100%(3)100% encontró este documento útil (3 votos)
658 vistas13 páginas
A bowl of chili costs $0.74 on a full-cost basis and $0.04 on an out-of-pocket basis. The full-cost includes direct materials, direct labor, and allocated overhead. The out-of-pocket cost only includes the relevant costs directly associated with producing the next batch/bowl of chili, such as ingredients and disposable materials like bowls and lids. Labor and other fixed costs are excluded from the out-of-pocket cost calculation. Based on assumptions provided about production volumes and costs, the document calculates the itemized costs to produce one batch of 37 bowls of chili.
A bowl of chili costs $0.74 on a full-cost basis and $0.04 on an out-of-pocket basis. The full-cost includes direct materials, direct labor, and allocated overhead. The out-of-pocket cost only includes the relevant costs directly associated with producing the next batch/bowl of chili, such as ingredients and disposable materials like bowls and lids. Labor and other fixed costs are excluded from the out-of-pocket cost calculation. Based on assumptions provided about production volumes and costs, the document calculates the itemized costs to produce one batch of 37 bowls of chili.
A bowl of chili costs $0.74 on a full-cost basis and $0.04 on an out-of-pocket basis. The full-cost includes direct materials, direct labor, and allocated overhead. The out-of-pocket cost only includes the relevant costs directly associated with producing the next batch/bowl of chili, such as ingredients and disposable materials like bowls and lids. Labor and other fixed costs are excluded from the out-of-pocket cost calculation. Based on assumptions provided about production volumes and costs, the document calculates the itemized costs to produce one batch of 37 bowls of chili.
Monday, CcLober 13, 2013 Cladys nlckerson Lln Zhang uesnon 1 now was Wendy's ab|e to ach|eve |ts |n|na| success and to grow so rap|d|y at a nme when the qu|ck-serv|ce hamburger bus|ness appeared to be saturated?
Wendy's was able Lo achleve lLs lnlual success and grew so rapldly aL a ume when Lhe qulck-servlce hamburger buslness appeared Lo be saLuraLed because of uave 1homas' bellef Lo creaLe blgger and beuer hamburgers LhaL were cooked Lo order, served qulckly [as he argued LhaL currenL hamburgers walL umes were way Loo long], and reasonably prlced." WlLh Wendy's, 1homas declded Lo go aer a dlerenL LargeL segmenL of Lhe hamburger markeL," namely young adulLs and adulLs. 1homas focused on hamburger quallLy ln llghL of Lhe seemlngly lnherenL low quallLy of hamburgers ln compeuLor qulck-servlce hamburger [olnLs, and also belleved he was oerlng up a dlerenL producL. Pls maln focus was Lhe hamburger. Wendy's old-fashloned hamburgers were made from fresh beef LhaL was served dlrecLly from Lhe grlll Lo Lhe cusLomer, noung our prevlous polnL LhaL Lhe quallLy dld noL decrease due Lo lL belng a qulck-servlce resLauranL. 1he unlque shape also dlerenuaLed a Wendy's hamburger from lLs compeuLors, whlch added Lo Lhe memorablllLy of Lhe pames. 1o sLay prlce compeuuve, Wendy's declded Lo llmlL Lhe number of menu lLems Lo four maln producLs. Powever, wlLh Lhe Lhree dlerenL Lypes of pauy cholces LhaL lndlvldual cusLomers could order, and Lhe many condlmenLs avallable, Wendy's was sull able Lo oer varleLy (236 posslble hamburger comblnauons). So hamburger varlauon was sull oered desplLe Wendy's llmlLed, and cosL- emclenL, menu.
C. nlckerson & L. Zhang 2 uesnon 2 What benehts m|ght have resu|ted from Wendy's' "||m|ted menu" concept? What were the d|sadvantages of such a concept? Why was the concept eventua||y d|sconnnued?
1he llmlLed menu" concepL was Lo promoLe compeuuve prlclng whlle sull malnLalnlng Lhe ablllLy Lo serve a quallLy producL. A beneL LhaL may have resulLed from Wendy's llmlLed menu was noL necessarlly cosL-eecuveness ln Lhe sense of dlrecL maLerlals (l.e. lngredlenLs), buL cosL-eecuveness ln Lhe sense LhaL research hours needed aL Lhe managemenL level Lo allocaLe cosLs for each menu producL and Lo prlce lLems were lower. ln shorL, Lhere are less admlnlsLrauve cosLs assoclaLed wlLh less menu lLems, and generally, fewer cosLs Lo Lake lnLo accounL. Slnce Wendy's already uses speclallzed machlnery Lo make many of lLs core four" menu lLems, fewer cosLs for new machlnery are lncurred. AnoLher beneL ls Wendy's apparenL goal and ablllLy Lo serve beuer-quallLy producLs Lhan lLs compeuLors aL Lhe ume. WlLh less menu lLems, Lhere are less quallLy assurance conLrol measures ln LoLal, Lhan lf Wendy's had sLarLed o wlLh a menu of 20 producLs wlLh 10 quallLy conLrol measures each. ldeally, Lhls would allow Wendy's more ume Lo focus on Lhe quallLy of lndlvldual producLs and Lo address lssues more qulckly.
C. nlckerson & L. Zhang 3 uesnon 2: Cont'd What benehts m|ght have resu|ted from Wendy's' "||m|ted menu" concept? What were the d|sadvantages of such a concept? Why was the concept eventua||y d|sconnnued?
A nal beneL ls Wendy's Way" and Lhe chlll advanLage. ln keeplng wlLh Wendy's Way," a seL of bellefs LhaL would resulL ln a successful company, chlll was added Lo Lhe llmlLed menu aer chooslng Lo malnLaln Lhe mosL deslrable producL mlx. Addlng chlll Lo Lhe menu prevenLs wasung Lhe hamburger pames and also provldes less problems for sLore managers slnce Lhere ls less pressure Lo serve any hamburger wlLh a pauy LhaL ls Loo well-done" and noL up Lo Lhe Wendy's hoL 'n [ulcy" sLandard. 1he absence of any excesslve lLems ln Wendy's llmlLed menu accounLed for savlngs whlch enabled Wendy's Lo be able Lo serve a cosL-eecuve quallLy producL, reLalnlng a compeuuve advanLage.
1he dlsadvanLages of such a concepL was Lhe lessened menu varleLy Lo cusLomers. Powever, ln Lhe case of Wendy's maln producL, Lhe hamburger, Lhls becomes less of an lssue. 8eLween Lhe Lhree dlerenL pauy cholces and all Lhe varylng condlmenLs, Wendy's was sull able Lo provlde up Lo 236 dlerenL burger varlauons.
C. nlckerson & L. Zhang 4 uesnon 2: Cont'd What benehts m|ght have resu|ted from Wendy's' "||m|ted menu" concept? What were the d|sadvantages of such a concept? Why was the concept eventua||y d|sconnnued?
AnoLher dlsadvanLage would be ln Lhe acqulsluon of new cusLomers. Many cusLomers would go Lo Wendy's for lLs unlque burger buL oLhers would frequenL oLher fasL food resLauranLs for new menu cholces. 8ecause of Wendy's llmlLed and sLagnanL cholce of four menu lLems, lL's noL as auracuve as oLher fasL-food resLauranLs, so lL llmlLs Lhe chances of a new cusLomer golng Lo Wendy's for a unlque producL. LasLly, Wendy's was unable Lo keep pace wlLh oLher compeuLors aL Lhe ume ln Lerms of havlng new and exclung menu cholces. Mcuonald's and 8urger klng, for lnsLance, conunued Lo release novel menu lLems. Lach new producL came wlLh a level of buzz" or word-of-mouLh markeung LhaL was noL apparenL for Wendy's. 1herefore, oLher fasL food esLabllshmenLs may malnLaln a compeuuve advanLage over Wendy's ln Lerms of producL oerlngs.
Wendy's llmlLed menu concepL was evenLually dlsconunued ln Lhe laLe 1970's because Lhe managemenL faced some upcomlng formldable challenges. Cne of Lhem was cruclal Lo Lhe llfe of Lhe already shorL-llved llmlLed menu concepL. Wendy's ma[or compeuLors had subsLanually lmproved Lhe quallLy of Lhelr producLs, servlce, and faclllues," and worse: Lhey had been, ln an aggresslve manner, lnLroduclng new menu lLems. Wendy's declded Lo dlsconunue Lhls ldea of a llmlLed menu ln order Lo keep up wlLh and llmlL Lhelr compeuLors' growlng advanLage over Lhem.
C. nlckerson & L. Zhang 3 uesnon 3 Why was Wendy's' dr|ve-through w|ndow successfu| when other qu|ck-serv|ce restaurant cha|ns had been unsuccessfu| at |mp|emennng the same concept?
1hls success was a resulL of Wendy's declslon Lo lmplemenL Lhese wlndows ln mosLly urban or densely populaLed, suburban areas. A loL of Lhelr success was dependenL on servlng a large number of cusLomers. Wendy's was able Lo caplLallze on lLs drlve- Lhrough wlndows because of Lhelr declslon Lo puL Lhem ln Lhese areas where people are more oen Lhan noL, busy enough Lo uullze Lhe drlve-Lhrough or even due Lo Lhe facL LhaL Lhere ls saLuraLed populauon per square mlle ln Lhese areas. Addluonally, Wendy's concepL of Lhe drlve-Lhrough wlndow was falrly newly lmplemenLed, and Lhey were able Lo use Lhls facL as an early compeuuve advanLage. 1hls made Wendy's sLand ouL and subsequenLly garner more proL because of Lhe auracuon and popularlLy lL gave Wendy's. CLher resLauranL chalns had been unsuccessful aL Lhls because of Lhe decrease ln buzz" aer each subsequenL lmplemenLauon of Lhe drlve-Lhrough wlndow.
C. nlckerson & L. Zhang 6 uesnon 4 now much does a bow| of ch||| cost on a fu||- cost bas|s? An out-of-pocket bas|s?
Genera| Assumpnons A full-cosL basls ls dened as Lhe LoLal cosL of producuon Lowards a baLch/cup of Wendy's chlll, lncludlng ouL-of-pockeL cosLs, dlrecL cosLs, and lndlrecL cosLs. 1he ouL-of-pockeL cosLs lnclude cosLs LhaL are deemed relevanL cosLs" or cosLs LhaL are dlrecLly assoclaLed wlLh Lhe producuon of Wendy's chlll. lurLhermore, we concluded LhaL Lhese ouL-of-pockeL cosLs are all cosLs assoclaLed wlLh produclng Lhe nexL baLch/cup of chlll (l.e. no sunk cosLs such as a one-ume cosL Lo buy speclal machlnery for Lhe klLchen). CosLs are calculaLed for one baLch of chlll, whlch makes 37 elghL ounce servlngs. 1he producuon process has noL changed over ume. Lmployees conslsLenLly work Lhe same number of hours each day.
C. nlckerson & L. Zhang 7 uesnon 4: Cont'd now much does a bow| of ch||| cost on a fu||- cost bas|s? An out-of-pocket bas|s?
Assumpnons 8eef pames are only lncluded as an ouL-of-pockeL cosL ln Lhe monLhs of CcLober Lhrough March, when Lhere was need Lo cook meaL speclcally for Lhe chlll (occurred 10 of Lhe ume). CuL-of-pockeL cosLs are calculaLed as 0.3 * 0.1 * $42 = $2.10
Ingred|ents (D|rect Mater|a|s) uannty Cost per Un|t Iu|| Costs Cut-of-ocket Costs Cost per 8atch Cost per 8ow| Cost per 8atch Cost per 8ow| Can of crushed LomaLoes 1 $2.73 $2.73 $0.03 $2.73 $0.03 46 oz. can of LomaLo [ulce 3 $1.23 $6.23 $0.11 $6.23 $0.11 Wendy's seasonlng packeL 1 $1.00 $1.00 $0.02 $1.00 $0.02 Cans of red beans 2 $2.23 $4.30 $0.08 $4.30 $0.08 Cooked beef pames 12 (lbs.) $3.30 $42.00 $0.74 $2.10 $0.04 C. nlckerson & L. Zhang 8 uesnon 4: Cont'd now much does a bow| of ch||| cost on a fu||- cost bas|s? An out-of-pocket bas|s?
Assumpnons Spoons are noL counLed ln ouL-of-pockeL cosLs because Lhey are sLocked regardless of wheLher Lhe chlll ls sold. ln oLher words, spoons are used for oLher lLems on Lhe menu as well (such as lrosues). 1hls conLrasLs wlLh bowls and llds, whlch we assume are used speclcally for Lhe chlll. AlLhough llds are used speclcally for chlll sold aL a carry-ouL wlndow, we assume LhaL Wendy's purchases Lhe same quanuLy of llds and bowls.
Utens||s (Ind|rect Mater|a|s) uannty Cost per Un|t Iu|| Costs Cut-of-ocket Costs Cost per 8atch Cost per 8ow| Cost per 8atch Cost per 8ow| Servlng 8owls 37 $0.033 $1.993 $0.033 $1.993 $0.033 Llds 37 $0.023 $1.423 $0.023 $1.423 $0.023 Spoons 37 $0.01 $0.37 $0.01 $0.00 $0.00 C. nlckerson & L. Zhang 9 uesnon 4: Cont'd now much does a bow| of ch||| cost on a fu||- cost bas|s? An out-of-pocket bas|s?
Assumpnons Cnly Lhe asslsLanL manager ls lnvolved ln Lhe producuon of Lhe chlll. So hls $10.30 wage ls $0.173 per mlnuLe. 1here are no ouL-of-pockeL labor cosLs. 1hls ls because Lhe hours worked by Lhe assoclaLe manager are sunk - Lhey would be worklng Lhe same hours regardless of wheLher Lhey were maklng Lhe chlll or noL. Labor cosLs lnclude payroll Laxes. Slnce lL Lakes 10-13, Lhe ume Lo prepare a poL of chlll Lakes an average 12.3 mlnuLes. 1he chlll ls surred for 30 seconds of each hour for 3 hours (average of 4-6 hours of cooklng ume for a baLch).
Labor Costs M|nutes Wage per m|nute Iu|| Costs Cut-of-ocket Costs Cost per 8atch Cost per 8ow| Cost per 8atch Cost per 8ow| reparauon 12.3 $0.173 $2.1873 $0.0384 $0.00 $0.00 CbLalnlng pames from cooler 1 $0.173 $0.173 $0.0031 $0.00 $0.00 Cooklng pames 10 $0.173 $1.73 $0.0307 $0.00 $0.00 Chopplng pames 3 $0.173 $0.873 $0.0134 $0.00 $0.00 Surrlng pames 2.3 $0.173 $0.4373 $0.0077 $0.00 $0.00 C. nlckerson & L. Zhang 10 uesnon 4: Cont'd now much does a bow| of ch||| cost on a fu||- cost bas|s? An out-of-pocket bas|s?
kesu|ts 8y summlng Lhe full and ouL-of-pockeL cosLs for an 8oz. bowl of chlll, we geL: lull cosLs per 8oz. bowl of chlll: 51.16 CuL-of-pockeL cosLs per 8oz. bowl of chlll: 50.3S
C. nlckerson & L. Zhang 11 uesnon S Ior determ|n|ng the true prohtab|||ty of ch|||, how much does a bow| of ch||| rea||y cost?
Cnly cosLs LhaL are speclcally relaLed Lo Lhe producuon of chlll should be lncluded ln Lhe calculauon of Lrue proLablllLy. 1hus, we do noL lnclude sunk cosLs and cosLs LhaL were already allocaLed Lo Lhe producuon of hamburgers. 1hus, Lhe ouL-of-pockeL cosLs deLermlne Lhe Lrue proLablllLy of a bowl of chlll. 1he cosL of each bowl of chlll ls $0.33.
C. nlckerson & L. Zhang 12 uesnon 6 Wou|d you recommend dropp|ng ch||| from the menu? Why or why not?
C. nlckerson & L. Zhang 13 Slnce Lhe Lrue cosL assoclaLed wlLh Lhe proLablllLy of chlll ls $0.33, and Lhe prlce of an 8oz. bowl of chlll ls $0.99, Lhere ls a slgnlcanL proL margln for keeplng chlll on Lhe menu.