VINOD GUPTA SCHOOL OF MANAGEMENT IIT KHARAGPUR

COST AND MANGEMENT ACCOUNTING PROJECT

SMALL INDUSTRY SELECTED-RESTAURANT

IMTIAZ AHMED 15BM60001

VERSHA MISHRA 15BM60011

RESTAURANT SELECTED

TANDOORI DELIGHTS

173, PARK STREET KOLKATA 700017

TANDOORI DELIGHTS-AN INTRODUCTION

Tandoori delights is a casual dining restaurant running since 2008.It is located in the

heart of Kolkata near the park circus seven point crossing which is one of its big

advantages. The target customers of tandoori delights include the general middle class

people of Kolkata and the student community of Kolkata as the prices of the products

are not that high compared to the other restaurants like Shiraz and Arsalan in similar

locations.

Tandoori delights has a seating capacity of just 24 people and thus has a seating area of

around about 400 sq ft. Its main strength lies in its food delivery and take away service.

Approximately 60% of the revenue is generated from the take away and delivery

orders. In addition to these it also provides catering service for events like marriages,

Engagements, Birthday parties etc. Around 20 % of the revenue is generated from these

orders.

INSIDE LOOK

MENU CARD

As we can see from the menu Tandoori Delights basically has two types of cuisine:

1) North Indian-The north Indian food Includes the different vegetarian and non

vegetarian dishes. The restaurant is particularly famous for its Non Vegetarian

tandoori dishes like tandoori chicken, chicken reshmi kabab, chicken tikka kabab etc.

Also different types of vegetarian dishes are also made here like Dal Makhni, Paneer

Butter Masala etc. So the cuisine is basically north Indian in style.

2) Chinese-Basic Chinese dishes like chowmein, chopsuey, soup etc are made over here.

The Chinese menu has a lot of scope of improvement.

DELIVERY BOX OF TANDOORI DELIGHTS

PLANNING REQUIRED TO EXECUTE AN ORDER

Tandoori delights prepares an inventory of some of the dishes in the cooked form

everyday for the easy execution of order. These food generally include the different type

of tandoori dishes, biryani,. The amount of these food prepared is calculated from the

average sale of these products which takes place during the previous week. The days are

generally divided into weekdays and weekends. So different amounts of foods are

prepared depending upon the average sale during the previous week. The owner told us

that by following this system of inventory scheme they have been able to reduce

wastage. Other made to order products like chowmein, different kinds of gravy dishes

are generally kept in the semi finished form and their quantity is also decided based on

the previous weeks demand. This type of practise also helps them to reduce the time

between ordering and execution.

Normal execution of order takes place as in any other restaurant. For take away you

have to order at the counter and pay your bill immediately. Then the person at the

counter hands over one receipt to the customer and one to the waiter. When the waiter

comes with the ordered food he matches it with the receipt of the customer and the

ordering process is complete. For dine-in also standard restaurant procedures apply

wherein the waiter first takes your order, then provides you with your ordered food and

ultimately at the end brings you a bill for the completion of the order.

COSTS INCURRED BY TANDOORI DELIGHTS

1) ONE TIME INVESTMENT:

KITCHEN AREA:

BURNERS AND OVENS

EXHAUST

COOLERS AND FREEZERS

KITCHEN UTENSILS

KITCHEN FURNITURES

PLUMBING WORK

RESTAURANT AREA:

AIR CONDITIONER

FURNITURE

PLUMBING WORK

ELECTRICAL FITTINGS

CROCKERY AND CUTLERY

LICENSING FEES

DISPLAY BOARDS

BILLING MACHINE

DIRECT COST: Direct cost is that cost which can be directly traced to a particular

product or service. For example cost of chicken in making tandoori chicken or the

salary of the chef engaged in making tandoori chicken. There are two types of Direct

cost:

1) Direct Material Cost: These are the materials that become an integrated part of

the finished product and whose cost can be easily traced.

2) Direct labour Cost: Labour costs that can be easily traced to a finished product.

INDIRECT COST: An indirect cost is a cost that cannot be easily and conveniently

traced to a specified cost object. Indirect cost is also of two types:

1) Indirect Material Cost: These are the materials which become an integral part of

the product but whose cost cannot be easily traced.

2) Indirect Labour Cost: These are the labour costs which cannot be conveniently

traced to a product. For eg the salary of the cashier of Tandoori Delights.

FIXED COSTS: Costs which remain constant or fixed regardless of the change in

activity level within the relevant range. Eg Monthly Rent.

VARIABLE COSTS: Cost that varies in proportion with the change in level of activity.

PRODUCT COSTS: Includes all costs in acquiring or making a product. These include

direct material cost, direct labour cost and manufacturing overhead.

PERIOD COSTS: All the other costs incurred which are not product costs. These are

directly taken to the income statement as expense for the period in which they are

incurred. Eg Administrative expense.

COST TRACEABILITY PER DISH

The different types of costs incurred per dish can be divided as follows:

1) Direct Materials Cost:

Cost of spices , oils and other materials used in cooking the product

The cost of the raw meat or vegetables which serves as the raw material

The amount of fuel consumed per dish.

2) Direct Labour Cost:

Cost incurred in giving salary to the person preparing the food and the

person serving the dish.

3) Indirect Labour Cost:

Expense incurred in providing salary to people not involved in food

production or delivery. Eg Manager of the store.

Other Expenses like Rent Expense, Electrical rent, Logistics expense , Maintenance

expense and Depreciation expense are also incurred by Tandoori Delights. These cannot

be directly ascertained to a particular dish as such.

COST BEHAVIOR

The Fixed and Variable costs of Tandoori Delights are:

FIXED COSTS:

Monthly Rent

Salary to the manager

Depreciation costs

Telephone and Internet Expense

VARIABLE COSTS:

Raw Materials

Transport delivery expense

Electricity expense

Staff and Labour salary (Per Hour).

Maintenance expense( Eg Napkin, Aluminium Foil, Sauce etc)

COST ACCOUNTING FORMAT (SEPTEMBER MONTH-2015)

Sales (Approx.) 1100000

Raw Materials 700000

Direct Labour 150000

Operating Costs

Electricity, Water and Rent 50000

Maintenance 10000

Indirect Labour 20000

Fuel Costs 25000

Depreciation Expense 5500

Other Costs 10000

Taxes NA

Total Operating Costs 120500

Net Profit 129500

IMPLICATIONS FOR FINANCIAL REPORTING

From the accounting report we see that the net profit per sales is 0.18 which is quite good for a

restaurant. We can see from the report that the net revenue for the month of September has been

Rs 1100000 whereas the raw material costing is around Rs 700000. The Labour cost is around

150000. Operations cost account for 120500. According to me the labour costs can be further

controlled which would increase the net profit further.

IMPROVING PRODUCTIVITY AND ELIMINATING SERVICE

As suggested above Labour cost can be controlled further for improving the profitability. Also

Tandoori Delights should increase the price of their best selling items as it is already very much

cheaper compared to its competitors. Hence there is a scope for profit improvement. Also very

little revenue is generated by in house dining (only around 20 %). So if Tandoori delights is able to

improve the service and facilities at its restaurant then we feel that the productivity would

increase.