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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
Q

Food is sold, given away, wasted, stolen

A

Incurred

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26
Q

Effective control of food cost

A

Menu
Menu costing and pricing
SOP

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27
Q

Reconciliation of actual food cost with budgeted food costs

Daily, weekly, or monthly basis

A

Food cost report

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28
Q

Cost of food sold formula

A

Cost of food sold = (opening inventory + purchase) - closing inventory

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29
Q

Formula for food cost %

A

(Food cost/sales) x 100

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30
Q

Give a possible cause for variance

A
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31
Q

Food cost control strategies

A

Correct costing and effective pricing of recipes
Use of convenience foods
Portion control
Menu engineering
Use of standardized recipes
Forecasting

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32
Q

Starting point of budget control

A

Menu planning

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33
Q

Menus should be

A

Popular and profitable

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34
Q

How do we ensure that menus are profitable and popular?

A

Effective pricing
Menu engineering

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35
Q

Conventional method of pricing

A

Prices are based on raw food cost multiplied by a mark-up factor

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36
Q

Food cost % is set by the

A

Management

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37
Q

Usual food cost %

A

35%
Not exceeding 50%

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38
Q

Formula for mark-up factor

A

100%/food cost %
Rounded off to two decimal places

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39
Q

Percentage added to account for hidden loss

A

10%

40
Q

Formula for selling price of one dish (conventional method)

A

SP = (RFC + Hidden loss) x Mark up factor

41
Q

Formula for selling price of one serving (CM)

A

SP = [(RFC + Hidden loss) x Mark up factor]/number of servings

42
Q

Formula for selling price of combination menus (CM)

A

SP = (Total RFCs + Hidden loss) x Mark up factor

43
Q

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

A

Menu product mix

44
Q

Method of menu evaluation or analysis to determine what menu items are profitable and popular

A

Menu engineering (contribution analysis)

45
Q

Involves computing for the popularity % (sales mix or product mix) for each food item within a menu category

Reflects demand

A

Menu popularity analysis

46
Q

Formula for %Popularity

A

%popularity = number of items sold/total number of items sold within the category

47
Q

Ratio of one item’s profit contribution compared to the total profit contribution of all items sold within one menu category

A

Menu profitability analysis

48
Q

Formula for profit contribution

A

Profit contribution = [selling price - (RFC + free items)] x number of orders sold for a menu item

49
Q

%profitability

A

%profitability = (profit contribution/total category contribution) x 100

50
Q

Star

A

Popular
Profitable
Increase promotions

51
Q

Plow horse

A

Popular
Not profitable
Consider increase price

52
Q

Puzzle

A

Profitable
Not popular
Evaluate what makes them not popular (price, quality, promotion)

53
Q

Dog

A

Not popular
Not profitable
Remove if it does not affect the sales of other menu items

54
Q

Food cost control in Purchasing

A

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
Q

Necessary forms in purchasing

A

PO
PR
Specifications
Price list
Summary of purchase records

56
Q

Food cost control in receiving

A

Follow a good receiving procedure
Use necessary forms

57
Q

Forms in receiving

A

Invoices
Credit memorandum and discrepancy report
Price list
Specifications
Receiving records

58
Q

Food cost control in storage, inventory, and issuance

A

Maintain proper conditions in dry and cold storage areas
Follow a good procedure
Practice control measures
Document accurately and completely

59
Q

Food production and service

A

Forecast
Monitor portioning - portion control chart
Food production chart
Food mishap report
Menu tally sheets

60
Q

Tools for dish-up

A

Spoodle or slotted spoon
Ladle
Scoop
Pre-portioned/by unit weight

61
Q

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

A

Labor cost control

62
Q

All forms of pay and other rewards given to employees

A

Compensation

63
Q

Two kinds of compensation

A

Current: direct or indirect
Deferred Action

64
Q

Direct compensation

A

Salaries
Wages
Tips/Gratuities
Bonus
Commission

65
Q

Fixed amount of compensation paid on a regular basis

A

Salaries

66
Q

Compensation based on an hourly rate of pay

A

Wages

67
Q

Given beyond obligation

A

Tips/gratuities

68
Q

Compensation over a regular salary or wages given as a reward for a specific job performance.

A

Bonus

69
Q

Compensation calculated as a percentage of sales

A

Commission

70
Q

Indirect compensation

A

Paid vacation
Health benefits
Life insurance
Meals
Accommodations
Use of recreational facilities
Use of company automobiles

71
Q

Deferred compensation

A

Also called back pay - received after the conclusion of the employment

72
Q

Labor cost %

A

Labor cost % = (labor cost / sales) x 100

73
Q

Planning stage: setting of standards

A

Payroll budget
Position that needs to be filled
Productivity standards
Schedule of employees

74
Q

Based on a labor cost % set by a certain type of operation and established based upon expected sales

A

Payroll budget

75
Q

Expected sales depend on:

A

Menu pricing
Type of service system
Level of service offered

76
Q

Based on a clear idea of what the enterprise is

A

Positions that need to be filled

77
Q

Positions that need to be filled will base upon

A

Organizational chart
Job analysis: job descriptions and specifications

78
Q

2 things to consider in schedule of employees

A

1) type and number of employees needed at different levels of business volume
2) standard work hours

79
Q

Aces in places

A
80
Q

What refers to the indicators that facilitate effective monitoring of employee performance.

Enumerate the indicators

A

Productivity/performance standards

Quality
Productivity
Cost
Safety
Sanitation

81
Q

Evaluation stage

A

Evaluating payroll cost in terms of the standard labor cost

82
Q

Formula for actual and standard payroll cost

A

Actual PC = total hours x hourly wage rate
Standard PC = standard work hours x hourly wage rate

83
Q

Payroll cost %

A

Payroll cost % = (total payroll cost/total gross sales) x 100

84
Q

Labor cost control strategies

A

Lower employee turnover
Effective scheduling
Training and development of employees
Use of labor-saving devices
Use of convenience foods

85
Q

12-18% of departmental budget

A

Overhead/operational costs

86
Q

Overhead cost control strategies

A

Establishment of protocols
Maximized use of equipment
Use of convenience foods
Use of energy-saving equipment

87
Q

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

A

Profit and loss statement

88
Q

Summary of financial performance over a given interval of time (such as profit and loss statement)

A

Income statement

89
Q

Lists the amounts of company assets, liabilities, and owner’s equity at the end of an accounting period.

A

Balance sheet

90
Q

Tells how much your business is worth and if you can still go with it

A

Balance sheet

91
Q

Refers to what you own, resources with economic value

A

Assets

92
Q

Assets that could be turned into cash at a predictable value and a short amount of time (equal or less than 1 year)

A

Current assets

93
Q

Monetary value of the company’s plant, equipment, property, patents, and other items used on a continuous basis. (More than 1 year)

A

Fixed assets

94
Q

Liabilities

A

What you owe others, debts, obligations

95
Q

Current liabilities

A

Must be paid off within the fiscal year (less than 1 year)

96
Q

Mortgages, bonds, and other debts that are paid off gradually

A

Long-term liabilities

FN 133 LE #2 (3 decks)

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