Question 1. Explain which of the proposed business expansion strategies are consistent with OSI's strategic focus?

Question 2. Calculate the variances from budget for Sushi Prince

Question 3. Explain the reasons behind the variances for Sushi Prince, using case facts.

Question 4. For Appendix III, calculate the optimal production of the three products and the profitability at that production level. (MUST be done in Excel)

well, Jeff was an award-winning chef at an exclusive Japanese restaurant for many years before opening OSI. Another key to OSI's success has been maintaining strong relations with only a few key suppliers of seafood, meats, and poultry for many years has generated strong loyalty in terms of efficient service and delivery. This has allowed OSI to obtain the best quality and selection of items to serve in its restaurants. ONTARIO SUSHI INC.

It is now October 19, 2018 and you, CPA, are a manager with Yorkville Consultants. You have recently been hired to provide consulting advice to Ontario Sushi Inc. (OSI). Jeff Fung is the sole owner of OSI's shares and manages overall operations.

OSI has operated award-winning Japanese restaurants in Toronto for the past ten years. OSI's mission has always been to provide the ultimate dining experience by serving the highest quality and freshest ingredients, with the widest variety of regular and exotic items on its menu, all provided with impeccable service in an authentic Japanese setting.

OSI's key success factors include focusing on activities at which it excels. For example, Jeffs best friend, Brandon Ling, manages the restaurants and has over 20 years of experience. As

A few weeks ago, Brandon raised the possibility of expanding OSI's core operations. Jeff has briefly looked at the proposals but wants you to evaluate these proposals to assess the consistency with the company's strategic focus that has allowed OSI to be so successful to date. You met with Brandon to discuss the proposed expansion ideas and your notes from the meeting are provided in Appendix I.

Jeff mentioned that one of his restaurants has not been as profitable as budgeted. Jeff would like you to prepare an analysis of the variances and explain the reasons for the cause of the variances. You met with Jeff and your notes from the meeting are provided in Appendix II.

During the year, Jeff inherited a food preparation business. The business is completely independent of OSI's core restaurant operations. The food items are prepared in a factory and sold in local supermarkets. Additional information on this business is provided in Appendix III.

the budget for Sushi Prince for the last month:

Meals sold Sales Ingredients cost per meal Variable overhead per meal

13,500 $377,500 $11.00 $3.00

Jeff provided the following excerpts based on the actual results for the month:

Meals sold Meals prepared Average sales price per meal Ingredients cost per meal Variable overhead per meal

13,255 13,613 $23.50 $11.75 $2.90

Jeff mentioned that the economy is weakening and he is finding that customers are reacting by eating out less frequently and reducing the amount that they spend on meals, but Jeff thought that he had incorporated this into his budget. A new Mexican restaurant, Taco Tuesdays, opened down the street from Sushi Prince at the beginning of the month and Jeff is convinced that this is the main cause of the variances from budget. Servers were complaining that there were less customers as a result.

Jeff mentioned that a few suppliers had increased their prices of some of the more exotic items served on the menu as these items are becoming harder to procure. There have also been several issues with errors in meal preparation due to server carelessness or incorrect orders being prepared in the kitchen. The city implemented new rebates on the cost of some utilities during the month.

APPENDIX III INHERITED FOOD PREPARATION BUSINESS

The factory produces three major items: sushi platters, sashimi platters, and bento boxes. The items are mass-produced with emphasis placed on efficiency over quality. Bento boxes are the best-selling item and are popular with customers because they combine a variety of foods in one meal.

Sushi Sashimi Platters Platters

Bento Boxes

Expected sales

80,000

90,000

100,000

Selling price Material costs Variable overhead

$12.00

4.00 1.40

$14.00

5.00 0.90

$15.00

4.80 1.00

Direct labour hours

0.20

0.15

0.30

Identifiable fixed costs pertaining to the three items being produced totals $450,000 per year, which is traceable as follows: 28% for sushi platters, 40% for sashimi platters, and 32% for bento boxes. Identifiable fixed costs would not be incurred if production of that product ceases.

The factory is currently operating at maximum capacity because of a constraint on labour hours. It is not possible to hire additional employees due to a lack of physical space on the factory floor. There is no desire to expand the size of the factory at this point in time. There are an equivalent of 10 full-time employees who work 8 hours per day, 350 days per year at an average wage of $15 per hour. Currently, labour hours are allocated as follows: 10,000 sushi platter; 6,000 sashimi platter; and 12,000 bento boxes.

Jeff would like you to determine the optimal production for the three products and the company's profitability at that production level.