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KMID : 1011620070230010090
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Korean Journal of Food and Cookey Science
2007 Volume.23 No. 1 p.90 ~ p.98
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Application of Activity-Based Costing (ABC) to Restaurant Menu Costing
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신서영:Shin Seo-Young
이봉식:Lee Bong-Shik/최미경:Choi Mi-Kyung
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Abstract
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The purpose of this study was to apply the activity-based costing (ABC) model to restaurant menu costing. The overhead cost of six entrees in XYZ restaurant was calculated for all levels of activity. When comparing activity-based costing with traditional costing applied to BBQ pork rib and an assorted seafood platter, the total difference of costs between two items was 2,191 won in activity-based costing and 600 won in traditional costing. The average food cost percentage of the six entrees was 27% using traditional costing, while the average activity-based cost percentage was 40%. Therefore, there was a 13% difference between the actual margin volume and the expected margin volume. The application of activity-based costing to the restaurant industry would be a milestone from a cost point of view as well as from a process point of view. In particular, the limitation that traditional costing only accounts for food costs could be overcome by considering the overhead cost as an important part of the cost structure. Furthermore, activity-based costing would not only help to reduce the costs associated with the process of analyzing the activities but it would also provide more accurate cost information for menu pricing.
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KEYWORD
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Activity-based costing, Menu costing, Restaurant
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