Question

Value chain and classification of costs, fast-food restaurant. Taco Bell, a fast-food restaurant, incurs the following costs:

a. Cost of oil for the deep fryer
b. Wages of the counter help who give customers the food they order
c. Cost of tortillas and lettuce
d. Cost of salsa packets given away with customer orders
e. Cost of the posters indicating the special "two tacos for $2.00 "
f. Costs of corporate sponsorship of the World Series
g. Salaries of the food specialists in the corporate test kitchen who create new menu items
h. Cost of "to-go" bags requested by customers who could not finish their meals in the restaurant

Answer 1

Taco Bell incurs different types of costs, including variable costs and fixed costs. The cost of oil, tortillas, lettuce, salsa packets, and 'to-go' bags are examples of variable costs, which vary based on the quantity of food being served. On the other hand, wages, posters, corporate sponsorship, and food specialists' salaries are examples of fixed costs, which remain the same regardless of the quantity of food sold.

Step-by-step explanation:

The costs incurred by Taco Bell, a fast-food restaurant, can be classified into different categories:

1. Cost of oil for the deep fryer: This cost falls under the category of variable costs because it varies based on the quantity of food being fried.
2. Wages of the counter help: This cost is a part of the labor cost and can be classified as a fixed cost because it remains consistent regardless of the quantity of food served.
3. Cost of tortillas and lettuce: This is another example of variable costs as it depends on the quantity of tacos and other food items being prepared.
4. Cost of salsa packets given away: This cost can be considered as a promotional expense or a cost of goods sold. It falls under the category of variable costs.
5. Cost of posters: This cost can be categorized as a marketing expense or a fixed cost, as it remains the same regardless of the quantity of food sold.
6. Costs of corporate sponsorship: This cost can be considered as a marketing expense or a fixed cost.
7. Salaries of the food specialists: This cost falls under the category of fixed costs, as it remains consistent regardless of the quantity of food items on the menu.
8. Cost of 'to-go' bags: This cost can be categorized as a variable cost as it varies based on the number of customers opting for takeout.