As global economies re-open in the aftermath of major country-wide lockdowns, businesses are being forced to re-evaluate how they conducted business in the past. One of the areas being scrutinised even more than before is their expenses and overheads.

It is wildly believed that lean organisations have a better chance at surviving the current economic conditions, unless vaccines are developed.

A few months ago, these vaccines did not have definite dates or definite success rates. However, Pfizer recently published that their best vaccine candidate has a success rate of 90 percent. This has bolstered business confidence overnight, across many industries. The latter has woken up the ailing restaurant sector, with renewed vigour in many areas i.e. cost restructures are now of dire importance & are being fast tracked.

As a result, your local Indian restaurant has decided to adopt an activity-based costing system to estimate the cost of the various courses that are currently being performed here. However, there are questions about whether an activity-based costing system has any demonstrable merit over traditional "top-to-bottom" budgeting processes.

Required:

1)Identify the principal activities that are carried on by employees in the restaurant

2)Make a few suggestions as to the potential activity drivers for each of these processes.

3)As a contrast, prepare an optimistic budget for the total revenue/cost of the Indian restaurant that you are analysing and for which you are completing this assignment. This can include a revenue line where your revenue can be assumed to be 20 percent higher (or more) than your costing.

Costing can be in terms of 10-15 different costs inspired by any realistic estimate you deem comparable to a restaurant or food manufacturer setting.

*Please use Excel, charts or any other graphical device (e.g. powerpoints) you deem necessary for presenting your figures clearly.

Here's an example of how you can present the income statement:

Budget $$

Revenue

xxx

Income stream A

xxx

Income Stream B

xxx

Operating Expenses

Cost A

xx

Cost B

xx

Cost C

xx

(Use as many categories as you deem necessary)

Operating income

x

Other income/Expenses

Cost d

x

cost e

x

x

Net Income

x

4)Now that you have experienced the budgeting process, do you feel that an activity based costing process would have presented any advantage over the traditional approach you took in question in 3 & 5.