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The restaurant with dynamic costing | The Hindu

A couple of cost accountants came together to start a restaurant. They made quite a few enquiries about the possible clientele, number of eateries around that area, offices nearby that would have both floating and regular customers. They then started it with as little fanfare as possible, to reduce overheads on advertisement costs. They decided that people who are hungry would themselves look for the signboard of an eatery and that would be sufficient advertisement.

They expected that given their reasonable and transparent pricing policy, they would have the advantage of word-of-mouth publicity, which does not cost the establishment anything.

For each dish on the menu, the quantity and the price, based on raw material costs, overheads such as rent, electricity, wages, possible leakages of revenue, breakage of china, loss of small cutlery, profit margin, leftovers and so on, were factored in. In fact, they took pride in making every possible expense being taken into account, making the costing of the merchandise strictly as per cost accountancy norms.

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The restaurant with dynamic costing – The Hindu.

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