Unit 2 Case Study

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Feb 20, 2024

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1 Unit 2 Case Study: Visit 1 and 2 Ashley Oquendo Post University ACC211H: Managerial Accounting Mary Leone July 10, 2022
2 Unit 2 Case Study: Visit 1 I was famished and decided to get something fast. I decided to get my original number 2B at McDonald’s, a quarter pounder with cheese and bacon meal. I went there with a mentality of how McDonald’s truly works. I never worked there myself, so I wonder how this successful business has been widely known and famous for years. I do not see this brand ever going away. McDonald’s has won the hearts of the whole world. So how does their operation truly work? I was walking in up to the register to order my food. I looked at all the employees and what makes everything work to give orders. The power is what makes McDonald’s strive. Electricity is an example of unit-level activities. They need electricity to take my order, make my food, keep it warm, and let the workers see what they are doing to prepare this delicious burger I am about to order. Costs related to unit-level activities refer to the amount of electricity used, machine hours, and labor hours (Brewer, 2021). Without unit-level activities, they wouldn’t be unable to produce any orders. How can any fast-food company strive without having something simple like electricity? It makes them keep creating so many demands and collecting costs to make the products. I ordered my meal and had to wait for it to be prepared. I observed all the workers needed to prepare my food and everyone else’s food. Even though many products are produced, each order is made the same, which relates to batch-level activities. The food is prepared on a production line, making the same products that customers order. Then it is handed to the expo to bag the food, ensuring all products are in the correct order. The workers then place napkins, sauces, and straws in the bag and hand it to the customer with the order number. Batch-level activities costs depend on the number of orders and not the batches of food. The cost of
3 processing a purchase order is the same, no matter how many units of an item are ordered (Brewer, 2021). After receiving my order, I went to get something to drink from the soda fountain. I always drink the Orange Hi-C from McDonald’s and know if it does not taste right. It needed to be changed out, so I got the attention of one of the workers to change out the drink. They proceeded to test the machinery to see if it worked correctly. This is an example of product-level activities. We all know they are constantly having problems with their ice cream machine going down and saying it is out of order, but this is another piece of machinery they use to produce products. They need to buy parts to fix their forever-down ice cream machine (To be honest, it is always down when you want ice cream from McDonald’s). Costs relate to specific machinery companies use and must be carried out to meet customer needs (Brewer, 2021). First, they must test the machinery and then order parts to fix it to keep customers happy and spending money. Sitting down and finally enjoyed my meal in the restaurant. I noticed the booths were torn, the flooring had cracks, and there was an out-of-order sign on the restroom. I understand that I am not at a fancy restaurant, and high-volume stores will have building depreciation. This is considered part of facility-level activities. Facility-level activities include the manager’s salaries, property taxes, and insurance. These costs must be carried out and are required to arbitrarily allocate products (Brewer, 2021). These activities tie into all other activities to keep businesses running like McDonald’s.
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