Christa Schuller owns an outlet of a popular chain of restaurants in the southern part of Germany.

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Christa Schuller owns an outlet of a popular chain of restaurants in the southern part of Germany. One of the chain’s popular lunch items is the cheeseburger. It is a hamburger topped with cheese. On demand, purchasing agents from each outlet orders the cheese and meat patties from the Central Warehouse. In January 2020, one of the freezers in Central Warehouse broke down and the production of meat patty and storing of cheese were reduced by 20–30% for 4 days. During these 4 days, Christa’s franchise runs out of meat patties and cheese slices while facing a high demand for cheeseburgers. Christa’s chef, Kelly Lyn, decides to prepare cheeseburgers using ingredients from a local market, sending one of the kitchen helpers to the market to buy the ingredients. Although the customers are satisfied, Christa’s restaurant has to pay twice the cost of the Central Warehouse’s products to procure meat and cheese from the local market, and the restaurant loses money on this item for those 4 days. Christa is angry with the purchasing agent for not ordering enough meat patty and cheese to avoid running out of stock, and with Kelly for spending too much money on the procurement of meat and cheese.


Required

Who is responsible for the cost of the meat patty and cheese as ingredients of a cheeseburger? At what level is the cost controllable? Do you agree that Christa should be angry with the purchasing agent?  With Kelly? Why or why not?

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Horngrens Cost Accounting A Managerial Emphasis

ISBN: 9780135628478

17th Edition

Authors: Srikant M. Datar, Madhav V. Rajan

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