Chili’s

Definition

Chili’s is a casual dining restaurant chain that uses job order costing to track the costs of preparing individual orders. Each meal or customer order can be treated as a separate job, allowing for precise cost allocation.

5 Must Know Facts For Your Next Test

1. Chili’s uses job order costing to track the direct materials, direct labor, and overhead costs associated with each customer order.
2. Each menu item at Chili’s could be considered a unique job with its own specific cost structure.
3. Job order costing at Chili’s involves tracking the costs of ingredients used in each dish, the time chefs spend preparing meals, and other overheads such as utilities.
4. The system helps Chili’s determine the profitability of each menu item by comparing the cost data against sales revenue.
5. Accurate job order costing allows Chili’s to make informed decisions about menu pricing and ingredient sourcing.

Review Questions

• How does Chili's utilize job order costing to manage its food preparation costs?
• What types of costs are tracked using job order costing at Chili's?
• Why is it important for Chili's to distinguish between direct materials, direct labor, and overhead in their costing process?

Related terms

Job Order Costing:

A cost accounting system that assigns costs to specific jobs or batches.

Process Costing:

A cost accounting system used where identical or similar products are mass-produced.

Direct Materials:

Raw materials that can be directly traced to the finished product.