Group 5

Nokyang Ganeung Tiba two Chicken

Management Accounting for Tiba Chicken

Contents

Introduction

Process

Cost Classifications

Cost-Volume-Profit Analysis

Standard cost

Master Budget

Proposal of New Set Menu

12

34

56

7

Introduction

baTi+

of the Customer

by the Customerfor the Customer

Delivery

Laughter & Joy

티끌모아 태산

바지런하다

Gyeonggi-do Uijeonbu-si Ganeung 1-dong

Phone Number

Nokyang Ganeung Tiba two Chicken

Location

Name

031)829-9392

500m200mCompetitors5 12Competitors

Visit & Interview

Process

Select business Contact storeBasic industryinvestigation

Data request & Data collection Data analyze

Proposal & suggestionProblem analysis

Report writing & Presentation

Process

Cost Classifications

Variable costsFixed costs

Direct costIndirect cost

Differential costSunk costOpportunity cost

Direct MaterialsDirect labor

Manufacturing Overhead

Non-manufacturing costsMarketing or selling costs

Administrative costs

Recap Cost Classifications3

Period costs(expensed)

Product costs(inventoriable)

OtherClassifications

DM

VMOH

FMOH

Ues

Those materials that become an integral part of the product andthat can be conveniently traced directly to it.

3 DMCost

Classifications

Direct Material

Number 8 Chicken Number 9 Chicken Sunsal Chicken Barbecue Chicken Fire Chicken

Barbecue Smoke Chicken

Cass Beer Soju Like the first time Chamisul Fresh Maesil liquor

sparkling Pepsi big medium

VMOH

Manufacturing costs that cannot be traced directly to specific units produced

Proportional to activity

Manufacturing Overhead

3Cost

Classifications

Breading ch1Packed RadishChicken vinyl (package)Sauce caseSoy sauceFrying oilWipesNew Chicken BoxRice cakeBetter Mix

Tiba SauceMustard SauceNew sunsal BoxTiba saltShopping bag boxCoke VinylSunsal teriyaki SauceAluminum foilTiba Shopping bagOnly one box

FMOH

Flyers (marketing)Motorcycle oilElectricity taxGas taxWater taxRentDeliver man wage

Constant in total

Manufacturing Overhead

Manufacturing costs that cannot be traced directly to specific units pro-duced

3Cost

Classifications

Cost-Volume-Profit Analysis

Revenue is based on an rough estimate that the shop owner provided. Because of the lim-ited knowledge on monthly revenue, the number of chickens sold also had to be estimated.

Tiba chickens has steady quarterly sale of 1800 sets = BEP calculation.(Hypothetical set of chicken + beverages = 20,000won)

Plans to trigger Higher sales

Surprisingly low BEPTiba is quite flexible in its sales!More than half of its sales is pure profit

it uses only 85% of its direct materials pur-chased, it is desirable for Tiba to make more efficient utilization

purchase

uses

BEP

surpass the BEP after selling about 500 sets of chicken in a quarteraverage sales is about 1800

it would be able to bring the number up to 2000 with promotions

that won't do any harm to the total sales of the shop.Revenue is based on an rough estimate that the shop owner provided. Because of the lim-ited knowledge on monthly revenue, the number of chickens sold also had to be estimated.

Tiba chickens has steady quarterly sale of 1800 sets = BEP calculation.(Hypothetical set of chicken + beverages = 20,000won)

Plans to trigger Higher sales

monthly promotionssell chickens at a lower price

Specific day of the monthstimulate purchase.

Standard cost

Assumption

Next quarter budget was analyzed by standard cost of current quarter budget

PriorQuarter

NextQuarter

CurrentQuarter

Problem analysis

⇒ Expected usage > actual usageNeed to purchase lower quantity of

⇒ Expected price > actual priceCan generate marginal cash flow

DMQV & VOEV

DMPV & VOSV

favorable unfavorable

alcohol&beveragechicken

VMOH

favorable unfavorable

2/43/4

4/44/4chicken chicken

chicken chicken chicken

VMOH

VMOH

VMOH

VMOH VMOH

alcohol&beverage

alcohol&beveragealcohol&beverage

alcohol&beverage

alcohol&beverage

2/43/4

4/42/4

3/44/4

⇒ Expected usage < actual usageThere can be lack of

⇒ Expected price < actual priceThere may be problem with cash flow

AQ * AP AQ * SP SQ * SPPrice

Varance

Quantity

Variance

chicke

n

2,129 * 3,775

= 8,036,000

2,128 * 4,344

= 9,248,376

2,180 * 4,344

= 9,469,500

1,212,37

6

(F)

221,124

(F)

alcoho

l &

bevera

ge

3,048 * 726

= 2,214,000

3,048 * 517

= 1,575,816

3,528 * 517

= 1,825,816

638,184

(U)

249,584

(F)

VMOH134 * 22,141

= 2,966,900

134 * 17,643

= 2,364,162

152 * 17,643

= 2,681,700

602,738

(U)

317,538

(F)

(SQ, SP from 1 quarter)

F : favorable varianceU : unfavorable variance

2/4 2011

(SQ, SP from 2quarter)

AQ * AP AQ * SP SQ * SPPrice

Varance

Quantity

Variance

chicke

n

2,061 * 4,062

= 8,372,700

2,061 * 3,775

= 7,780,275

2,129 * 3,775

= 8,036,000

592,425

(U)

255,725

(F)

alcoho

l &

bevera

ge

2,128 * 701

= 1,490,900

2,128 * 726

= 1,544,928

3,048 * 726

= 2,214,000

54,028

(F)

669,072

(F)

VMOH117 * 15,253

= 1,784,600

117 * 22,141

= 2,590,497

134 * 22,141

= 2,966,900

805,897

(F)

376,403

(F)

F : favorable varianceU : unfavorable variance

3/4 2011

F : favorable varianceU : unfavorable variance

(SQ, SP from 3quarter)

AQ * AP AQ * SP SQ * SPPrice

Varance

Quantity

Variance

chicke

n

1,967 * 3,995

= 7,867,500

1,967 * 4,062

= 7,989,954

2,061 * 4,062

= 8,372,700

122,454

(F)

382,746

(F)

alcoho

l &

bevera

ge

2,820 * 674

= 1,902,000

2,820 * 701

= 1,976,820

2,128 * 701

= 1,490,900

74,820

(F)

485,920

(U)

VMOH149 * 16,905

= 2,467,600

149 * 15,253

= 2,272,697

117 * 15,253

= 1,784,600

194,903

(U)

488,097

(U)

4/4 2011

Master Bud-get

DM(chicken) Total purchase 8,337chickenQuarter average purchase 2,084chicken

Total purchase price 33,745,700wonQuarter average purchase price 8,436,425won

unit price 4,048won 

DM(Drink) alcohol+beverageTotal purchase 11,524Quarter average purchase 2,881

Total purchase price 7,432,300wonQuarter average purchase price 1,858,074won

unit price 645won 

VMOHTotal purchase 552Quarter average purchase 138

Total purchase price 9,900,800wonQuarter average purchase price 2,475,200won

unit price 17,936won

2011 total budget

2012 ¼ Master budget

Drink(alcohol+beverage)Quarter average purchase 2,881+(maximum-minimum 1,688) = 4569 purchase

645(unit price) * 4569 = 2,947,005won

ChickenQuarter average purchase 2084chicken+(maximum-minimum 213chicken) = 2297chicken purchase

4048(unit price) * 2297 = 9,298,256won

VMOHquarter average purchase 량 138+(maximum-minimum 35) = 173 purchase

17,936(unit price) * 173 = 3,102,928won DL & FMOHquarter average DL 11,700,000wonquarter FMOHDeliver bike oil 150,000won + tax(Electricity 900,000won + Gas 900,000won + Water 900,000won + Additional Tax 100,000won) 2,800,000won + Rent(month pay) 700,000won =

3,650,000won

2012 ¼ Master budget

2012 ¼ Quarter Budget total cost DM Budget(9,298,256won) + Drink Budget(2,947,005won) + VMOH Budget(3,102,928won) + DL Budget(11,700,000won) + FMOH Budget(3,650,000won) =

30,698,189won Month average sales 12000000won * 3 = quarter average sales 36000000won – 1/4quarter Budget total cost(30,698,189won) = expected 1/4quarter profit 5,301,811won

2012 ¼ Master budget

2012 ¼ Master budget

Can lower budget311,605won

+20

-51 -31

Drink(alcohol+beverage)Quarter average purchase 2,881+(maxi-mum-minimum 1,688) = 4569 purchase

645(unit price) * 4569 = 2,947,005-won

ChickenQuarter average purchase 2084chicken+(max-imum-minimum 213chicken) = 2297chicken purchase

4048(unit price) * 2297 = 9,298,256wonMax = ¼ quarter 2,180 * 4344(won) = 9,469,500won= 9,469,920won

Lack of 171,664won in budgetWe should add 200,000won in budget

Max = 2 quarter 3,048 * 726(won) = 2,214,000-won

Using 2,435,300won budgetWe can lower 511,605won

+Max10%

2012 ¼ Master budget

Labor Cost 2 part time worker

PM12:00 ~ Am 1:00 13hour5000won/hour, 30 day

2*13*5000* 30= 11,700,000won

It’s about Chicken industry!!!

We don’t need all 2 workers at opening, endingWe don’t need 30day workersWe don’t need all 2 workers at PM 2:00~4:00

If we lower this labor costWe can make More profit!!!

Pro-posal

New Set Menu

Set Menu?!

Beer + Chicken

Tiba Two Chicken indicates, the set must be consisted of more than 2 chick-ens

Best Matching!!!

Average Profit per 1 bottle of 소주 : 3000-1200=2800Average Profit per 1 draft beer : 20000/500=80 63000/80=787.5 3000-787.5=2212.5Average Profit per 1 chicken : 13000-3800(avg)=9200Lowest Profit in original set menus (Profits may differ)18000-(3800*2)=18000-7600=

new set to be effective it must at least exceed 11000 won in profits

per set.

Analysis

11000

2 chickens + 1 draft beer=3800*2+2212.5=7600+2212.5=8812.58812.5+11000=19812.5

The cheapest price for our new set menu would be

Thinking of combinations of which chicken and what beer to include

The most effective butcheapest price for our Set Menu

19812.5

To Make

22000 won

23800 won

Suggestion

2 draft beer

2 Spice Chicken

Sunsal Chicken + Sunsal Soy Sauce Chicken

2 draft beer

EQ Seasoned Spicy Chicken

Garlic Soy Sauce Chicken

1 Soju

20800 won

2 Spice Chicken

1 draft beer

20000 won

Do y

ou

wan

t to

bu

y?!

Brand New Set Menu