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MA Wendy S Group1
MA Wendy S Group1
MA Wendy S Group1
Assignment
Wendys Chili :
A Costing Conundrum
Prepared by:
Amit Yadav
Ashish Khola
Khushit Mehta
Rohit Nadgouda
Sameeksha Gupta
5A
12A
21A
37A
42A
Introduction
Four offerings Hamburger, French fries, Frosty dairy dessert and Chili
Growth by franchising
Income from sales and franchise royalties being the major avenues of
revenue
By the onset of the third millennium, elimination of one food item was
deemed necessary
Advantages:
Disadvantages:
Started in 1970s
Assumptions:
Time taken for preparation is assumed 15 minutes (as average is 10-15
minutes; but, the different activities add up to more than 15 minutes
so higher range is taken)
Assistant manager is the only staff member to work on chili
preparation hence only his salary is considered
0.046
0.003
0.663
0.373
0.069
0.004
0.995
0.560
All the data for servings is calculated for an 8 oz. intended pot, consisting
of 57 servings
Thus, we have reduced the sunk costs from the full cost to arrive at the
out-of-pocket cost
Chili is the fourth item on the menu and is a separate offering which
requires 12 pounds of beef patties per serving.
However, the beef patties are taken from pre-cooked previous patties for
90% of the time, so 90% of the cost of patties ($42 per batch) is
subtracted as sunk cost, since the patties would have gone waste anyway
Profitability of Chili
Item sold
Cost
Revenue (Price) Profit
Both the variants are profitable
8 Ounce
0.373
0.99
12 Ounce
0.560
1.59
0.617
1.030
Thank You