Question

Think about your favorite restaurant or fast-food restaurant. The general manager of that restaurant has hired you to help classify all the costs that are involved in running the restaurant and keeping the customers satisfied. Think about its business operations as you answer the following questions.

Describe all business activities from the time a customer arrives to the time that customer departs.

List all costs you can identify with the separate activities described in question 1.

Classify each cost from question 2 as fixed, variable, or mixed and explain your classification.

Answer 1

Answer)

Business activities are:

Here,as soon as the customer arrives there is elictricity provided through fans,air conditioners ,lights and so on.Then a employee goes to the customer to pick the order,bring their order,serve them and so on.Then the The chef performs another activity that is cooking.Along with it purchase of cooking materials like meat,chicken,vegetables,oils etc. Then billing,cash collecting etc is activities perform by cashier.

Costs identified with the separate activities:

Electricity bill,Salary of the server,salary of the chef,Raw material purchases,costs for conversion of raw material to food,depreciation of the equipment,Salary for the cashier,other miscellaneous like paper and stationery for billing,noting the order etc,building rent.

Callsification of costs:

Here salary of the server,chef, cashier,building rent, depreciation comes under fixed costs as they remain constant regardless the services and sales of customers.

Then cost of raw material,their conversion costs, miscellaneous items,packaging costs.comes under variable costs as it is changes based on orders of customers.

Electricity comes under mixed costs as it have certain percentage compulsory payable and rest on units utilised.