The Blue Caf and Restaurant operates in the CYT building. The Caf is located on the 3
Question:
The Blue Café and Restaurant operates in the CYT building. The Café is located on the 3rd floor, selling coffee, dessert, and soft drinks from 08:15 to 16:30 from Monday to Friday. The Café also serves simple lunch during 11:30-14:00, including spaghetti, hamburgers, and set meals. The restaurant is located on the 5th floor, offering buffet lunch to registered members only during 12:00-14:00 from Monday to Friday.
Suppose the general manager of Blue wants to assess the cost and profit of the two sections, Café on the 3rd floor and the restaurant on the 5th floor. As an assistant account, you are trying to put together some cost information for the meeting in the next week.
1) List all direct costs that you can think of with respect to the two sections respectively. Explain why and make necessary assumptions.
2) List all indirect costs that you can think of with respect to the two sections. Explain why and make necessary assumptions.
3) For all the indirect costs that you have identified in 2), suggest appropriate cost pools and cost allocation bases.
4) For all the costs that you have identified in both 1) and 2), explain whether they are fixed or variable costs.
5) The Blue was closed throughout the year 2020-2021 due to covid-19. Provide suggestions to the manager about how the cost structure can be adjusted to deal with future uncertainty resulting from Covid-19
Expert Answer:
1 Direct costs for the caf on the 3rd floor include Coffee beans Milk Sugar Cups Utensils Cleaning s... View the full answer
