The application of activity‐based costing to a support kitchen in a Las Vegas casino

Abstract

Purpose -The paper aims to examine the activity-based costing (ABC) method as a feasible and appropriate tool for the casino and hotel industry to apply to support kitchens in order to eliminate the monthly allocation of overhead based on variable costs. Design/methodology/approach -Data were collected at a support kitchen in a Las Vegas casino. These data were analyzed by using ABC methods and establishing ABC costs. ABC methods were compared to traditional allocation methods to determine, first, if allocations could be eliminated entirely; and, secondly, to establish if some outlets would be significantly impacted by the accounting change.Findings -An ABC approach can be applied to support kitchens and total cost (ABC) can be estimated. This approach allowed the casino to eliminate traditional allocation methods based solely on food cost. Research limitations/implications -ABC was shown to be a powerful technique that can be applied effectively in a support kitchen of a casino. Since this paper involved only a single support kitchen in a single casino, further research should be conducted to confirm that ABC can also be applied in support kitchens in other hospitality industry settings. Practical implications -The use of ABC techniques confirmed that the ABC process is a useful tool in an effort to abolish allocations and can be applied to the remaining support kitchens. Without the benefit of this paper, restaurant management for individual food and beverage outlets received an unfair share of the overhead and did not have appropriate cost information for bread products. Originality/value -ABC may be a powerful technique when applied effectively to the food and beverage operations in the field of hospitality.

“Back of house” – focused study on food waste in fine dining: the case of Delish restaurants

“…What may first appear as food waste may actually be miss-tracking of items within the system. To avoid the problems of untracked items in inventory, establishments may use activity-based costing methods to track the amount of inputs each dish requires (Vaughn et al, 2010).…”

“…Standards for timeliness of delivery are used to ensure that the guest receives their food in a specific time frame. The timings cause some issues when components of a meal require differing amount of time to Kling (1943), Youngs et al (1983) (stock levels) No clear method of predicting the number of guests per day beyond general weather and time of year; inventory levels in constant flux due to unpredictability; lack of recycling of items lead to direct waste, not perceived as significant by staff; and poor handling unspoken cause of food waste, blamed on new employees but more likely to be older employees who don't care as much Rodgers (2005), Shapton and Shapton (1991) (equipment) Equipment only minorly important to waste and was not a perceived large driver Kantor et al (1997), Chan and Au (1998) (menu specific) Large variety in popularity of items, but all prep considered equally important Par levels may not be accurate due to varying popularity Seasonal menu increases unpredictability Seasonal menu well received by staff as it changes the same old menu Vaughn et al (2010), Bloom (2010), Drysdale andGalipeau (2009) (portion size) Portion size perceived to be slightly larger than normal, starches more likely to be uneaten than proteins, understanding that misportioning occurs yet is not checked and misportioning due to laziness and acknowledged by management and not reprimanded for Panisello and Quantick (2001). (Kitchen layout)…”

Where has all the labor gone? Capacity and value-added labor in school meals programs

“…Studies of costs to produce menu items in commercial foodservice operations have employed ABC, including identifying costs of individual products on buffets (Raab, Mayer, Ramdeen, & Ng, 2005), in a bakery (Vaughn, Raab, Nelson, and Baloglu (2010), and at a quick serve restaurant (Annaraud, Raab, & Schrock, 2008). Time-Driven Activity-Based Costing (TDABC), a simplification of ABC, is a method to assign costs to products by determining the value of time required to manufacture products.…”

Rateio proporcional na avaliação de custos pelo sistema ABC em uma indústria envasadora de farinha

“…Com a evolução dos métodos produtivos e as variedades de produtos, que podem ser originários de uma mesma linha de produção, o ABC surge como um método inovador de custeio para resolver os problemas ocasionados por critérios de rateios arbitrários na alocação dos custos indiretos aos produtos. Por isso se faz uso da metodologia baseada em atividades, criando geradores de custos específicos para as atividades consumidas na execução dos produtos (WERNKE, 2001;VAUGHN;RAAB e NELSON, 2009;SAROKOLAEI, et al, 2013).…”