Question

Name four cost pools for a fast food restaurant (Chick-Fil-A) and two cost drivers for every cost pool.

Identity each cost pool as as either a fixed cost or a variable cost

Answer 1

Cost Pool definition - By name we can understand that cost pool represents POOL of cost or gathering / accumulating all cost before distribution of cost . Cost pool mainly covered under Activity Based Costing .

Cost Driver - By name you can identify those costs who are driving the Organization . Like Direct labour hour .Cost driver mainly used in Overhead cost determination .Machine Hour , Labour hour etc.

Cost pool - Either Variable cost in case of restaurant - followings are variable in nature ( Mostly directly connected with Volume of Sales)

1) Staff Labour cost - Cost driver - Labour Hour

2) Food - Cost driver - Number of customer visit in restaurant

3) Supplies - Cost driver - Number of meals

4) Drinks - Cost driver - number of Customer visit

Certain cost pool which all are fixed cost in nature and not relates to Volume or Sales , like :

1) Occupancy/Utilities  - Restaurant has to pay Occupancy rent ( Cost driver) on the basis of space Occupied ( Cost driver)

2) Salary Of Management/ Support cost- Fixed in nature .