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FN 133 LE #2 > Introduction To Cost Control > Flashcards

Introduction To Cost Control Flashcards

1
Q

The component of food service system that regulates, modifies, checks, and directs operations by using a set of standards

Used by managers to regulate and guard against excessive cost

A

Cost control

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2
Q

3 types of cost

A

Food cost
Labor cost
Overhead/operating cost

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3
Q

All forms of pay given to the employee (monetary and non-monetary)

A

Labor cost

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4
Q

Fixed or recurring expenses

A

Overhead/operating costs

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5
Q

prices of goods and services consumed and rendered

A

Cost

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6
Q

2 ways to classify cost

A

Based on:
Relationship to sales volume
Control

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7
Q

Classification based on relationship to sales volume and define

A

Fixed - unaffected by changes in sales volume; overhead/operating cost
Variable - affected; food and labor cost; directly variable and semi-variable

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8
Q

Classification of cost based on control

A

Uncontrollable - little or no control; overhead costs
Controllable - can be directly controlled by the manager; food and labor costs

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9
Q

What is prime cost?

A

Food and labor cost <= 65%

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10
Q

Projection of the cost in the future

A

Planned cost

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11
Q

Cost of food and labor in one period

A

Total cost

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12
Q

Cost documented in records

A

Historical cost

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13
Q

What is unit cost?

A

Cost per serving, per hourly work

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14
Q

Cost control process (NRA-EF)

A

1) Collect accurate sales and cost data
2) Monitor and analyze sales and cost
3) Take corrective action as appropriate

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15
Q

Period: data

Yearly and monthly:
Weekly and daily:
Daily and meal:

A

pre-operations planning
scheduling and purchasing
scheduling and planning

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16
Q

Sources of data

A

POS
Manual tabulation

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17
Q

Gross profit

A

Sales - cost of food

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18
Q

How do we monitor and analyze cost and sales data

A

Compare actual sales and costs to budget, historical data, and standards
Line item review
Get the difference: amount or percentage

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19
Q

Small changes can be

A

Significant losses

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20
Q

Actions to take to control cost

A

Corrective actions
Reforecast

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21
Q

Control techniques that a manager may use

A

Preparing and following budgets
Observing and correcting employees
Use of financial records
Training of employees
Establishment of procedures
Establishment of standards
Disciplining employees

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22
Q

Food service managers must simultaneously control

A

3 types of cost

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23
Q

Essential for monitoring daily financial records and to serve as basis for financial statements

A

Record keeping

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24
Q

Most readily controlled cost and subject to the greatest fluctuation

A

Food cost

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25
Food is sold, given away, wasted, stolen
Incurred
26
Effective control of food cost
Menu Menu costing and pricing SOP
27
Reconciliation of actual food cost with budgeted food costs Daily, weekly, or monthly basis
Food cost report
28
Cost of food sold formula
Cost of food sold = (opening inventory + purchase) - closing inventory
29
Formula for food cost %
(Food cost/sales) x 100
30
Give a possible cause for variance
31
Food cost control strategies
Correct costing and effective pricing of recipes Use of convenience foods Portion control Menu engineering Use of standardized recipes Forecasting
32
Starting point of budget control
Menu planning
33
Menus should be
Popular and profitable
34
How do we ensure that menus are profitable and popular?
Effective pricing Menu engineering
35
Conventional method of pricing
Prices are based on raw food cost multiplied by a mark-up factor
36
Food cost % is set by the
Management
37
Usual food cost %
35% Not exceeding 50%
38
Formula for mark-up factor
100%/food cost % Rounded off to two decimal places
39
Percentage added to account for hidden loss
10%
40
Formula for selling price of one dish (conventional method)
SP = (RFC + Hidden loss) x Mark up factor
41
Formula for selling price of one serving (CM)
SP = [(RFC + Hidden loss) x Mark up factor]/number of servings
42
Formula for selling price of combination menus (CM)
SP = (Total RFCs + Hidden loss) x Mark up factor
43
Detailed analysis that shows quantities sold of each item, along with their selling price and standard portion cost Used to compute for the composite food cost percentage
Menu product mix
44
Method of menu evaluation or analysis to determine what menu items are profitable and popular
Menu engineering (contribution analysis)
45
Involves computing for the popularity % (sales mix or product mix) for each food item within a menu category Reflects demand
Menu popularity analysis
46
Formula for %Popularity
%popularity = number of items sold/total number of items sold within the category
47
Ratio of one item’s profit contribution compared to the total profit contribution of all items sold within one menu category
Menu profitability analysis
48
Formula for profit contribution
Profit contribution = [selling price - (RFC + free items)] x number of orders sold for a menu item
49
%profitability
%profitability = (profit contribution/total category contribution) x 100
50
Star
Popular Profitable Increase promotions
51
Plow horse
Popular Not profitable Consider increase price
52
Puzzle
Profitable Not popular Evaluate what makes them not popular (price, quality, promotion)
53
Dog
Not popular Not profitable Remove if it does not affect the sales of other menu items
54
Food cost control in Purchasing
1) Implement buying policies set by the management 2) Choose suppliers after comparing 3) Purchase from reputable and reliable suppliers 4) Purchase what is needed 5) Establish and use specification 6) Follow a good purchasing procedure 7) Use necessary forms
55
Necessary forms in purchasing
PO PR Specifications Price list Summary of purchase records
56
Food cost control in receiving
Follow a good receiving procedure Use necessary forms
57
Forms in receiving
Invoices Credit memorandum and discrepancy report Price list Specifications Receiving records
58
Food cost control in storage, inventory, and issuance
Maintain proper conditions in dry and cold storage areas Follow a good procedure Practice control measures Document accurately and completely
59
Food production and service
Forecast Monitor portioning - portion control chart Food production chart Food mishap report Menu tally sheets
60
Tools for dish-up
Spoodle or slotted spoon Ladle Scoop Pre-portioned/by unit weight
61
A process used to direct, regulate, and restrain employees’ actions in order to obtain desired levels of performance at appropriate levels of cost Balancing concerns: management, employees and customers
Labor cost control
62
All forms of pay and other rewards given to employees
Compensation
63
Two kinds of compensation
Current: direct or indirect Deferred Action
64
Direct compensation
Salaries Wages Tips/Gratuities Bonus Commission
65
Fixed amount of compensation paid on a regular basis
Salaries
66
Compensation based on an hourly rate of pay
Wages
67
Given beyond obligation
Tips/gratuities
68
Compensation over a regular salary or wages given as a reward for a specific job performance.
Bonus
69
Compensation calculated as a percentage of sales
Commission
70
Indirect compensation
Paid vacation Health benefits Life insurance Meals Accommodations Use of recreational facilities Use of company automobiles
71
Deferred compensation
Also called back pay - received after the conclusion of the employment
72
Labor cost %
Labor cost % = (labor cost / sales) x 100
73
Planning stage: setting of standards
Payroll budget Position that needs to be filled Productivity standards Schedule of employees
74
Based on a labor cost % set by a certain type of operation and established based upon expected sales
Payroll budget
75
Expected sales depend on:
Menu pricing Type of service system Level of service offered
76
Based on a clear idea of what the enterprise is
Positions that need to be filled
77
Positions that need to be filled will base upon
Organizational chart Job analysis: job descriptions and specifications
78
2 things to consider in schedule of employees
1) type and number of employees needed at different levels of business volume 2) standard work hours
79
Aces in places
80
What refers to the indicators that facilitate effective monitoring of employee performance. Enumerate the indicators
Productivity/performance standards Quality Productivity Cost Safety Sanitation
81
Evaluation stage
Evaluating payroll cost in terms of the standard labor cost
82
Formula for actual and standard payroll cost
Actual PC = total hours x hourly wage rate Standard PC = standard work hours x hourly wage rate
83
Payroll cost %
Payroll cost % = (total payroll cost/total gross sales) x 100
84
Labor cost control strategies
Lower employee turnover Effective scheduling Training and development of employees Use of labor-saving devices Use of convenience foods
85
12-18% of departmental budget
Overhead/operational costs
86
Overhead cost control strategies
Establishment of protocols Maximized use of equipment Use of convenience foods Use of energy-saving equipment
87
Summary account used at the end of an accounting period to collect the balances of the nominal accounts so that the net profit or losses may be shown
Profit and loss statement
88
Summary of financial performance over a given interval of time (such as profit and loss statement)
Income statement
89
Lists the amounts of company assets, liabilities, and owner’s equity at the end of an accounting period.
Balance sheet
90
Tells how much your business is worth and if you can still go with it
Balance sheet
91
Refers to what you own, resources with economic value
Assets
92
Assets that could be turned into cash at a predictable value and a short amount of time (equal or less than 1 year)
Current assets
93
Monetary value of the company’s plant, equipment, property, patents, and other items used on a continuous basis. (More than 1 year)
Fixed assets
94
Liabilities
What you owe others, debts, obligations
95
Current liabilities
Must be paid off within the fiscal year (less than 1 year)
96
Mortgages, bonds, and other debts that are paid off gradually
Long-term liabilities

FN 133 LE #2 (3 decks)

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