Accounting in Restaurant

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The primary role of a manager is to make numerous decisions during the day- to-day operations of a business and in planning for the future. In order to achieve success and make the right decision, managers need accurate managerial accounting information. Managerial accounting information is designed to meet the specific needs of a company’s management. It contains both historical and estimated data, which provide objective measures of past operations, and subjective estimates about future decisions to develop future plan. This type of accounting is different from financial accounting, and is used for analysis and decision making purposes. In restaurant business, understanding some basic managerial accounting concepts by both owner and manager is crucial. Management is continually making decisions while it plans, directs, and controls operations. Restaurant managers must decide where to open new restaurants, which restaurants to refurnish, what prices to set for meals, what entrees to offer, and so forth. Managerial accounting gathers, summarizes, and reports cost and revenue data relevant to each of these decisions. In our case, managerial accounting information could help our restaurant manager to know how much ingredients cost and what dishes are the most profitable. Armed with this knowledge the manager can make decisions that might lead to higher profitability. Manager should use planning in development the restaurant’s objective and translating these objectives into courses of action. Strategic planning is a company’s process of formulating a strategy and deciding how to allocate resources to pursue the strategy. For instance, increasing the advertising budget would help the restaurant increase its exposure, also an accurate direct material budget estimates the quantities of food to be purchases to support budgeted food production and desired inventory levels. Cost behavior is useful for manager to predict profits as sales and production volumes change....
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