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Essay / Research Paper Abstract
This 3 page paper looks at the way that a restaurant accounts have varied from the budgeted accounts and then goes on to show that the variation is due to costs that are not under the control of the manager. The paper argues for the use of responsibility accounting. The bibliography cites 1 source.
Page Count:
3 pages (~225 words per page)
File: TS14_TEvarcase.rtf
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Unformatted sample text from the term paper:
at the different figures and the causes of change behind these. The restaurant manager should only be held accountable for the areas over which they have control; this is a
basic concept of responsibility accounting. It is incorrect and does not achieve any positive results to hold individuals accountable for changes over which they do not have any control. This
allows for the correct allocations of responsibility and is more likely to result in effective budget controlling. There was a significant decrease in sales, with a 100,000 negative variance. It
has been stated that sales have a heavy reliance on the marketing. The national marketing budget was cut by 20% and the local budget by 40%, but there is only
an 11% decrease in sales despite these massive marketing cuts. This would indicate that the local restaurant has been doing well despite the cuts. There may be some measures that
the local store manager can undertake to try and increase sales, such as local marketing initiatives and getting involved with the local community. However under the current budget the fall
in sales is not the responsibility of the manager. The next stage is to look at the expenses. The first of these is food; this appears to be well
under budget with 300,000 budgeted. However, sales were lower than expected, and food is expected to make up a specific percentage of the revenues. The budgeted rate at 33.33% (1/3
of all revenues), so adjusting this new budget should be 266,667. There is still a variance, with the restaurant manager under budget, this can be a positive result, as it
may result very effective food handling, and indicate good financial management, assuming all the food has been in the right portion sizes and the right quality. In addition to this
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