Chapter 7: Cost Control

Question 1

q1as a management function, deals with the measurement of current performance and guidance towards some predetermined goals

Answer 1

control

Question 2

a process of making actual costs conform to a standard

Answer 2

cost control

Question 3

defined as the prediction of the amount of money needed for a specific period of time

Answer 3

budget

Question 4

type of budget

overall financial budget

ex: balance sheet, income statement

Answer 4

master budget

Question 5

type of budget

forecast of sales activity and an estimate of costs that will be incurred in generating those sales

includes: revenues, expenses, changes in inventory, and other working capital items

Answer 5

operating budget

Question 6

type of budget

based on set, predetermined level of activity or transactions

Answer 6

fixed budget

Question 7

type of budget

reflects variability in performance activities

Answer 7

flexible budget

Question 8

type of budget

identifies amount of cash on hand at any given time

Answer 8

cash budget

Question 9

type of budget

allocates funds bases on efficiency and necessity rather than budget history

Answer 9

cash budget

Question 10

type of budget

allocates funds bases on efficiency and necessity rather than budget history

Answer 10

zero-based budget

Question 11

type of budget

predict costs of capital expenditures of long-term plan used to estimate

includes equipment replacement, renovation projects, and facility expansion

Answer 11

capital budget

Question 12

pertains to resources expended in order to achieve an objective

Answer 12

cost

Question 13

elements of cost are (3)

Answer 13

raw materials
labor
overhead

Question 14

cost

expired, consumed, or utilized costs

Answer 14

expenses

Question 15

cost

unaffected by change in business volume

Answer 15

fixed cost

Question 16

cost

affected by change in business volume

Answer 16

variable cost

Question 17

cost

affected by short-term plans and operational objectives

Answer 17

controllable cost

Question 18

does not easily change over time, fixed cost

Answer 18

untcontrollable cost

Question 19

cost

cost of goods and services agreed upon by the management

Answer 19

standard cost

Question 20

cost

incurred costs of operation

Answer 20

actual cost

Question 21

cost

can be traced directly to the product

Answer 21

direct cost

Question 22

cost

cannot be traced directly on the product

Answer 22

indirect cost

Question 23

cost

legitimate business cost

any activity that increases the variable cost or unexpectedly reduces sale that can reduce profit

Answer 23

hidden cost

Question 24

defined as a set of rules or measures established in order to make comparisons and judgments

Answer 24

setting standards

Question 25

setting standards defines the degree of acceptability of inputs, finished products, and work performance

Answer 25

quality

Question 26

setting standards degree of acceptability based on weight, count, or volume

Answer 26

quantity

Question 27

setting standards must be accurately determined to determine effectiveness of the operations

Answer 27

cost

Question 28

established methods and techniques for routine operations

Answer 28

procedures

Question 29

procedures established by the management must be followed for standardization purposes

Answer 29

training

Question 30

involves monitoring performance, discipling employees, and taking appropriate actions to correct deviations from standards

Answer 30

effective supervision and leadership

Question 31

provide information for decision-making

Answer 31

records and reports

Question 32

involves setting basic policy decisions

Answer 32

pre-operational control

Question 33

pre-operational control concerned with the profitability of the company

Answer 33

financial policy

Question 34

pre-operational control provision of satisfactory standards for the F&B according to target market, type of menu, methods of purchasing, food quality, type of service, and facilities design

Answer 34

catering policy

Question 35

involves built-in checks and technological and operational procedures covering the different stages of foodservice activities

Answer 35

operational control

Question 36

involves cost reporting, assessment of results, and taking corrective actions

Answer 36

post operational control

Question 37

percentage of total sales spent on food products

Answer 37

food cost

Question 38

cost distribution based on % of sales: 40-45%

Answer 38

food costs

Question 39

cost distribution based on % of sales: 30-35%

Answer 39

labor costs

Question 40

cost distribution based on % of sales: 10-15%

Answer 40

other expenses

Question 41

80-95%

Answer 41

total

Question 42

production control the prediction of food needs for a day or other specific period of time based on historical data

Answer 42

forecasting

Question 43

production control measurable statements of aesthetic characteristics of food items basis for sensory analysis of the prepared products

Answer 43

quality standards

Question 44

production control yield percentage or yield factor is sued to determine how much of the food is lost as a result of processing

Answer 44

yield test

Question 45

production control - yield test used to determine standard portion costs of meat items portioned before cooking

Answer 45

butcher test

Question 46

production control - yield test used for items to be divided into portions after cooking to get portion cost

Answer 46

cooking loss test

Question 47

portion control quantity of any item that is to be served each time that item is prepared or ordered size per serving formula: standard portion size = total weight of the product / no. of portions per unit

Answer 47

standard portion size

Question 48

portion control calculated or planned cost amount that a standard portion should cost given the standards and standard procedures for its production standard portion cost = purchase price per unit/no. of portions per unit

Answer 48

standard portion cost

Question 49

done based on product, clientele, competitor, and supply vs demand

Answer 49

menu pricing

Question 50

menu pricing - cost-based pricing cost of food + direct labor

Answer 50

prime cost

Question 51

menu pricing - cost-based pricing overall cost + desired profit

Answer 51

average cost-plus profit

Question 52

menu pricing - cost-based pricing includes profit percent

Answer 52

all cost-plus profit

Question 53

menu pricing - cost-based pricing based on minimum charge

Answer 53

minimum sale pricing

Question 54

menu pricing - non-cost-based pricing based on competitor's price

Answer 54

competition pricing

Question 55

menu pricing - non-cost-based pricing based on intuition, competitor's pricing, or "follow the leader" pricing

Answer 55

traditional pricing

Question 56

labor cost formula

Answer 56

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

Question 57

costs other than food and labor

Answer 57

operating/overhead cost

Question 58

operating/overhead cost utilities, laundry, repairs and maintenance, replacement, phone water, electricity, office supplies, and cleaning materials

Answer 58

operating costs

Question 59

operating/overhead cost depreciation, rent or amortization, insurance, and taxes

Answer 59

fixed costs