McDonald’s Corp. Uses a Standard Cost System
This includes standards for such items as food, labor, and paper products. Given the level of sales volume achieved, the actual costs incurred are compared to the standard costs that should have been achieved for each cost item. Access the text companion website by going to www.cengagebrain.com and entering the text author’s name or ISBN in the search box, and clicking on the ‘Access Now’ link under Study Tools.
At the companion website, click on the link titled “Internet Exercise” for Chapter 8. The 2010 Consolidated Statement of Income for McDonald’s will come up. Assuming that the 2009 operating results were used in setting standards for 2010, what cost items do you expect had favorable or unfavorable variances in 2010? (Hint: Compare “Food and paper,” “Payroll and employee benefits,” and “Occupancy and other operating expenses” to “Sales by Company-operated restaurants,” and compare “Selling, general, and administrative expenses” to “Total revenues” for 2009 and 2010 in making your determinations.)
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