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Tony and Tina Roselli own and run TNT’s Pizza Restaurant. Tony is responsible for managing the day-to-day aspects, hiring workers, and overseeing the kitchen, building, and grounds. He is the chief cook and handles all purchasing. Tina is the hostess and manages the front of the house (restaurant talk for the dining area). She schedules the wait staff, ensures that customers are well taken care of, and pitches in to bus tables and refill drinks as needed. Tina also handles the financial aspects of the business and is responsible for bookkeeping and tax compliance. Two years ago, Tony and Tina became parents of a baby boy, Joseph, nicknamed “LJ” for Little Joe. Tina brings LJ to work each day, and both Rosellis as well as the restaurant staff help out watching him. Recently, the restaurant has grown busier, so Tony and Tina expanded the hours of operation. As a result, the staff rarely has any free time and Tina feels she has too much to handle. Tony and Tina are considering outsourcing their bookkeeping and tax-filing needs to a local accountant.
Typically, Tina spends 15 hours per month on bookkeeping and taxes. This increases to 40 hours in April. She uses a room off the kitchen as her office (a room that is sorely needed for additional food storage given the expansion). If Tina continues to do the financial work, the restaurant will need to make up for 75 percent of her time by hiring additional help at $10 per hour (hourly wage plus the restaurant’s cost of Social Security, Medicare, and
Required:
- 1. Given the information, determine whether Tina should do the bookkeeping and tax work in house or outsource it to the accountant.
- 2. Discuss the qualitative factors that would affect the decision, including strategic implications.
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Chapter 17 Solutions
Cornerstones of Cost Management (Cornerstones Series)
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Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning