ACC 302

Dr. Ken Lorek

Wendy’s Chili

Each group needs to answer the following questions pertaining to the Wendy’s
Chili Case in our supplementary packet. Your answer to question 1) below should
consist of two pieces, an exhibit or table that shows your specific cost calculations, and a
page which explains the logic behind the numbers. Make sure the exhibit or table can be
used as an overhead in your presentation (if your group is presenting). Question 2) can
be answered in a paragraph while the answer to question 3) will require about a page of
discussion.

1) How much does it cost Wendy’s to make a bowl of chili? Explain your
calculations, and why you believe your calculations reflect the real cost
of the chili. (HINT: Make certain that you only include costs that
would disappear if Wendy’s dropped Chili from the menu.) Also discuss
any other relevant costs of making a bowl of chili that you would
include if you had more specific information.

2) How does chili’s gross profit percentage compare to other basic

products? (HINT: You need to compare the gross profit percentage of
chili to all products other than chili. The case provides sufficient data
for you to make this calculation.)

3) Would you recommend that Wendy’s drop chili from the menu? Why
or why not? Explain.