Starting a Restaurant - Do We Cook or Calculate First?

Abstract

Vin DeOrio was gratified that his 23 year old nephew offered to set up back office systems for Vin’s new business. But Vin was worried that his nephew, a newly minted BS in accounting, was inexperienced in installing such systems, and that the nephew would design an overly elaborate system for a simple business. It was several months since Vin was fired after twenty years as a product manager at Stearnco, an industrial goods manufacturer. Vin thought this was an opportunity to finally do what he always wanted to do - run his own restaurant. His plan was to have two sides to the restaurant, on one side a bar serving sliders, hotdogs, and pizza, and on the other side, an upscale restaurant.

His nephew outlined the efficiencies and effectiveness of job shop costing, process costing, standard costing, target costing. and life-cycle costing. The case will allow a review of the data needs and outputs of each costing approach and match Vin s cost management needs to each of these systems.