Introduction & Types of cost control- Storing Flashcards
is defined as the expense to a foodservice establishment for goods and services when the goods are consumed or the services is rendered
cost
Food and services are considered “———-” when they have been used, wastefully or otherwise, and
are no longer available for the purposes for which they were acquired.
consumed
the cost of a piece of meat is incurred when the piece is no longer available for the purpose for which it was purchased, because it has been cooked, served, or thrown away because it has spoiled, or even because it has been stolen.
Example of food cost
the cost of labor is incurred when people are on duty, whether or not they are working and whether they are paid at the end of a shift or at some later date.
example of labor cost
The cost of any item may be expressed in a variety of unit such as
weight
volume
count
weighing an item such as a piece of meat, vegetables
weight
only for liquid item such as fruit juices, coffee, cooking oil, vinegar
volume
materials that we can —— visually for examples of a can of tuna, a bottles of soy sauce
count
9 types of cost:
Fixed costs
Variable costs
Controllable costs
noncontrollable costs
unit costs
total costs
prime cost
historical cost
planned costs
costs that are normally unaffected by changes in sales volume. They have little direct relationship to the business volume because they do not change significantly
when the number of sales increases or decreases
fixed costs
cost is one that varies on a linear basis with revenue. Are those that are clearly related to business volume. Example: Cost of food, beverages & labor.
Variable costs
2 types of variable costs
Direct variable costs
Semi variable costs
are those that are directly linked to volume of business, such that every increase or decrease in volume brings a corresponding increase or decrease in cost. The obvious variable costs are food and beverage.
directly variable costs
has both fixed and variable element, meaning that a PORTION of it should change with short-term changes in business volume and another portion should not.
semi variable costs
are those that can be changed in the short term. Variable costs are normally controllable. The cost of food or beverages, for example, can be changed in several ways – by changing portion sizes, by changing ingredients in the recipe, or by
changing the quality of the products purchased.
Controllable costs
are those that cannot normally be changed in the short term. These
are usually the fixed costs, and a list of the common ones would include rent, interest on a mortgage, real estate taxes, licence fees and depreciation.
Noncontrollable costs
food and beverage portions, as in the cost of one steak or one watermelon juice, or unit of work, as in the hourly rate for an employee.
Unit costs
Total cost of all food served in one period, such as a week or a month, or the total cost of labor for one period
Total costs
refer to the costs of materials and labor: food, beverages and payroll. —— are defined as the sum of food costs, beverage costs and labor costs (salaries and wages, plus employee benefits).
Prime Cost
the definition of cost at the beginning of this chapter carries with it an
implication that all costs are historical – that is, that they can be found in business records, books of account, financial statements, invoices, employees’ time cards, and other similar records.
Historical Cost
———- is among the most important functions of management and in order to plan effectively, managers use historical costs to develop planned costs –
projection of what costs will be or should be for a future period.
Planned costs
In food and beverage establishment, THREE types of cost;
- Food and beverage cost
- Labor cost
- Overhead cost
Known as raw material cost including expenses of meat, chicken & poultry, fish, seafood, dairy product, vegetables and foodservice food product items. This cost is the largest cost in most of the cost of raw material.
Food and beverage cost
includes the cost of all employees necessary to run the business, including taxes and benefits. In most operations, —— are second only to food costs in total
dollar spent.
Labor cost
