Chapter 2 Cost And Sales Concept) Flashcards
Define cost
Cost is the value of money that has been used up to produce something or deliver a service,
What is cost labor
the amount paid by an employer to cover an employee’s wages and benefits, plus related payroll taxes and benefits date.
How can labor cost be expressed
Labor costs can be expressed as value per hour or value per week
List the different types of costs
Fixed cost
variable cost
Controllable cost
Non-controllable costs
Prime cost
Historical and planned costs
Define Fixed cost
They are expenses that stay the same no matter how much activity a business is doing.
Give examples of fixed costs
Insurance premiums
real estate taxes
salaries
depreciation on equipment
Repairs and maintenance
Most utility costs
And costs of professional services
Variable costs Itf
A cost that increases it decreases based on the business volume
Ch
examples of variable costs
examples of variable costs are food,
beverages, and labor
Food and beverage costs (directly variable cost)
Food and beverage costs are considered directly variable costs. Directly
variable costs are directly linked to volume of business, so that every
increase or decrease in volume brings a corresponding increase or decrease
in cost.
Semi veriable cost
It contains both fixed and veriable costs
Controllable
costs
Controllable
costs can be changed in the short term.
For example changes in food and beverage and labor
noncontrollable costs
noncontrollable costs cannot normally be changed in the
short term. These are usually fixed costs. It include rent, interest on a mortgage, real estate taxes, license fees, and
depreciation.
Unit price
the price for a single unit of measure of a product sold in more or less than the single unit
Prime cost
prime cost is defined as the sum of food costs,
beverage costs, and labor costs
Historical and planned costs
Historical costs are used for various important purposes,
such as establishing unit costs, determining menu prices, and comparing
present with past labor costs.
historical costs are necessary for effective planning.
two basic groups of terms normally
used in food and beverage operations to express sales concepts
monetary
and nonmonetary sales
Monetary sales includes:
Total sales
Total sales by category
Total sales per server
Total sales per seat
Sales price
Average sales
Average check
Average sales per server
Define total sales
the total volume of sales expressed in dollar terms.
Total Sales measures the total revenue generated from all sales transactions
Total Sales by Category
Total dollar sales by category refer to the total dollar volume of sales for all items in one category, such as total food sales or total beverage sales
Total Sales per Server
Total Sales per Server: Total sales per server is the total dollar volume of sales for which a given server has been responsible in a given time period, such as a meal period, a day, or a week
Total Sales per Seat
Total sales per seat is the total dollar sales for a given time period divided by the number of seats in the restaurant, typically used for annual comparisons.
It is calculated by dividing the total revenue earned in a given period (usually a day, week, or month) by the total number of guests served during that same period
Sales Price
Sales Price: Sales price refers to the amount charged to each customer purchasing one unit of a particular item, which contributes to the total dollar sales for that time period.
Average Sale
Average Sale: An average sale in business is determined by adding individual sales to determine a total and then dividing that total by the number of individual sales, with common measures being average check and average sale per server
calculated by dividing the total revenue earned by the total number of units sold
Average check
Average check is the result of dividing total dollar sales
by the number of sales or customers
the amount a customer spends on a single visit to your business
Average dollar sale functions
The average dollar sale is used by foodservice operators to compare
the sales performance of one employee with that of another, to identify sales
trends, and to compare the effectiveness of various menus, menu listings, or
sales promotions.
Average Sale per Server.
Average Sale per Server. Average sale per server is total dollar sales
for an individual server divided by the number of customers served by that
individual
Non-monetary sales include
Total number sold
Cover
Total covers
Average covers
Seat turnover
Sales mix
Total number sold
Total number sold refers to the total number of steaks, shrimp cocktails,
or any other menu items sold in a given time period.
For example, foodservice managers use total number sold
to identify unpopular menu items in order to eliminate such items from
the menu.
Cover
Cover is a term used in the industry to describe one diner, regardless of the
quantity of food he or she consumes
Total Covers
Total Covers. Total covers refers to the total number of customers served
in a given period — an hour, a meal period, a day, a week, or some other
period
average covers
An average number of covers is determined by dividing
the total number of covers for a given time period by some other number.
That number may be the number of hours in a meal period, the number of
days the establishment is open per week, or the number of servers on duty
during the time period,
Seat turnover
Seat turnover , most often called simply turnover or turns , refers to the num-
ber of seats occupied during a given period divided by the number of seats available.
,
Sales mix
Sales mix is a term used to describe the relative quantity sold of any menu
item as compared with other items in the same category
the variety of products offered by a company and the profit generated from this range of products
there are two basic types of foodservice operations
- Those that operate at a low margin of profit per item served and depend
on relatively high business volume - Those that operate at a relatively high margin of profit per item and
therefore do not require such high business volume
overhead cost
The term overhead cost is used to mean all costs other than prime cost.
Overhead normally consists of all the fixed costs associated with operating the business.
