Edelstein Chapter 9: Fiscal Management in Foodservice

Question 1

As Purchased (AP)

Answer 1

The actual price paid for food.

Question 2

Contribution Margin (CM)

Answer 2

Is the same as gross profit and CM is equal to sale price minus the variable cost.

Question 3

Cost Plus Method

Answer 3

Prices are calculated for menu items based on the entire cost to produce the item; per portion costs for food, direct labor, operating expenses, fixed expenses, and profit.

Question 4

Covers Per Labor Hour

Answer 4

Determined by dividing the total number of customers served by total number of hours worked.

Question 5

Edible Portion (EP)

Answer 5

The portion of the food that can be eaten or yielding portion.

Question 6

Factor Method

Answer 6

The raw food cost is multiplied by a predetermined factor that takes into account labor, supplies, and any projected profit margin.

Question 7

Labor Cost Per Cover

Answer 7

Calculated by dividing total payroll by number of covers (customers or meals) during the period of the payroll.

Question 8

Labor Cost Per Labor Hour

Answer 8

Calculated by dividing total payroll by total labor hours.

Question 9

Menu Engineering

Answer 9

An evaluating tool used to determine how well a menu item is doing in foodservice business. It determines the menu mix and contribution margin for each product and compares them with an average menu mix or average contribution margin.

Question 10

Menu Mix

Answer 10

The percent popularity of a menu item in comparison to other items sold with it.

Question 11

Par Stock Level

Answer 11

The maximum amount of food item that should be in inventory at a time. It is the same as maximum inventory level.

Question 12

Percent Food Cost Method

Answer 12

Figure reached by dividing the cost of a particular food by the cost of the total food bill.

Question 13

Percent Popularity

Answer 13

Measures how popular a menu item is in comparison with other menu items sold with it.

Question 14

Physical Inventory

Answer 14

An actual count of the inventory items and a paper record of them to determine the total cost of inventory, inventory turnover rate, cost of food sold, and percent food cost.

Question 15

Prime Cost Method

Answer 15

The sum of food and labor costs is multiplied by a predetermined pricing factor that accounts for food and labor through separate percentages/

Question 16

Reorder Point

Answer 16

Computation relating to the reorder point or economic order quantity is a concept that balances ordering frequencies of orders.

Question 17

Safety Level

Answer 17

An additional amount of food allowed in inventory to safeguard against running out in the middle of the week or before the ordered food is received. Every operation can determine its safety level for its foods based on experience.

Question 18

Sales Per Labor Hour

Answer 18

Determined by dividing the total sale by the number of total labor hours.

Question 19

Variable Cost

Answer 19

The cost that goes up and down depending on the volume of sales.

Question 20

Variable Rate (VR)

Answer 20

The ratio of variable cost to a dollar.

Question 21

Contribution Rate (CR)

Answer 21

The ratio of the sum of fixed cost and profit to sales or the difference between one and variable rate.