Chapter 11 — Quiz

Twenty-four self-check questions. Answer from memory first; the key is collapsed at the bottom. Have a calculator for the short-answer section.

Multiple choice

1. Food cost of goods sold for a period equals: - (a) total food purchases for the period - (b) beginning inventory + purchases − ending inventory - (c) ending inventory − beginning inventory + purchases - (d) food sales × target food cost percentage

2. An operator computes food cost by dividing food invoices by food sales. The error in that figure is exactly equal to: - (a) the waste allowance - (b) the ideal-to-actual variance - (c) the change in inventory divided by food sales - (d) the Q factor divided by covers

3. In a period where the walk-in was deliberately filled ahead of a holiday, the invoice shortcut will: - (a) understate true food cost - (b) overstate true food cost - (c) report true food cost accurately - (d) be unaffected, since purchases and usage always match

4. Edible-portion cost is computed as: - (a) AP cost × yield percentage - (b) AP cost ÷ yield percentage - (c) AP cost ÷ (1 + yield percentage) - (d) AP cost − trim cost

5. A product with a 70% yield costs, per usable pound: - (a) 70% of the invoice price - (b) 130% of the invoice price - (c) about 143% of the invoice price - (d) the same as the invoice price

6. In a butcher test, a by-product may be credited: - (a) always, at the price of the primary cut - (b) only if you actually use it, at the price of what it displaces - (c) never — all cost belongs to the saleable cut - (d) at whatever value makes the plate cost meet target

7. The Hearth Chicken's plate cost of \$8.52 consists of: - (a) \$8.35 of components plus a 2% waste allowance - (b) \$8.35 of components plus labor and fuel - (c) \$8.52 of components with no allowance - (d) half a bird at \$3.20/lb, and nothing else

8. The Q factor is: - (a) the percentage of plates returned to the kitchen - (b) the per-cover cost of items served but not separately priced - (c) the quality grade of a purchased protein - (d) the quarterly re-costing cycle

9. A #16 disher holds: - (a) 16 fluid ounces - (b) 4.0 fluid ounces - (c) 2.0 fluid ounces - (d) 1.6 fluid ounces

10. A cook uses a #12 disher where the card specifies a #16. The plate receives: - (a) 25% less product - (b) the same product, since dishers are interchangeable - (c) about 33% more product - (d) about 75% more product

11. Ideal food cost is computed from: - (a) last period's actual, adjusted for inflation - (b) units sold × plate cost, summed across the menu - (c) purchases ÷ sales - (d) the industry benchmark for the service style

12. An ideal-to-actual variance of 3.1 points in a full-service restaurant is best characterized as: - (a) normal operating friction - (b) worth noting but not acting on - (c) a real problem requiring investigation and action - (d) evidence of theft

13. When investigating a large variance for the first time, the correct place to start is: - (a) reviewing security footage - (b) interviewing the kitchen staff - (c) recounting high-value inventory categories and checking the math - (d) changing the menu prices

14. Target-cost pricing produces a price of \$13.17 for a dish the market will pay \$24.00 for. The correct action is: - (a) charge \$13.17, because the target is the target - (b) charge \$24.00 and bank the additional contribution - (c) add ingredients until the plate cost justifies \$24.00 - (d) remove the item, since it violates the target

15. A restaurant raises all menu prices 5% and nothing else changes. Its food cost percentage: - (a) rises - (b) falls - (c) is unchanged - (d) cannot be determined

16. A cost card's exclusion of labor means the card: - (a) is incorrectly built and should be revised - (b) systematically under-prices labor-intensive dishes when used for target pricing - (c) overstates the cost of assembled dishes - (d) is only usable in quick-service operations

Short answer

17. Write the true food cost formula and the identity for the shortcut's error.

18. A period shows food sales of \$80,000, beginning inventory \$17,500, purchases \$23,900, and ending inventory \$19,100. Compute the true food cost percentage, the invoices-over-sales figure, and confirm the gap using the error identity.

19. A product costs \$2.40 a pound as purchased and yields 68%. What is the EP cost per pound?

20. A dish has a plate cost of \$7.15 and the house target is 32%. What price does target-cost pricing produce?

21. An item is priced at \$28.00 with a plate cost of \$10.40. State its food cost percentage and its contribution margin, and say which of the two you would rather manage by.

22. A period produced ideal usage of \$6,120 and actual usage of \$6,590 on food sales of \$21,000. Compute the variance in dollars and points and characterize it.

23. A restaurant's Q factor is \$0.52 a cover. It does 31,000 covers and \$980,000 of food sales annually. Express the Q factor as points of food cost.

24. Explain in three sentences why a cost card is a purchasing document rather than a profitability document, using the Hearth Chicken as your example.

Answer key — try all twenty-four first **1.** (b) — What you started with, plus what you bought, minus what is still on the shelf. **2.** (c) — shortcut % − true % = (ending inventory − beginning inventory) ÷ food sales. **3.** (b) — Ending inventory exceeds beginning inventory, so purchases exceed usage and the shortcut reports a food cost higher than the truth. **4.** (b) — AP cost ÷ yield percentage. **5.** (c) — 1 ÷ 0.70 = 1.4286, about 143%. **6.** (b) — Only if you genuinely use it, and only at the price of the product it displaces. Bones in the trash are worth zero. **7.** (a) — \$8.35 of costed components plus 2% (\$0.17) = \$8.52. Labor and fuel are *not* on the card. **8.** (b) — Bread and butter, condiments, table oil, coffee accompaniments; frequently worth a point or more of food cost. **9.** (c) — 2.0 fl oz. The number is scoops per quart: 32 ÷ 16 = 2.0. **10.** (c) — A #12 holds 2.7 fl oz against the #16's 2.0, roughly 33% more, on every plate, with no possibility of noticing by eye. **11.** (b) — Units sold × plate cost, summed, including specials and comps. **12.** (c) — Under about one point is normal friction; one to two is worth investigating; above two is a real problem. **13.** (c) — Counting and math errors are the commonest cause of a large surprise variance and the cheapest to check. Theft is investigated last. **14.** (b) — The formula prices ingredients; the guest prices dinner. Obeying it on a cheap-to-make dish gives away real contribution. **15.** (b) — Food cost percentage is a ratio and the denominator moved. Nothing about the kitchen changed, which is precisely the failure mode. **16.** (b) — The card excludes labor, so dividing plate cost by a target under-prices a twelve-hour braise relative to a composed salad with the same plate cost. **17.** $\text{Food cost \%} = (\text{BI} + \text{P} - \text{EI}) \div \text{food sales}$; and $\text{shortcut \%} - \text{true \%} = (\text{EI} - \text{BI}) \div \text{food sales}$. **18.** Usage = \$17,500 + \$23,900 − \$19,100 = **\$22,300**; ÷ \$80,000 = **27.9%**. Shortcut = \$23,900 ÷ \$80,000 = **29.9%**. Gap = 2.0 points. Identity check: (\$19,100 − \$17,500) ÷ \$80,000 = \$1,600 ÷ \$80,000 = **2.0 points** — the shortcut overstates because inventory was built. **19.** \$2.40 ÷ 0.68 = **\$3.53 per pound**. **20.** \$7.15 ÷ 0.32 = **\$22.34** — which in practice you would round to a price that fits the menu's ladder, not leave at \$22.34. **21.** \$10.40 ÷ \$28.00 = **37.1%** food cost; \$28.00 − \$10.40 = **\$17.60** contribution margin. Manage by the dollars: you deposit contribution margin, not percentages. Chapter 12 builds the system. **22.** Variance = \$6,590 − \$6,120 = **\$470**; \$470 ÷ \$21,000 = **2.2 points** — above the two-point threshold, so a real problem requiring investigation, starting with a recount. **23.** \$0.52 × 31,000 = \$16,120; ÷ \$980,000 = **1.6 points of food cost** — invisible on every cost card in the building. **24.** The card prices ingredients only, so it answers "what did the product on this plate cost?" The Hearth Chicken's card says \$8.52, but the plate also consumes about \$0.79 of butchery and brining labor and \$0.63 of hearth fuel, taking the real consumption to \$9.94 — 34.3% of the \$29.00 price rather than 29.4%. The card is not wrong; it answers a narrower question, which is why the number an owner manages by is prime cost rather than food cost.