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Assignment BACC and BAIT 3

The document is an assignment for accounting students from the Institute of Finance Management regarding cost analysis and decision making for a restaurant called Cask Bar and Grill. [1] It provides cost information for the restaurant for different months and breakdowns of costs for one of their food items, roast goose. [2] Students are asked to analyze fixed and variable costs, develop a cost equation, calculate total costs at different volume levels, and evaluate options around outsourcing the preparation of roast geese. [3]

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27 views

Assignment BACC and BAIT 3

The document is an assignment for accounting students from the Institute of Finance Management regarding cost analysis and decision making for a restaurant called Cask Bar and Grill. [1] It provides cost information for the restaurant for different months and breakdowns of costs for one of their food items, roast goose. [2] Students are asked to analyze fixed and variable costs, develop a cost equation, calculate total costs at different volume levels, and evaluate options around outsourcing the preparation of roast geese. [3]

Uploaded by

sudeis omary
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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THE INSTITUTE OF FINANCE MANAGEMENT (IFM)

FACULTY OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

MANAGEMENT ACCOUNTING

PROGRAMME: BACC & BAIT 3

GROUP ASSIGNMENT

REQUIREMENT
You are required to create groups of ten (10) students for this assignment in your tutorial class
with the assistance and guidance of Tutorial Instructors. Individual work is highly discouraged.

The assignment report will be evaluated based on the quality of the analysis, clarity, organization,
and persuasiveness.

Submission Deadline: 20/12/2023 and all assignments will be


submitted to your Tutorial Instructor and signed to evidence
that your assignment has been submitted
Note: This assignment contains 20 marks in your total coursework of 40 marks
ASSIGNMENT QUESTION
Cask Bar and Grill operates a bar and restaurant at Rock City Mall in Mwanza City. It maintains a
good transaction processing system and has the following record regarding costs at different levels
of monthly sales in the number of guests served.

Year 2023
April May June
Monthly Sales in number of Guests Served 5,000 8,000 10,000
TZS ‘000’ TZS ‘000’ TZS ‘000’
Cost of sales (Food cost) 210,000 336,000 420,000
Salaries, wages, and benefits 150,000 156,000 160,000
Telephone 1,275 1,635 1,875
Rent on the shop 96,000 96,000 96,000
Depreciation on equipment 12,000 12,000 12,000
Utilities 25,000 32,500 37,500
Maintenance and repairs 10,000 14,800 18,000
Administrative costs 52,000 52,000 52,000

Though the business is small, the owner of Cask Bar and Grill Mr. Joe has a good management
accounting system. To better manage the costs, Mr. Joe separates the costs into fixed costs and
variable costs. After that, he makes use of a cost equation to predict the cost behaviour and
formulate the prices of the products. In addition, he is aware of the importance of strategic
management techniques.

One of the popular foods offered by Cask Bar and Grill is roast goose. Cask Bar and Grill prepares
roast geese in its kitchen. A fresh goose costs TZS 250,000 after special treatment and the roasting
process, it is sold in a restaurant for TZS 400,000. Detailed studies give the following information
about the costs of a goose:

TZS
Energy 25,000
Staff 10,000
Depreciation 25,000
Ingredients 15,000
Rent 15,000

Due to accelerating operating costs, Mr. Joe is considering outsourcing the preparation of the roast
geese to an external vendor. If it is outsourced, energy and ingredient costs can be saved. Since the
related equipment cannot be sold immediately, depreciation cannot be reduced. In addition, the
rent for the storage of equipment and for raw and finished geese will remain the same. Staff will
be deployed to perform other duties.

REQUIRED
a) Explain the meaning of fixed cost and variable cost. Based on the given information, state
which are the fixed costs and variable costs, and their respective amounts for Cask Bar and
Grill in April 2023. (15 marks)
b) Explain the meaning of mixed costs. Based on the given information, state the mixed costs
and their values for Cask Bar and Grill in April 2023. (20 marks)
c) Using the results from parts (a) and (b), work out a linear cost equation based on the number
of guests. Show your workings clearly. (20 marks)
d) What is the total cost in a month if the number of guests is 15,000? Provide TWO
assumptions in this calculation and show your workings clearly. (15 marks)
e) State THREE techniques commonly used by management accountants in the strategic
management accounting framework (10 Marks)

Many caterers face accelerating food costs and labour costs. To cope with such inflation,
outsourcing and centralized processing are two important trends in the catering business.

f) If a vendor offers to supply finished roasted geese at TZS 260,000 each, justify whether this
is a good deal. Show your calculations. (10 marks)
g) State ONE qualitative reason to support outsourcing and TWO qualitative reasons to object
to outsourcing (10 Marks)

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