=+10-32 KK Responsibility in a restaurant OBJECTIVE 5 Barney Stanson owns a restaurant franchise that is part
Question:
=+10-32 KK Responsibility in a restaurant OBJECTIVE 5 Barney Stanson owns a restaurant franchise that is part of a chain of restaurants. One of the chain’s popular breakfast items is pancakes and maple syrup. Central Warehouse makes and refrigerates the pancake mix, which is then sold to the franchise stores;
there, it is cooked in the individual stores by the cook. Each franchise also has a purchasing agent who orders the pancake mix (and other items) based on expected demand. In March 2015 one of the fridges in Central Warehouse breaks down and pancake mix production is reduced by 25% for three days. During those three days, Barney’s franchise runs out of pancake mix but demand does not slow down. Barney’s franchise cook, Janet Truong, sends one of the kitchen helpers to the local grocery store to buy refrigerated pancake mix. Although the customers are kept happy, the refrigerated mix cost Barney’s franchise three times the cost of the Central Warehouse refrigerated pancake mix, and the franchise loses money on this item for those three days. Barney is angry with the purchasing agent for not ordering enough pancake mix to avoid running out of stock, and with Janet for spending too much money on the replacement pancake mix.
Required Who is responsible for the cost of the pancake mix? At what level is the cost controllable? Do you agree that Barney should be angry with the purchasing agent? With Janet? Why or why not?
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 9781442563377
2nd Edition
Authors: Monte Wynder, Madhav V. Rajan, Srikant M. Datar, Charles T. Horngren, William Maguire, Rebecca Tan