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Wendy's/Arby's Group Output Year Ending Jan. 3, Essay

WENDY'S/ARBY'S GROUP

Output (year ending Jan. 3, 2010)

$3,198,348

Output (year ending Dec. 28, 2009)

$1,662,291

Change in sales:

$1,536,057

Cost info (in thousands)

Cost Driver

Rate (Change in cost/change in sales)

Cost of sales

$2,728,480

$1,415,530

Facilities

$8,016

$3,221

Other (misc)

$3,239

Wendy's/Arby's Group 2010 Annual Report)

Wendy's/Arby's Group's basic sales operations, which consist of many different activities classified into broad categories of costs in company financial statements, are examined n the above table. Not all cost categories are represented, however the three that are most easily broken down (from the available information) into specific activities appear above: cost of sales, which includes all of the basic activities from material procurement through labor costs; facilities costs, which includes property maintenance, procurement, and other physical resource control; and other miscellaneous costs, which involve a number of different one-time and ongoing costs incurred in a given year (Gilman, 2011). The time period covered the 2008 and 2009 fiscal years (years ending Dec. 28, 2008 and Jan. 3, 2010), as these were the years with complete and consistent information available, and the input was taken directly form the company's own annual report: output figures are the sales figures reported under the main heading of "Revenue" (essentially revenue less franchising fees), and the other figures were also taken as line items. Change in sales was calculated as the simple difference from year to year; rates for each cost driver were determined by dividing the year-to-year difference of the cost by the difference in sales.

The results of this analysis suggest that the activities involved in determining the cost of sales are much more significant overall cost drivers for the company than the other areas examined. This is in keeping with expectations for most retail and manufacturing establishments, and Wendy's/Arby's Group can be considered both to some degree (Bradtke, 2007). Facilities costs have a very low effect, and the other miscellaneous costs are an even smaller portion of overall costs for the company. Based on this analysis, it would appear that Wendy's/Arby's Group should focus on the cost of sales as a place to create savings and greater efficiency, though this driver will likely always remain the primary source of costs for the company (Bradtke, 2007).

References

Bradtke, D. (2007). Activity-Based Costing. New York: Grin.

Gilman, S. (2011). Analyzing Financial Statements. New York: BiblioBazaar.

Wendy's/Arby's Group. (2011). 2010 Annual Report. Accessed 8 February 2012.

http://ir.wendys.com/phoenix.zhtml?c=67548&p=irol-reportsannual

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