Costing System In Pizza Hut

COSTING SYSTEM

Costing system is primarily concerned with the accumulation and analysis of cost information for internal use to aid management in planning, controlling and decision making.
“Example of costing system in Pizza Hut can be taken from their costing procedure with respect to Pizzas produce”
The costing system used with respect to pizza production here in Pizza Hut is ‘PROCESS’. The pizzas are produced by passing through similar stages and all the units take approximately similar time in production i.e. in the production process, each and every set of television takes same amount of time and they are produced by identical series of steps.
The stages through which pizza passes through are as follows:
• Spices and other ingredients

Doing so eliminates a considerable amount of investment in inventory, thereby reducing the working capital needs of a business.
JIT STRATEGY OF PIZZA HUT
Pizza hut use JIT to serve their customers on a daily basis. Pizza hut have cheese, vegetables, meat, flour, yeast in their kitchen, but they only assemble these materials when they receive an order from the customer
Pizza hut works on JIT they order direct supplies according to demand. For just in time strategy they prepare themselves few hours before
All team members are prepared before peak hours with vegetables required for toppings. They keep things ready in the line. Keep lemonade syrup ready so that they just have to add 7 up when the customer ask for Lemonade.
They be ready with different patties (pizza base)
During peak hour they provide the pizza making time of 15 – 20 minutes. While there cycle of making one pizza is only 7 minutes. In normal case they provide the pizza making time of 10 – 14 minutes.

PURPOSE OF

So Pizza Hut develops standards and maintains them “off the books”. That is, they are not part of the formal accounting system. Therefore this standard costing system is there to facilitate control of personnel, operations and costs. In Pizza Hut, the standard costs are objectives set by management which function as controls for monitoring actual costs. Standard costs do not replace actual costs in a cost accumulation system but serve as efficiency and performance