Ground Crew is an airline catering company stationed at O R Tambo International Airport. The company is supplying airline food to most airlines, including South African Airways, British Airways, Kuhlula Airlines and Lufthansa. All meals are prepared on-site at the kitchen in Jet Park Industrial Park. Ground Crew prepares three kinds of meals, being Chicken, Beef and Vegetarian. Food quality and control are very important with all food preparation, but with airline food, it is even more important. When food safety or food quality is compromised on an airline, passengers don’t look to the catering company that supplied the food, they look to the airline that they are flying with. Not only do incidents seriously damage the brand of an airline, but the legal ramifications of an incident mean that airlines will turn to the airline catering companies who have supplied questionable food and demand that they take at least some responsibility. One well-known example of a food contamination crisis, which spurred the implementation of more stringent international food safety standards, is the 1992 case of cholera from contaminated shrimp, which killed one airline passenger and infected at least five others. Some foods are more associated with foodborne illnesses and food poisoning than others. They can carry harmful germs that can make one very sick if the food is contaminated For catering companies, the challenge in food safety can be found across various factors. Apart from preparation issues, such as undercooked food, spoiled food and so on, hygiene and cross-contamination are two key areas that catering companies need to focus on. Management provides you with the following information: Selling prices per meal: Chicken: R 38, Beef: R 40 and Vegetarian: R 39 During the financial year, the following raw materials were bought by Ground Crew. : Chicken: 1 210 257.50 kg, Beef: 1 807 502.50 kg and Vegetarian: 901 051.50 kg and at the following prices : Chicken: R 80.00 / kg , Beef: R 110.00 / kg and Vegetarian: R 40.00 / kg. These raw materials need to be processed and packed into a final product by Ground Crew. All raw material was processed into a final product and all final products were sold during the financial year. The product sold in meals during the financial year: Chicken: 2 420 515, Beef : 3 615 005 and Vegetarian: 1 802 103. The average labour cost was R 2 per meal. The total manufacturing overhead cost was R 39 188 115 and the total Administrative – and Marketing overhead cost was R 25 252 510 The company currently uses the traditional absorption costing method to allocate manufacturing overhead costs according to the amount of final product sold in meals. After spending also some time with management, you obtain further valuable information. Manufacturing Overhead cost that could be identified and classified to certain specific production cost activities includes Meal processing: R 7 053 862, Meal packing: 16 067 130, Maintenance : R 8 500 800, Quality Control : R 6 636 000. You consider the activities for each manufacturing overhead to be: Meal processing: labour cost Meal packing: meals sold Maintenance: maintenance hours Quality control: quality control checks The total maintenance spend in hours on the various meals were: Chicken: 4 224 hours, Beef: 3 696 hours and Vegetarian 2 640 hours. The quality control checks on the various meals were: Chicken: 2 370 000, Beef: 1 422 000 and Vegetarian 948 000. 1. Calculate the cost and profit per product according to the activity-based costing method
Ground Crew is an airline catering company stationed at O R Tambo International Airport. The company is supplying airline food to most airlines, including South African Airways, British Airways, Kuhlula Airlines and Lufthansa. All meals are prepared on-site at the kitchen in Jet Park Industrial Park.
Ground Crew prepares three kinds of meals, being Chicken, Beef and Vegetarian. Food quality and control are very important with all food preparation, but with airline food, it is even more important. When food safety or food quality is compromised on an airline, passengers don’t look to the catering company that supplied the food, they look to the airline that they are flying with.
Not only do incidents seriously damage the brand of an airline, but the legal ramifications of an incident mean that airlines will turn to the airline catering companies who have supplied questionable food and demand that they take at least some responsibility.
One well-known example of a food contamination crisis, which spurred the implementation of more stringent international food safety standards, is the 1992 case of cholera from contaminated shrimp, which killed one airline passenger and infected at least five others.
Some foods are more associated with foodborne illnesses and food poisoning than others. They can carry harmful germs that can make one very sick if the food is contaminated
For catering companies, the challenge in food safety can be found across various factors. Apart from preparation issues, such as undercooked food, spoiled food and so on, hygiene and cross-contamination are two key areas that catering companies need to focus on.
Management provides you with the following information:
Selling prices per meal: Chicken: R 38, Beef: R 40 and Vegetarian: R 39
During the financial year, the following raw materials were bought by Ground Crew. : Chicken: 1 210 257.50 kg, Beef: 1 807 502.50 kg and Vegetarian: 901 051.50 kg and at the following prices :
Chicken: R 80.00 / kg , Beef: R 110.00 / kg and Vegetarian: R 40.00 / kg.
These raw materials need to be processed and packed into a final product by Ground Crew.
All raw material was processed into a final product and all final products were sold during the financial year. The product sold in meals during the financial year: Chicken: 2 420 515, Beef : 3 615 005 and Vegetarian: 1 802 103.
The average labour cost was R 2 per meal.
The total
The company currently uses the traditional absorption costing method to allocate manufacturing overhead costs according to the amount of final product sold in meals.
After spending also some time with management, you obtain further valuable information.
Manufacturing Overhead cost that could be identified and classified to certain specific production cost activities includes Meal processing: R 7 053 862, Meal packing: 16 067 130, Maintenance :
R 8 500 800, Quality Control : R 6 636 000.
You consider the activities for each manufacturing overhead to be:
Meal
Meal packing: meals sold
Maintenance: maintenance hours
Quality control: quality control checks
The total maintenance spend in hours on the various meals were: Chicken: 4 224 hours, Beef: 3 696 hours and Vegetarian 2 640 hours.
The quality control checks on the various meals were: Chicken: 2 370 000, Beef: 1 422 000 and Vegetarian 948 000.
1. Calculate the cost and profit per product according to the activity-based costing method
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