Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 5

Target Costing Using Quality Function Deployment (QFD) Rick's is a popular restaurant for fine dining. The owner and chef, Rick Goetz, is pleased with his success and is now considering expanding his existing restaurant or perhaps opening a second restaurant. Before making his decision, Rick wants to find out more about his competitive position. There are three other restaurants that compete directly with him on food quality and price. Rick knows that his profitability depends on his ability to provide a satisfying meal at the market price. His first step was to gather some information about his customers, using an independent market research firm, which informed him that his customers were looking for taste, comfort (the ambiance, service, and overall presentation of the food), and enjoyment (the distinctiveness of the dining experience, a degree of excitement). He was surprised to find that comfort and enjoyment ranked highest.

Next, he worked with his key wait staff and chefs to try to identify the three main components, and related cost, of the service Rick's provided:

Having the customer criteria and components, Rick now again worked with his staff to assess how each component contributed to the desired customer criteria.

Required
1. Using the information Rick has developed, determine the importance index for each component (menu and food preparation, wait staff, and food ingredients).
2. Compare your findings in requirement 1 to the cost of the components. What conclusions can you draw from this comparison