Key Terms in Cost Management

Front

Controllable costs

Back

Expenses that can be altered in the short term and a manager has the power to influence (i.e., food and beverage, advertising, employee compensation, office supplies).

Front

Daily Production Report

Back

A specific report that shows how much food product was used, how much was sold, and how much was unused, or left over.

Front

Fixed costs

Back

Expenses that are constant whatever the amount business is conducted (i.e., rent, salary wages, insurance, some utilities like electricity and internet).

Front

Perpetual inventory

Back

A system in which information about inventory quantity and availability is computerized and updated on a continuous basis.

Front

Physical inventory

Back

An actual count of what you have on hand.

Front

Prime costs

Back

Expenses that are directly related to the production of each menu item (i.e., food and beverages in a restaurant).

Front

Product specification

Back

A tool used to let the vendor know the specific product you need. These specifications precisely describe the product you expect.

Front

Requisition

Back

An internal, formal method for one department or profit-center to request items from a central purchasing authority, such as a storeroom.

Front

Sales cycle

Back

The period between supply deliveries.

Front

Variable costs

Back

Expenses that vary with the level of output (i.e., food and beverage, hourly wages, and some utilities like water).