PS2 Unit 3: Cost Controls

PS2 Unit 3: Cost Controls

Non-controllable or Fixed costs do NOT change with sales.

These costs are bills the restaurant pays out no matter how much they sell.

Non-controllable or Fixed costs include

• Mortgage/Rent

• Utility Bills

• Management Salaries

• Insurance

Multiple Choice

Which cost in non-controllable or fixed?

• Food and beverage

• Hourly wages

• Seasonal advertising

• Manager Salaries

Forecast

Is an estimation of how changes will affect business profits in the future.

Customer Count Forecasting

Uses the number of expected guests to determine purchasing needs.

Multiple Choice

Which type of forecast uses the number of expected guests to determine purchasing needs?

• Projectural

• Usage

• Perpetual

• Customer count

Multiple Choice

Employees covered under the Fair Labor Standards Act (FLSA) who must be paid a minimum wage and overtime for working over 40 hours per week are classified as

• Exempt

• Non-exempt

Managers are exempt from overtime

They make the same wage every week no matter how many hours they work.

Multiple Choice

Which of the following plans help the operation remain efficient during adverse conditions, such as a power outage?

• Operational Plan

• Contingency Plan

Contingency

Emergency plans in case of fire, tornado, or power outage

Get your CALCULATOR ready!

Food Cost Percentage Method

To find a menu price

• The item FOOD COST is what is costs the restaurant in products to make it.

• The Food Cost PERCENTAGE is expressed as a decimal 0.30 = 30%.

• The Menu Price is what customers will pay for the item.

A restaurant uses the food cost percentage method to price its menu. With a food cost percentage of 30% for each dish, what should the menu price be for an entrée with a raw food cost of $4.00?

• Item food cost / FC percent = menu price

• 4/0.30 = ?

Multiple Choice

4/.0.30 = ?

• $7.50

• $12.00

• $13.33

• $16.00

$13.33 is a strange, uneven number to put on a menu

Round up to $13.50 or $13.99 on the menu

Make-or-Buy Analysis

Will we make more money if we make it or buy it?

Make-or-Buy Analysis - items to consider:

• ​Do I have enough storage for the ingredients?

• ​Does my Staff have the SKILLS to make the product consistently?

• ​Is the Purchased Product HIGH QUALITY?

• ​Can I afford the product and labor to make the item?

Multiple Choice

The question that should be considered when conducting a make-or-buy analysis is, “Does the

• supplier offer the lowest prices?”

• staff have the skills to make this product consistently?”

Food Flow

Controlling the food flow keeps food safe & helps managers save money = increase profit

​

​

Multiple Choice

The purpose of controlling all 9 steps of the food flow process is the

• A. result in higher food costs.

• B. result in lower food costs.

• C. result increased consumer ratings.

• D. result in loosely monitored areas of business functions.

Multiple Choice

Which of the following costs are MOST impacted by business volume? (CONTROLLABLE/VARIABLE COST)

• Rent

• Labor

• Utilities

• Insurance

Labor is semi-variable

• Is a controllable cost.

• If we have less sales or less business volume we can send hourly workers home.

• ​MANAGERS are salary workers, an noncontrollable cost

There are 3 channels of distribution

That is: 3 levels of getting food to customers

Primary Source

Buying FOOD directly from the farm

Intermediary Source

Wholesalers who buy from the farmers

Retailers

Grocery Stores and Restaurants

Multiple Choice

Which distribution channel does a farmer represent?

• Intermediary Source

• Primary Source

• Retailer

• Distributor

Multiple Choice

In a channel of distribution, wholesalers, suppliers, and distributors are considered to be

• caterers.

• primary sources.

• retailers.

• intermediaries.

Chefs use their inventory counts to calculate their Food Cost

• Count the inventory Dec. 1st (opening inventory)

• Add all PURCHASES in December

• Count the inventory Jan. 1st and SUBTRACT IT (closing inventory)

• The amount left is how much the chef spent on food in December = FOOD COST

• NOW: pick out the correct formula

Multiple Choice

How does an operation determine its food cost?

• A. (Closing Inventory + Supply Purchases) – Opening Inventory

• B. (Total Supply Inventory + Supply Purchases) – Revenue

• C. (Opening Inventory + Purchases) – Closing Inventory

• D. (Opening Inventory + Labor Cost) – Closing Inventory

Remember: Item Food Cost

undefinedFood Cost Percentage =  Menu Price

• The item FOOD COST is what is costs the restaurant in products to make it.

• The Food Cost PERCENTAGE is expressed as a decimal 0.30 = 30%.

• The Menu Price is what customers will pay for the item.

Multiple Choice

Using the food cost percentage method, which item would be divided by the food cost in order to calculate menu price?

• A. Food cost percentage

• B. Labor cost percentage

• C. Menu price percentage

• D. Dollar amount percentage

Multiple Choice

Employees learn how to perform the duties of another job within the operation in

• Cross-training

• On-the-job training

• Group training

• Classroom training

Multiple Choice

Which type of training should be used when many employees need to learn the same thing?

• group training

• cross-training

• on-the-job training

• hands-on training

Specifications

Chefs create specifications for products to make sure the orders are up to standard.

Example: Fresh Apples Spec Sheet for a Hilton Hotel

• US Extra Fancy

• Fruit must be symmetrical

• Fruit must be free of any blemish

• Fruit must be individually wrapped

• Fruit must meet all expectations for US Extra Fancy

Example: Apple Spec Sheet for a School Cafeteria

• US Fancy

• Fruit must be free of blemishes

• Fruit must be free from bruising

• No damage to the case

• Fruit may be asymmetrical

Multiple Choice

What creates challenges in meeting the established quality specifications for fresh foods?

• Wide variance in seasonality, availability, and degree of freshness of products

• High energy costs required for delivery and preservation of food at optimal temperatures

Remember the Conversion Factor Formula

Multiple Choice

What is the formula for increasing or decreasing recipe yields?

• Original yield divided by desired yield

• Desired yield divided by original yield

Multiple Choice

Lease or mortgage payments are considered to be what type of cost?

• Business

• Variable

• Fixed

• Controllable

Lease or Mortgage payments are FIXED

The monthly lease or mortgage is the SAME COST no matter how much or little profit the restaurant makes.

Multiple Choice

Employee turnover is defined as the number of employees

• needed to fill one shift.

• hired to fill one position in a year's time.

Multiple Choice

A profit and loss report is a compilation of which two items?

• Sales and Revenue

• Sales and Costs

Get your Calculator ready!

Finding Food Cost Percentage

Multiple Choice

An operation began the month with a $25,000 food inventory, closed the month with $23,000, and purchased $19,000 worth of food products. Food sales for the month totaled $63,000. What was the food cost percentage?

• 27.3

• 30.9

• 32.2

• 33.3

Multiple Choice

When an employer asks a prospective employee about his or her age, the employer is engaging in

• discrimination.

• successive interviewing.

• job applicant screening.

• termination.

If you are over 18

Interviewers cannot ask your age

Remember: an operating budget is

a financial PLAN for a specific period of time.

This is a tough question

Ms. S will walk us through it:

Multiple Choice

An operating budget serves many purposes in the management of a restaurant or food service operation, including

• providing a plan for a non specific period of time.

• calculates non-controllable costs, lists managers’ goals, and measures actual staff performance.

• aids in controlling operational costs, lists operational needs, and calculates actual costs against anticipated revenue

• identifying all controllable cost needs, such as labor, food and beverages and supplies.

And here's the last question!

This unit is tough. You've done a great job hanging in.

Multiple Choice

Regularly running out of a menu item is the result of a failure in which step of the purchasing cycle?

• A. Writing product bid specifications

• B. Determining what needs to be purchased

• C. Determining staffing needs

• D. Selecting an excellent vendor