Got a tricky question? Receive an answer from students like you! Try us!

McDonald's Corporation - Essay Example

Only on StudentShare
Author : nikita83

Summary

This paper talks about one the most widely used technique to apportion the costs among various departments and units of production on the basis of activity of the firm. This method has removed any discrepancy that the previous accounting methods have and now because of this method we have been able to comply with the accounting principle of "PRUDENCE"…

Extract of sample
McDonald's Corporation


Activity based costing is one of the modern approaches that have been developed to apportion various indirect costs to a unit of production or process. These indirect costs are known as "Overheads" in the business terminology. These are also known as indirect costs because they cannot be associated with a particular production process and the entire organization has to bear these costs.
Talking about McDonalds as part of our report, the overheads that McDonald restaurants incur are telephone bill, security costs, electricity bill and wages. Since, these costs cannot be absorbed in the direct costs of a food item, they are treated as overheads.1
Like many other organizations McDonalds also faces problems in apportioning these costs to the different units of products. ABC costing or Activity based costing is an ideal estimate of these costs that can be used by McDonalds to get rid of the problem.
By using the ABC costing McDonalds will first calculate the entire data about these indirect costs or overheads. ...
Download paper

Related Essays

Final report
For Burger King, food and paper for the three years ended June 30, 2004 to 2006 were $391 million, $437 million, and $470 million respectively, constituting 23.26%, 24.43%, and 25.03% of the total operating costs and expenses respectively (Burger King Holdings, Inc. a, 2006). Food and paper are only incurred with each burger sold.…
2 pages (502 words)
Human Resource Management at McDonald's
Much of the time, employees are motivated by their working environment and thus some of these employees rise to top positions with in the company. Fairhurst claims that about 80% of service crews advance to store managerial positions, serving the company for 10 years on the average ("HR challenges. I'm lovin' It, 2005").…
10 pages (2510 words)
Executive Compensation Plan
According to the principal-agent theory, there is a difference of interest between shareholders as principals and senior managers as agents. The best way to optimize performance of senior managers is to link their pay to the performance of the firm (McKnight & Tomkins, 1999). At McDonald's, the members of the top management are paid according to a reasonable salary, performance-based annual bonus, cash incentives, stock options and other perquisites or fringe benefits. Annual base salary takes into account the competitive market of managerial talents, individual performance, tenure in position…
4 pages (1004 words)
McDonalds as the leading global foodservice retailer
The following are their targets:…
5 pages (1255 words)
Orgnaisational structure and design Analyses McDonald's individual essay
Most of the restaurants are operated locally (nearly 75%) and the chain of restaurants, one of the most successful brands of today, serves not less than 58 million customers per day (Our Company, n.d.).…
6 pages (1506 words)