chapter 5

Question 1

cost of sales

Answer 1

The ability to accurately calculate and report an operation’s cost of sales is an important management skill….

Question 2

Computing Cost of Food Sales

Answer 2

It is important to recognize that the cost of sales incurred by an operation in an accounting period is most often not equal to the amount of food purchases in that same accounting period.

Question 3

Cost of the food sold

Answer 3

Beginning Inventory + Purchase - Less Inventory - Employee Meals

Question 4

Purchase

Answer 4

Food available for sale
The purchases amount is determined by adding and properly summing the value of all delivery invoices and other bills for products purchased in the accounting period.

Question 5

Ending Inventory

Answer 5

Cost of food consumed

It must be determined by completing an accurate physical inventory.

Question 6

Employee meals

Answer 6

Cost of food sold

Question 7

Beginning inventory

Answer 7

It is determined by completing a physical inventory; the actual count and valuation of all foods in storage and/or in production areas.

Question 8

Food cost percentage

Answer 8

Cost of food sold/ Food sales= Food cost percentage

Question 9

Cost per meal

Answer 9

Cost of food sold/ Total meals served= Cost per meal

Question 10

Cost of Beverage sold

Answer 10

Beginning Inventory+ Purchase- Ending Inventory

Question 11

Beverage cost percentage

Answer 11

Cost of beverage sold/ Beverage sales

Question 12

Managers who understand the cost of sales formulas for food and beverages are in a good position to perform a variety of tasks that can improve the management of their operations. These include

Answer 12

1. Calculating cost of sales for individual product categories
2. Estimating daily cost of sales
3. Comparing actual costs to attainable costs

Question 13

Cost of Sales by Category

Answer 13

1. In many cases, restaurant managers calculate separate cost of sales percentages or proportions only for certain items such as meats and sea foods.
2. Similarly, beverage managers often calculate separate cost of sales percentages for their beer, wine, and liquor sales.

Question 14

as purchased (AP)

Answer 14

This refers to the weight or count of a product as it is delivered to the foodservice operator.

Question 15

Edible portion (EP)

Answer 15

refers to the weight of a product after it has been cleaned, trimmed, cooked, and portioned.

Question 16

yield test

Answer 16

is a procedure used for computing actual EP costs on an AP product that sustains weight or volume loss during preparation.

Question 17

product yield

Answer 17

Product As Purchased (AP)- Losses due to preparation

= Product Edible Portion (EP).

Question 18

butcher’s yield test

Answer 18

considers loss due to trimming inedible fat and bones, as well as losses due to cooking or slicing when they calculating EP costs

Question 19

Waste %

Answer 19

is the percentage of product lost due to cooking, trimming, portioning, or cleaning. Managers calculate an item’s waste % using the following formula:
Waste %= Product Loss/ AP Weight

Question 20

Yield %

Answer 20

is the percentage of product remaining after cooking, trimming, portioning, or cleaning.
Yield %= 1.00- Waste %

Question 21

Managers determine the amount of an AP ingredient they must have available by using the following formula:

Answer 21

EP Required/ Product Yield %= AP Required

Question 22

Another way to determine product yield % is to compute it directly using the following formula:

Answer 22

EP Weight/ AP Weight= Product Yield %

Question 23

Edible portion cost (EP cost)

Answer 23

is the portion cost of the item after cooking, trimming, portioning, or cleaning. The EP cost is useful to know because it represents the true cost of an ingredient or menu item based on its product yield.
AP Price per unit/ Product Yield %= EP Cost (per unit)

Question 24

Operational Efficiency

Answer 24

Compares how well a manger is doing with how well he or she should be doing.

Question 25

Attainable product cost

Answer 25

is defined as that cost of goods sold figure that should be achievable given the product sales mix of a particular operation.

Question 26

Operational efficiency ratio

Answer 26

Actual Product Cost/ Attainable Product Cost

Question 27

Attainable food cost percentage

Answer 27

Cost as per Standardized Recipes/ Total Sales= Attainable Product Cost %

Question 28

When comparing their actual product costs with their attainable product costs they use the following formula

Answer 28

(Actual Product Cost − Attainable Product Cost)/ Attainable Product Cost= Cost Percentage Variance

Question 29

To achieve product costs that are at their proper proportion of sales managers must perform three important tasks.

Answer 29

1. Minimizing product loss in the kitchen 2. Minimizing product loss in the bar 3. Optimizing overall cost of sales percentage

Question 30

Food and Beverage Product Security Tips

Answer 30

1. Keep all storage areas locked and secure. 2. Issue food only with proper authorization and management approval. 3. Monitor the use of all carryovers. 4. Do not allow food to be prepared unless a guest check or other written request precedes the preparation. 5. Maintain an active inventory management system. 6. Ensure that all food received is signed for by the appropriate receiving clerk. 7. Do not pay suppliers for food products without an appropriate and signed invoice. 8. Do not use “petty cash” to pay for food items unless a receipt and the product can be produced. 9. Conduct systematic physical inventories of all level A, B, and C level products. 10. Do not allow employees to remove food from the premises without management’s specific approval.

Question 31

Minimizing Product Loss in the Bar

Answer 31

1. Order Filled but Not Rung Up 2. Use Mystery shoppers 3. In-room minibars Bottle sales Open bars Banquet operations

Question 32

Optimizing Overall Cost of Sales Percentage

Answer 32

1. If costs can be kept constant but sales increase, the cost percentage goes down. 2. If costs remain constant but sales decline, the cost percentage increases. 3. If costs go up at the same rate sales go up, the cost of goods sold percentage will remain unchanged. 4. If costs can be reduced while sales remain constant, the cost percentage goes down. 5. If costs increase with no increase in sales, the cost percentage will go up.

Question 33

Reducing Overall Product Cost Percentage | Six methods for reducing product cost percentage

Answer 33

1. Decrease portion size relative to price 2. Vary recipe composition. 3. Adjust product quality. 4. Achieve a more favorable sales mix. 5. Ensure that all product purchased is sold 6. Increase price relative to portion size

Question 34

Ensure That All Product Purchased Is Sold

Answer 34

These seven words have tremendous implications. They include all phases of professional purchasing, receiving, storage, inventory, issuing, production, service and cash control.

Question 35

Decrease Portion Size Relative to Price

Answer 35

Product cost percentages are directly affected by portion size. Most guests would prefer a smaller portion size of higher quality ingredients than the reverse. Portion sizes are determined by the foodservice manager and, as a result, they are variable.

Question 36

Sales mix

Answer 36

is defined as the series of guest purchasing decisions that result in a specific food or beverage cost percentage.

Question 37

Perform nutrition-related analysis of menu items, including

Answer 37

``` Recipe nutrient analysis Diet analysis FDA (Food and Drug Administration) food labels Diabetic exchange Weight management components ```

Question 38

Maintain product usage records by

Answer 38

``` Vendor Product Food category Individual menu item Ingredient ```