The following are three decisions that Bobby Ray needs to make. Bobby manages an up-market restaurant in Miami, Florida, and has considerable discretion over its operations.
Decision 1: Whether to convert the restaurant from a European to an Asian theme.
This change will require substantial redecoration.
Decision 2: Which celebrity chefs to showcase? The restaurant usually invites three or four celebrity chefs during the year to take over the restaurant for a week. In consultation with the regular chef, the celebrity chef designs the menu for that fortnight, often contributing several secret recipes or helping build a theme.
Decision 3: Whether to accept a booking for a wedding reception. The reception will take over the entire restaurant for one evening. While some costs will increase (e.g., for rearranging seating), others will decrease (everyone will have the same meal).
Required:
a. Classify each of the three decisions as per their time horizon.
b. Classify the following costs and benefits as being controllable or non controllable with respect to the three decisions.
1. Average revenue per patron
2. Cost of meals served
3. Cost of printing restaurant menus
4. Salaries for chef and other kitchen staff
5. Building rental cost