Question

Decompose the Income Statement into labor and facility sustaining cost pools. Divide the cost pools into activity centers at the ratio of 40% for the BOH and 60% for the FOH. Display in the table.

Revenue	$111,122.85
F&B cost	$46,940.33
Salaries	$6,000.00
Employer Taxes	$779.63
Employee Meals	$200.30
Telephone	$14.18
Equipment Leases	$46.38
Travel & Entertainment	$17.88
Utilities	$700.00

Activity Centers	Labor	Facility Sustaining
FOH
BOH
Total

4. Based on the calculation from #3, calculate cost pool rates

50. Total hours worked FOH = 800 hours
50. Total hours worked BOH = 600 hours

Answer:

5. Calculate an allocation value per menu item for the Facility Sustaining cost pool. The number of menu items sold during the month = 2,000.

Answer:

6. Last week, 9.75 bottles of 1L Jack Daniel was used. The POS system recorded sales of 102 drinks. If the standard drink size is 1.50 oz, how many potential drinks should have been sold last week?

Answer:

7. Last week, 9.75 bottles of 1L Jack Daniel was used. The bar pays $25 per bottle and the POS system recorded sales of 98 drinks. If the standard drink size is 1.30 oz and is sold for $6.00 per drink, what is the actual cost % of Jack Daniel?

Answer:

8. The Night Owl Bar sold 189 of Chivas Regal last month generating sales of $897.75. A bottle of Chivas Regal costs $38.95, with a bottle size of 1.5L. A standard drink size of 1.20 oz is sold for $6.25. The bar sells 32 brands and 9 categories. If the total liquor CM is $17.762.42 and total CM for Whisky category is $1.723.51, what is the profit factor for Whisky category?

Answer:

Answer 1

I. Based on the calculation from #3, calculate cost pool rates

a. Total hours worked FOH = 800 hours

b. Total hours worked BOH = 600 hours

Answer: 1. Statement showing Components of cost pools: Cost Pools Labour Facility Sustaining a. F&B Costs $ 46,940.33 Nil b. Salaries $   6,000.00 Nil c. Employer Taxes $      779.63 Nil d. Employee Meals $      200.30 Nil e. Telephone Nil $   14.18 f. Equipment Lease Nil $   46.38 g. Travel & Entertainment Nil $   17.88 h. Utilities Nil $ 700.00 Total Cost Pool [(a) to (h)] $ 53,920.26 $ 778.44 2. Allocation of Cost pools to activity centres: As provided in the Question, the total of Cost pools as arrived in Working Note – 1 will be allocated to BOH and FOH cost activity centres in the ratio of 40% and 60% respectively as follows: Activity Centres Labour Facility Sustaining a. FOH (60%) $    32,352.156 ($ 53,920.26 x 60%) $    467.064 ($ 778.44 x 60%) b. BOH (40%) $    21,568.104 ($ 53,920.26 x 40%) $    311.376 ($ 778.44 x 40%) Total [(a)+(b)] $      53,920.26 $      778.44 3. Calculation of per hour cost pool rates: Activity Centresà FOH BOH a. Total Cost allocated - Labour - Facility Sustaining Total (a) $    32,352.156 $         467.064 $      32,819.22 $    21,568.104 $         311.376 $    21,879.376 b. No. of hours worked 800 hours 600 hours c. Cost Per hour [(a)/(b)] $      41.024 (approx.) $      36.466 (approx.)

II. Calculate an allocation value per menu item for the Facility Sustaining cost pool. The numberof menu items sold during the month = 2,000.

Answer: 1. Calculation of allocation value per menu item for the facility sustaining cost pool:             Particulars Data a. Total cost pool of facility sustaining cost centre (Refer W.N-1 of Question I) $ 778.44 b. Total menu items during the month 2,000 menu items c. Cost per menu item [(a)/(b)] $ 0.38922 per menu item

III. Last week, 9.75 bottles of 1L Jack Daniel was used. The POS system recorded sales of 102 drinks. If the standard drink size is 1.50 oz, how many potential drinks should have been sold last week?

Answer: 1. Calculation of sale of potential drinks: Particulars Data a. Volume of Jack Daniel used last week (9.75 bottles x 1 litre per bottle) 9.75 litres b. Unit of Conversion (1 litre into oz) 33.814 oz per litre c. No. of oz units for 9.75 litres [(a)x(b)] 329.6865 oz d. Standard drink size 1.50 oz per drink e. No. of potential units that would have been sold during last week [(c)/(d)] 219 drinks (approx.)

IV. Last week, 9.75 bottles of 1L Jack Daniel was used. The bar pays $25 per bottle and the POS system recorded sales of 98 drinks. If the standard drink size is 1.30 oz and is sold for $6.00 per drink, what is the actual cost % of Jack Daniel?

Answer: 1. Calculation of actual cost % of Jack Daniel: Particulars Data a. No. of drinks sold 98 drinks b. Standard Quantity per drink 1.30 oz per drink c. Total Volume of Jack Daniel used [(a)x(b)] 127.40 oz d. Sale value per drink $ 6.00 e. Total Sale value [(a)x(d)] $ 588.00 f. Cost of 9.75 litres of Jack Daniel purchased (9.75 bottles x $ 25 per bottle) $ 243.75 g. Volume of Jack Daniel purchased (in oz) [Refer W.N-5(c)] 329.6865 oz h. Cost of Jack Daniel sold [Cost per oz of Jack Daniel x No. of oz units sold] ={[(g) / (f)] x (c)} $ 172.316 i. Actual cost %age of Jack Daniel [(Cost of Jack Daniel Sold/Total Sales) x 100] = {[(h)/(e)]*100} 29.3054% (approx.)

V. The Night Owl Bar sold 189 of Chivas Regal last month generating sales of $897.75. A bottle of Chivas Regal costs $38.95, with a bottle size of 1.5L. A standard drink size of 1.20 oz is sold for $6.25. The bar sells 32 brands and 9 categories. If the total liquor CM is $17.762.42 and total CM for Whisky category is $1.723.51, what is the profit factor for Whisky category?

Answer: 1. Calculation of Profit factor for Whisky category: Profit factor for a Whisky category can be derived based on magnitude of contribution margin of Whisky category to the total contribution of Liquor which is as follows: Ø Profit Factor for Whisky category = (Contribution margin for Whisky category/Contribution margin for total liquor) x 100 = $   1,723.51 x100     $ 17,762.42 = 9.7031% (approx.)