- What is Gina's operating income for an average month (without the special order) under a) absorption costing b) variable costing. Assume there is no beginning or ending inventory.
On average on any given day, 80% of the chicken used in the soup consists of the leftover cooked chicken from the prior day. The remaining 20% consists of fresh chicken cooked for the soup then added. The building which houses the restaurant consists of two floors with the restaurant and storeroom on the first level and an office and office storage area on the second level. It has 2,000 square feet for the upper-level office and 100 for the storage area; the square footage for the lower level is 1,800 sq. ft. for the restaurant and 700 sq.ft. for the storeroom. There are 3 workers: Gina, who takes a salary of $5,000 per month and two worker paid $20/hour. Gina orders the groceries and takes inventory. The two hourly employees serve the customers, pack the soup, prep the ingredients for the soup, cook the chicken, and clean up. Gina makes the soup and oversees the restaurant & is also the cashier. The hourly workers work 40 hour weeks. Gina sells the 8oz cup of soup for $3.99 and the 12 oz for $5.49. On average Gina sells 5,500 cups of soup a month: 3,000 of the 8 oz and 2,500 of the 12 oz. Gina has the capacity to make 6,000 cups of soup a month-in the same ratio as noted here (3,000:2,500). MATERIALS 6 gallons of filtered water 3 pounds of chicken, breasts, thigh ground 1 pound of carrots 5 stalks of celery, chopped 3 cups of dried egg noodles 1 ounce of seasoning Salt and pepper Condiments (misc. seasonings) COST $1.00 per five gallon jug .69 per pound for thighs,.99 for breasts, the ratio of breasts to thighs is 2:1, 2 pounds of breast meat to 1 pound of thigh meat .39 per pound .79 per bunch, average 8 stalks per bunch $1.00 for a 36 oz. bag of noodles $2.00 per pound .15 each 0.50 PACKAGING 8 oz containers with lid .75 for both average.25 per order (whether take out or eat-in) .90 for both Spoon & napkins 12 oz container with lid LABOR Time to grind chicken Time to chop celery Time to chop carrot Time to cook the chicken Packaging time Time to assemble ingredients & put in soup 15 minutes for 5 pounds 15 minutes for whole bunch 10 minutes per pound 20 minutes total average 5 minutes 15 minutes per batch (5 gallons) Time to reorder groceries Time to count inventory & determine need Counter staff (serving in customers) Cleaning work To-go time Time to complete acctg & tax requirements OVERHEAD 1 hour per week 2 hours per week 15 minutes per customer 2.5 hours a day 10 minutes per order 3-5 hours per week Utilities Rent on building Depreciation of Kitchen equipment Depreciation of Office equipment $800 per month $3,200 per month $700 per month $1000 per month On average on any given day, 80% of the chicken used in the soup consists of the leftover cooked chicken from the prior day. The remaining 20% consists of fresh chicken cooked for the soup then added. The building which houses the restaurant consists of two floors with the restaurant and storeroom on the first level and an office and office storage area on the second level. It has 2,000 square feet for the upper-level office and 100 for the storage area; the square footage for the lower level is 1,800 sq. ft. for the restaurant and 700 sq.ft. for the storeroom. There are 3 workers: Gina, who takes a salary of $5,000 per month and two worker paid $20/hour. Gina orders the groceries and takes inventory. The two hourly employees serve the customers, pack the soup, prep the ingredients for the soup, cook the chicken, and clean up. Gina makes the soup and oversees the restaurant & is also the cashier. The hourly workers work 40 hour weeks. Gina sells the 8oz cup of soup for $3.99 and the 12 oz for $5.49. On average Gina sells 5,500 cups of soup a month: 3,000 of the 8 oz and 2,500 of the 12 oz. Gina has the capacity to make 6,000 cups of soup a month-in the same ratio as noted here (3,000:2,500). MATERIALS 6 gallons of filtered water 3 pounds of chicken, breasts, thigh ground 1 pound of carrots 5 stalks of celery, chopped 3 cups of dried egg noodles 1 ounce of seasoning Salt and pepper Condiments (misc. seasonings) COST $1.00 per five gallon jug .69 per pound for thighs,.99 for breasts, the ratio of breasts to thighs is 2:1, 2 pounds of breast meat to 1 pound of thigh meat .39 per pound .79 per bunch, average 8 stalks per bunch $1.00 for a 36 oz. bag of noodles $2.00 per pound .15 each 0.50 PACKAGING 8 oz containers with lid .75 for both average.25 per order (whether take out or eat-in) .90 for both Spoon & napkins 12 oz container with lid LABOR Time to grind chicken Time to chop celery Time to chop carrot Time to cook the chicken Packaging time Time to assemble ingredients & put in soup 15 minutes for 5 pounds 15 minutes for whole bunch 10 minutes per pound 20 minutes total average 5 minutes 15 minutes per batch (5 gallons) Time to reorder groceries Time to count inventory & determine need Counter staff (serving in customers) Cleaning work To-go time Time to complete acctg & tax requirements OVERHEAD 1 hour per week 2 hours per week 15 minutes per customer 2.5 hours a day 10 minutes per order 3-5 hours per week Utilities Rent on building Depreciation of Kitchen equipment Depreciation of Office equipment $800 per month $3,200 per month $700 per month $1000 per month
