Controlling Foodservice Costs Final Exam
At a local bistro, total fixed costs for June were $176,432. In that month, 8,652 covers were served. What was fixed cost per cover for June?
$20.39
Calculate the average check per customer if an operation has a weekly sales of $9,300 and a weekly customer count of 258.
$36.05
If the hotel lobby coffee and pastry bar had requisitions of $565, transferred in goods of $25, and transferred out goods of $50, what would its daily food cost be?
$540
If an operation's sales are $48,000 per week and labor cost is $15,600 for the week, what is the labor cost percentage?
0.325%
If the amount of an ingredient was 0.9 lb after converting a recipe, what would it probably be rounded to?
16 oz
Given an opening inventory of $9,000, a closing inventory of $12,000, and a cost of food sold of $22,000, what would the inventory turnover for this establishment be?
2.1
Given the following data, determine the food cost percentage: Opening inventory= $3,890 Purchases= $74,381 Closing inventory= $2,996 Sales= $233,479
32.2%
A hotdog has a food cost percentage of 24.5%. What is the factor for this item, if the manager uses the factor method? 1.00/standard food cost percentage=factor
4
If an establishment needs 12 employees to operate and hires 50 employees during the year, what is the turnover rate?
417%
What is the restaurant and foodservice industry standard for prime cost?
65%
What is the first step in the revenue collection system?
Charging the guest
Which purchasing method is used primarily by franchised chains?
Commissary
portion control
Controlling the quantity of particular foods by using appropriately sized servings.
fixed costs
Costs that do not vary with the quantity of output produced
long term budget
A budget from one year to five years in the future.
short term budget
A budget planned for a week, a month, or a quarter.
fixed budget
A budget that is based on a certain level of sales revenue; expense estimates for food, labor, and other costs are then calculated based on that level of sales.
credit card
A card that allows the holder to make purchases without cash by borrowing money
credits to cost of sales
A category of credits including such items as employee meals, complimentary meals served to guests, or grease sales sold to rendering companies.
food production chart
A chart that provides the essential information a staff needs to know on exactly what and how much food to prepare.
crew schedule
A chart that shows employees' names and the days and times that they are to work.
merchant services provider
A company that facilitates the transaction between an operation and the card issuer, also known as clearing.
variable cost
A cost that increases or decreases in total in direct proportion to increases or decreases in the volume of activity.
Payment Card Industry (PCI)
A data security standard. A series of technology requirements for retailers and companies that process credit cards, which are designed to ensure the protection of the cardholder data.
specification
A description of the desired product's name, intended use, grade, size, and other product characteristics; it can include general instructions regarding delivery, payment procedures, and other pertinent data.
merchant account
A designated account where funds from guest credit card payments can be sent.
menu product mix
A detailed analysis that shows the quantities sold of each menu item, along with their selling prices and standard portion costs.
physical inventory
A detailed listing of merchandise on hand.
portion control device
A device that assists in the portioning of food items, including scoops, ladles, serving spoons, serving dishes, and portion scales.
guest relations discount
A discount on a meal offered by a manager because the guest was not satisfied with the quality of the food or service.
credit memo
A document used to adjust information about product quantities or costs recorded on a delivery invoice
auditing
A financial examination of an organization's accounts.
pre-portioned item
A food item that is measured or weighed prior to going to the service line.
invoice
A form describing the goods or services sold, the quantity, and the price
cash report
A form filled out by the cashier to report all money, checks, and charge slips collected during a shift.
daily sales report
A form that shows sales, cash, and charges collected, as well as any money over or short for a shift.
Order Guide
A form used as a tool for counting and tracking all the products an operation uses and must reorder.
service charge
A labor-related fee, added by the manager, to be paid by guests.
menu training
A list of all menu items with detailed descriptions, which teaches employees about the establishment's offerings.
menu engineering
A management information tool that focuses on both the popularity (menu mix) and the profitability (contribution margin) of menu items.
simple markup method
A markup method based on expenses being increased by a predetermined amount, normally a percentage of the previous year's expense.
inventory breakdown
A method of categorizing the operation's food and supplies.
What is FIFO?
A method of stock rotation
percentage of sales method
A method that involves estimating expenses for a future period as a percentage of the sales forecast.
prime cost method
A method that requires managers to determine the amount of direct labor spent in preparing an item; this number is added to the food cost to arrive at the prime cost.
averaged price method
A method that uses a composite of all prices paid for an item during the inventory period to evaluate the inventory.
actual price method
A method that uses a product's cost that is listed on the closing inventory sheet.
Latest price method
A method that uses the latest price paid for a product to value an inventory; this is the most widely used pricing method in the restaurant and foodservice industry.
recipe conversion
A method used to change the yield of a recipe from its original yield to a desired yield.
edible portion cost
A method used to cost an ingredient after it has been trimmed and waste has been removed so that only the usable portion of the item is reflected.
as-purchased (AP) method
A method used to cost an ingredient at the purchase price prior to any trim or waste being taken into account
butcher's yield test
A method used to measure the amount of shrinkage that occurs during the trimming of a meat product
sales per labor hour
A number calculated by adding all the sales for a specific period and then dividing the total by the total number of labor hours used during the same time period.
sales representative
A person who solicits orders but cannot bind the selling organization in contracts with buyers.
budget
A plan for making and spending money
Factor method (pricing)
A popular formula used to determine menu prices based on the standard food cost percentage, also called simple markup or food cost percentage method.
food cost percentage method
A popular formula used to determine menu prices based on the standard food cost percentage. This method is also called simple markup or factor method.
duplicate guest-check system
A procedure that uses written records of what guests purchased and how much they were charged for the items.
table management
A process of managing customer preferences, seating capacity, and available staff.
Federal Insurance Contributions Act (FICA)
A program that sets aside money for Social Security payments, which is paid for by employers and employees through payroll deductions.
blanket purchase order
A purchase order that allows the buyer to purchase a certain amount of goods, usually indicated by a dollar amount, at the stated terms within a given time period.
Prime Vendor
A purchasing method that involves purchasing most, if not all, of an operation's goods from one supplier; also called the one-stop shop.
product usage report
A report that details the number of items issued to the cook's line, the number of returned to inventory, and the number sold to customers.
Controls
A series of coordinated actions that help keep financial results within an acceptable target range.
standardized recipe form
A set of directions for preparing a food or beverage item, along with a list of ingredients
nonsufficient funds
A situation that occurs when a check is returned to a depositor because the writer of the check did not have a bank available balance equal to or greater than the amount of the check.
quantity standard
A standard that refers to weight, count, or volume measure, such as portion sizes for menu foods and beverages, and employee production standards such as one cook per 50 covers.
quality control line check
A system for ensuring product freshness and sufficient quantities, encompassing taste tests and checking standards.
open tab
A temporary guest charge account that allows guests to purchase and consume products before paying for them.
yield test
A test used to measure the amount of shrinkage that occurs during trimming and cutting products that are not cooked, such as produce
perpetual inventory
A theoretical count based on goods received and issued, which exists on paper only.
slack-out seafood
A type of fraud in which frozen seafood is thawed to appear fresh
cooking loss test
A way to measure the amount of product shrinkage during the cooking or roasting process
What is included in labor cost?
All payroll costs, taxes, benefits, and insurance
accounts payable
Amounts to be paid in the future for goods or services already acquired
Cash Handling Procedure
An activity that operations follow to ensure that all cash and charge transactions are accurate and accounted for.
labor contract
An agreement between a union and a company outlining the wages, fringe benefits, and rules under which employees will work
daily food cost
An estimate of cost based on requisitions, transfers, and sales. To determine daily food cost, the daily requisitions for that unit are totaled. Transfers from that unit to another unit are subtracted and transfers into the unit are added to the requisition total to determine the daily food cost for that unit. This total number is divided by the unit's sales to determine a daily food cost percentage.
fraud
An intentional effort to deceive another individual for personal gain.
To bring new employees up to speed on the existing purchasing process, an operation should use which tool?
An order schedule
fringe benefits
Benefits provided to employees in addition to wages and salaries.
Which test measures the amount of shrinkage that occurs during the trimming of a meat product?
Butcher's yield test
Key drop delivery
Delivery of food items and goods after hours when the establishment is closed for business.
product specification
Descriptions of the quality requirements of the products that are purchased.
Which method for managing payroll is most efficient to calculate labor cost?
Electronic time record method
What is the first step in the cost control process?
Establish standards and define goals
What is safeguarding credit card information based on?
Established PCI standards
When should perishable goods be purchased?
Every one, two, or three days
standard portion cost
Exact amount that one serving, or portion, of a food item should cost when prepared according to the item's standardized recipe.
What information is used to determine the menu product mix?
Food costs of all items on the menu and their quantities sold
Reduced-oxygen packaged (ROP) food
Food packaged in a way that reduces the amount of oxygen available in order to slow microbial growth. ROP methods include sous vide, modified atmosphere packaged (MAP), and vacuum packaging.
carry-over production
Food that has been previously produced but not served to customers.
markup differentiation
Giving different markups to different categories of food, according to a range of expectations in the market.
Which is a credit to cost of sales?
Grease sales
The standing order purchasing method is best suited for which product?
Heavy cream
What is the purpose of using liquor control systems?
Help control beverage pour costs
What is the major advantage of developing standardized recipes?
Help maintain consistency of food production
What does a food dating labeling system do?
Helps increase the accountability for food safety and inventory control standards
padding
Inflating the inventory for the purpose of reducing the food cost.
Which document should employees present to have products issued?
Issue requisition
What is the benefit of managing accounts payable?
It improves cash flow
What is the major benefit of the EP costing method?
It is more accurate than the AP costing method
How is a credit memo form used?
It is used to account for missing, returned, or spoiled items
directs
Items that are charged to food cost as they are received by the operation, on the assumption that these perishable items will be used immediately.
stores
Items that are considered part of the inventory until issued for use in an establishment and are not included in food cost until they are issued.
Which of the following is a labor cost forecasting method?
Labor hours per day
When an operation's expenses exceed its sales, the establishment is experiencing a
Loss
What is one benefit of having cost controls?
Managers know if they are meeting their budget.
Who is expected to meet standards set by managers?
Managers, employees, and suppliers
Last-In, First-Out (LIFO)
Method for assigning cost to inventory that assumes costs for the most recent items purchased are sold first and charged to cost of goods sold.
First-In, First-Out (FIFO)
Method to assign cost to inventory that assumes items are sold in the order acquired; earliest items purchased are the first sold.
counterfeit currency
Money that is produced to resemble official legal currency closely enough that it may be confused for genuine currency.
Extending
Multiplying the number of units of each item by the item's price.
What is the formula used to extend an inventory?
Multiplying the unit cost by the number of units
Rent and insurance typically are examples of what type of cost?
Noncontrollable costs
employee turnover
Number of employees hired to fill one position in a year's time.
What are standard man-hours (SMH)?
Numbers used to determine staffing needs
Which document is used before preparing a purchase order?
Order guide
What type of inventory is counted, recorded, priced, extended, and totaled?
Physical inventory
time and temperature control
Policies and procedures that monitor the amount of time and the ongoing temperature of food products in the flow of food.
price-per-person model
Pricing determined by calculating the food cost for all the items included on a buffet and the backup inventory used to replenish the buffet during the service period
market-driven pricing
Pricing that is determined by the market, which is usually regional.
Generally, what is the highest expense in restaurant and foodservice operations?
Prime cost
Which is the most important cost to a restaurant or foodservice manager to control?
Prime cost
What are budgets based on?
Projected sales and costs
A taste test is part of what managerial function?
Quality-control line check
Uniform Commercial Code (UCC)
Sets of guidelines established to harmonize business transactions law across states.
An operation uses one case of tomato sauce per day and has a par level of three cases. Orders are made once a week. Today is order day, and there are three cases left. How many should be ordered?
Seven
pour/cost percentage
Similar to food cost percentage, except used in beverage control.
Actual costs should be compared against what type of costs?
Standard costs
Which is an internal factor that might affect the final selling price of an item?
Standard food cost percentage
Which recipe form lists all ingredients at the top with numbered procedural steps listed below?
Standardized form
issuing
Taking food or beverage products from storage.
taste test
Tasting done by staff prior to the start of a meal period to determine if products meet the establishment's standards.
Master Schedule
Template, usually a spreadsheet, showing the number of people needed in each position to run the restaurant or foodservice operation for a given time period.
buyer
The acquirer of products, services, or results for an organization.
undercharging
The act of charging less than the amount that should have been charged and collected.
overcharging
The act of charging more than the amount that should have been charged and collected.
short weight
The amount a shipment actually weighs subtracted from the weight given on its label
sales forecast
The amount of a product a company expects to sell during a specific period at a specified level of marketing activities
payroll dollars
The amount of money available for payroll for a scheduling period.
Contribution Margin
The amount remaining from sales revenues after all variable expenses have been deducted.
line item review
The checking of every item on the budget against actual figures, and noting the difference, or variance.
gross weight
The combined weight of a food item and a plate.
value perception
The customer's opinion of a product's value to him or her
tare
The difference between gross and net weight. (the weight of the plate that the food is served on)
Markup
The difference between the wholesale price and retail price
quality standards
The expectations of customers expressed in terms of the minimum acceptable production or service standards
What is a the center of portion control?
The menu
covers per server
The number of customer meals that a waitstaff member can serve in an hour.
standard man-hours (SMH)
The number of employee work hours necessary in each job category to perform a given volume of forecasted production.
recipe yield
The number of portions a standardized recipe produces.
utilization factor
The percentage of an amount of a food item served to a guest.
popularity index
The percentage of total guests choosing a given menu item from a list of menu alternatives.
controllable profit
The profit amount that reflects only those line items over which a manager has any influence or control.
return on investment
The profit or interest earned on an investment .
To whom is a purchase order sent?
The supplier
demand-driven pricing
The theory that an operation can set pricing based on demand for the product or service.
Card verification value (CVV)
The three-digit code on the back of most credit cards.
plate cost
The total sum of product costs included in a single meal, or plate, served to a guest
budgeting process
The way managers go about developing a budget, which is a process of both planning and control.
composite food cost percentage
The weighted average food cost percentage for all items sold, weighted by the quantity of each item sold, is known as the
recipe cost card
Tool used to calculate the standard portion cost for a menu item.
Which statement describes plate cost?
Total sum of product costs included in a single meal
suggestive selling
Value-added suggestions from servers to increase the number or type of items customers purchase, often called up-selling or add-on selling.
flexible budget
a budget prepared for various levels of sales volume
capital expenditures budget
a budget that allows an establishment to plan for the replacement of high-cost equipment that wears out, and to purchase new types of equipment that may come on the market
debit card
a card (usually plastic) that enables the holder to withdraw money or to have the cost of purchases charged directly to the holder's bank account
supplier
a company that provides resources or services for a firm to help in its creation of products and services
inventory
a complete list of items such as property, goods in stock, or the contents of a building.
semivariable costs
a cost that increases and decreases as sales increase and decrease, but not in direct proportion
Income Statement
a document summarizing a business's income and expenses
requisition
a form listing the items and quantities needed from the storeroom
purchase order
a form requesting that a vendor sell merchandise to a business
transfer
a form used to track items going from one foodservice unit to another..
operating budget
a formal one-year operating plan to achieve the financial goals of an organization
perishable goods
a product that does not stay fresh for long
What is par level?
a purchasing method where each item has a level at which it is reordered
ratio pricing method
a ratio derived by taking the sum of all nonfood costs, adding it to the target profit, and dividing the resulting number by the cost of food sold in dollars.
(point-of-sale system) POS system
a system for controlling the operations cash generation, product usage, and inventory.
contribution margin method
adding the contribution margin figure to the cost of a menu item to determine that item's price
petty cash
an amount of cash kept on hand and used for making small payments
bank
an amount of money issued to each cashier that consists of coins and dollar bills sufficient to make change
quote
an offer made by a supplier
Demand-driven pricing refers to a theoretical statement that states that
an operation can set pricing based on demand for the product or service
Prime Cost
an operation's total food cost, beverage cost, and labor cost for a specific time period, usually a week or month.
What term refers to the amount left after a men item's food cost is subtracted from its selling price?
contribution margin
Medicare
contributions from payroll set aside for health benefits for people age 65 or older and for individuals with certain disabilities
noncontrollable costs
costs incurred indirectly and allocated to a responsibility center that are not controllable at that level
The most efficient way to determine the number of servers to schedule is
covers per labor hour
Monitoring high-cost items, such as steak and seafood, on the cook's line is best done by
creating a product usage report
When there is a variance between the purchase order and the invoice amounts, the purchasing agent should request a(n)
credit memo
A food production cost control training manual should contain
customer service standards
shrinkage
decrease in the weight of purchased meat because of cooking or trimming
"Building the till" is a technique used by
dishonest employees
FICA is contributed to by
employer and employee
If a guest skips without paying his or her bill, what should a manager do?
file a police report
Which is used in determining cost of sales?
food and beverage purchases
If a portion served is slightly higher than standard, what will happen?
food costs will go up
Inventory represents the dollar value of
food products in storage for a given time period
Cash audits enable managers to
identify errors
Baker's Percentage
in a formula, includes the percentage of each ingredient in relation to the weight of flour in the final baked product
Why might an operation use suggestive selling?
increase profitability
An internal revenue security system starts with
kitchen issuance
A production schedule is based on
knowing the percentage of each item's sales
What is a service charge?
labor related fee
Forecasting
making future predictions about the budget based on current situations and trends
controllable costs
management can influence or change cost
Cash register readings at the end of the shift are usually taken by the
manager
Who is in charge of developing product specifications?
managers
The use of POS systems enables managers to
match sales with guest orders
operational standards
measures established for making comparisons and judgments about the degree of excellence in operations
Inventory Turnover
measures how efficiently managers are turning inventory over
The primary reason for using a production chart is to
meet customer demand
cover
one meal served to a customer
Which of the following is a long-term budget?
operating budget
Which action can be considered fraud in restaurant and foodservice establishments?
overcharging
What is the most basic method to detect counterfeit currency?
paper and print
In menu engineering, a low-CM/high-popularity item is referred to as a
plow horse
speed scratch
pre-made products that are nearly complete but lack finishing touches such as sauces and flavoring
productive
producing or capable of producing an effect or result
nonperishable goods
products that have a relatively long shelf life
An ordering system can be improved by
providing staff training about the order schedule
Which two key documents should be compared during receiving by the receiving agent?
purchase order and delivery invoice
Proper purchasing involves
purchasing according to the specification at the lowest price
Which step should managers consider to make serving hot food a priority?
put hot food on hot plates
standardized recipe
recipe that consistently delivers the same quantity and quality of a product when followed precisely
sales
revenue
Labor usage forecast is primarily based on
sales volume
If the food cost on the income statement and the composite (potential) food cost are each 4% higher than the standard, then there is a potential problem with the
standard
Corrective Action
steps that are taken to address a problem
acceptable substitutions
substitutions previously agreed upon by both buyer and vendor
To make sure that everything leaving the kitchen gets paid for, the most popular system in use today is
the POS control system
portion size
the amount of food served for a single person
par level
the amount of stock necessary to get the kitchen through until the next order is delivered
In the duplicate guest-check system, the guest checks turned in by the cashier and the copies from the kitchen are matched by
the bookkeeper
price-value relationship
the connection between the selling price of an item and its worth to the customer
Cost of sales
the cost of the food and beverage products to a given operation
productivity standards
the criteria that define the acceptable quantity of work to be completed by employees
variance
the difference between current performance and the standard
break-even point
the minimum sales and attendance required to cover all of the expenses of organizing, planning and promoting the event
sales mix
the percentage of sales volume each menu item contributes to total sales
menu matrix
the placement of menu items in different categories based on their popularity and profitability
market price
the price determined by supply and demand, based on the current market
extension
the price of an item multiplied by the number of items being purchased
cost structure
the proportion or percentage of expense items to sales
Productivity
the quality, state, or fact of being able to generate, create, enhance, or bring forth goods and services
Q factor
the quotient or cost of all other food items served with an entree'; the cost includes side dishes and garnishes, as well as all complimentary items such as condiments, seasonings, coffee creamer, and sweetener.
standing order
the replenishment of stock by a vendor made on a regular basis
ideal food cost
the target cost an operation is aiming for
purchases
the value of how much an operation spent on food products in a given period
closing inventory
the value of how much food product exists at the end of a given period
opening inventory
the value of how much food product exists at the start of a given period
collusion
the working together of two or more employees for dishonest purposes
overtime
time worked beyond the regular hours
profit
total revenue minus total cost
A type of cost that increases or decreases in direct proportion to sales increase or decrease is known as a
variable cost
Food cost is an example of what type of cost?
variable cost
loss
when a business's expenses are more than its revenues
conversion factor
when converting recipes, a multiplier used to adjust the quantity of ingredients on the existing recipe to the quantity needed to produce the desired yield
Temperature Danger Zone
zone from 41F° to 135F° in which foods should not be stored or kept for long periods of time due to risk of spoilage and bacteria growth
