CHAPTER 3
COST CONTROL
What is revenue? (147)
• The income from sales before expenses
What is the definition of a cost? (147)
• The price an operation pays out in the
purchasing and preparation of its products or
the providing of its service.
What are the 4 main categories of
costs? (147)
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Food costs
Beverage costs
Labor costs
Overhead costs
What is another name for a fixed cost?
(148)
• Non-controllable cost
What are 2 examples of controllable
costs? (149)
• Food cost
• Hourly wage portion of labor cost
What is a fixed cost? (151)
• Costs that remain the same regardless of sales volume
What is an operating budget? (151)
• A financial plan for a specific period of time
What is a forecast? (152)
• A perdition of sales levels or costs that will
occur during a specific time period
Forecasting revenue is usually
determined by looking at what 2
things? (152)
• Historical data
• Average sales per customer
How do you calculate the average sales
per customer? (152)
• Total dollars divided by the total number of customers
What does the sales history show?
(153)
• It is a record of the number of portions of
every item sold on a menu
What is a production sheet? (153)
• It is a list of all of the menu items that are
going to be prepared for a given date.
The number of times a menu item is
sold during a particular time period is
known as what? (153)
• Sales history
What is a profit and loss report?
(156)
• A compilation od sales and cost information
for a specific period of time
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List the 7 stages of the flow of food
process. (165-166)
Purchasing
Receiving
Storage
Issuing
Preparation
Cooking
Service
What is the definition of food cost?
(167)
• The actual dollar value of the food used by an
operation during a certain period
How do you calculate food cost?
• (See page 167)
What is inventory? (167)
• This represents the dollar value of a food product
in storage and can be expressed in terms of units,
values or both
Define opening inventory. (167)
• The physical inventory at the beginning of a
given period (such as the month of April)
Define closing inventory. (167)
• The physical inventory at the end of a given period.
What is the formula for calculating
food cost percentage? (168)
• Total food cost / Sales = Food Cost Percentage
What are the 2 methods used to
determine the cost of ingredients in a
standard recipe? (170-171)
• As purchased
• Edible portion
What is as-purchased method? (170)
• It is used to cost an ingredient at the purchase price
before and trim or waste is taken into account.
What is the edible portion method?
(171)
• It is used to cost an ingredient after trimming and removing
waste so that only the usable portion of the item is reflected.
What is a food production chart?
(176)
• It is a form that shows how much product should be
produced by the kitchen during a given meal period.
What is a sales history used for? (176)
• It is critical in helping management forecast
how many portions of each menu item to
produce on a given day.
What is contribution margin? (178)
• The portion of dollars that a particular menu item
contributes to overall profits.
How do you calculate contribution
margin? What is the contribution
margin if a menu item sells for 15.00
and has cost of 33% to make?
What is the straight markup method?
(178)
• Multiply raw food costs by a predetermined
fraction
What is the average check method?
(178)
• The total revenue is divided by the number of
seats, average seat turnover and days open in
one year.
What 4 factors affect labor costs?
(187)
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Business volume
Employee turnover
Quality standards
Operating standards
How do you calculate employee
turnover? (189)
• It is the number of employees hired to fill one
position in a year’s time
What is listed on a master schedule?
(190)
• It lists no names. It just lists the positions and
the number of employees in those positions.
What is a chart that shows the
employee’s names and the days and
times they are to work? (191)
• Crew Schedule
List 3 things a good staff contingency
plan should include. (192)
• Cross training employees
• Identifying shift leaders
• Having on call employees
What is cross training? (192)
• Training employees to handle responsibilities
in areas of the operation aside from their
primary work responsibilities
Explain the process of having on call
employees. (192)
• A certain number of employees must call their
operation at a predetermined time to find out
whether they have to work that day.
What is the best time for restaurants
and foodservice operations to receive
deliveries? (199)
• When the operation is slow
How often should fresh fish be
delivered to an operation? (200)
• Daily
How often should meat be ordered
and delivered to an operation? (200)
• At least 2 or 3 times a week
What is the document from a vendor
that lists such details as items
purchased, date of order, purchaser
• Invoice and sales price? (201)
What is another name for an invoice?
(201)
• Bill
What does it mean to take a physical
inventory? (204)
• To count and record the number of each item
in the storeroom