted price, and they are thus cooked in bulk rather than on a per-order basis. The expenses incurred include energy employed in preparing food and keeping it warm and labor costs as the waiters stand by and clear tables. Moreover, fast food engages its customers through online surveys and face-to-face interviews to determine their preferences in enhancing the quality of service—for example, the most preferred deluxe package.

Product-Level Activities and Costs.

Product-level activities comprise expenses that are incurred in supporting the restaurant’s commercial operations (Brewer et al., 2019). They include the procurement of products and supplies used in the preparation of food, the cleaning services hired to ensure the restaurant remains in pristine condition, and the accounting and financing services performed in reporting the revenue and expenses incurred in the restaurant. Notably, the restaurant purchases supply daily to ensure the availability of ingredients needed in preparing the meals and beverages. The restaurant also manages human resources through employee scheduling to ensure sufficient service during peak hours. It also trains and orients new employees into the business. Lastly, the venture incurs advertisement costs since it markets the restaurant’s services and offerings on social media and in the local newspaper. It also pays the municipal advertisement cost since it established a billboard advertising the facility.

Facility-Level Activities and Costs

The facility-level activities are crucial in supporting the restaurant’s development and commercial operations (Brewer et al., 2019). These expenses include depreciation, leasing, taxes, plant security, and insurance, outside landscaped and maintained. The restaurant incurs depreciation expenses in its cooking equipment and furniture, which are depreciated on a straight-line basis. Additionally, the enterprise services its taxes monthly as it is categorized as a limited liability company. I also observed the restaurant had contracted security services from a renowned firm to ensure its customers and employees’ safety. Additionally, the company incurs costs in maintaining the lawn. Lastly, the restaurant incurs leasing costs for its premises, which it has rented at the heart of the city.

Visit 2

I visited the restaurant for the second time alongside my friends. We ordered various offerings, inclusive of meals, snacks, and beverages. Due to the different orders we placed, issues arose with sharing the bill. Notably, there are two alternatives to billing the restaurant’s services. the first is determining the cost consumed by each individual, and the second is dividing the bill among the people who visited the restaurant. The first alternative is preferable since it would charge the customer for the exact cost of consumption. This alternative would be fair because each guest would pay for their consumption. The second alternative is summing the costs and dividing them among the guests, which is unsuitable since it assumes each client consumed similar amounts of meals and beverages. This system would thus charge less for some clients while overcharging others.

Which system for dividing the bill is more equitable?

Therefore, the first system is preferable as it is more equitable and precise. On the flip side, it is more complicated to determine each guest’s cost, unlike the second alternative.

Which system is easier to use?

Therefore, most restaurants would prefer the second alternative because it is easier to use.

How does this issue relate to the material covered in this chapter (Chapter 4)?

This issue relates to the material as discussed in chapter four, which covered activity-based costing. It explored assigning overhead expenses to products through various techniques, including plant-wide and departmental overhead rates and activity-based costing. More often than not, accountants encounter challenges in determining the precise costs incurred by each activity. In this case, the restaurant’s cashier encountered trouble determining the exact cost incurred by each of us. The accurate estimation of costs is crucial in determining the enterprise’s commercial operations’ aggregate operating expenses. This information is crucial in facilitating precise financial reporting.

References

Brewer, P., Garrison, R., & Noreen, E. (2019). Introduction to Managerial Accounting, 8e.

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Question 

Managerial Accounting

Overview:

Your case study takes you to a restaurant twice; visit one, you are alone, visit two you are with a group of friends. Answer all questions posed completely.

Managerial Accounting

Instructions:

Visit 1: 

You recently visited and closely observed the operations at a fast-food restaurant. Identify activities and costs at the restaurant that fall into each of the following categories:

Visit 2: 

You and your friends go to a restaurant as a group. At the end of the meal, the issue arises of how the bill for the group should be shared. One alternative is to figure out the cost of what each individual consumed and divide up the bill accordingly. Another alternative is to split the bill equally among the individual

Instructions:

Requirements:

Textbook

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