Read the “Wendy’s chili: A costing conundrum” case, then answer the questions below. For each question, include all relevant costs of ingredients, serving pieces, and labor (including payroll taxes and other employee-related costs) as described.
Important note: There is a typo in Table 5 of the case – Assistant Manager pay is $10.50/hour (not $0.50).
Submission and format requirements
Your completed assignment is due to Canvas on the date and time noted on the day-by-day class schedule on the syllabus (see the policy on missed deadlines in the syllabus).
Excel is recommended to avoid typing errors in formulas with Word.
You must show your work to earn credit for answers – even if you have a reasonable answer, you will not receive full or partial credit if computations are not provided.
1)Assume the costs of the meat and labor for the well-done patties is allocated to chili, but no additional meat needs to be cooked. Compute the full cost per-8-oz. serving of producing chili. Show computations. (15 points)
2)Assume the costs of the meat and labor for the well-done patties is allocated to hamburgers, not chili.
However, also assume that Wendy’s sometimes needs to cook patties especially for chili, particularly during the months when chili is especially popular with customers; those costs are allocated to chili.
Given this, how does this change the cost per-8-oz. serving of chili? Describe your logic and show computations. (5 points)
3)Assume that:
If chili is not made, the well-done patties are discarded and those who prepare the chili will work on other tasks; and,
Ground beef is never cooked specifically for chili.
Given this, what is the incremental cost of one 8-oz. serving of chili? Describe your logic and show computations. (5 points)
Sample Solution