A: The institute of cost and management Accountants, London defines standard cost as “ The predetermined cost based on a technical estimate for material, labor and overhead for a selected period of time and for prescribed set of working condition”. Where as Basic food cost is the cost of all ingredients used to make a menu.
Q: What is an Ideal Cost
A: It is a method of calculating standard food costs based on the actual number of each menu item sold during a day or meal period. The actual count of each item sold is multiplied by its per item standard food cost to arrive at the expected cost for serving that number of the menu item.
Q: What do you mean by opportunity cost
A: It is the cost, which has been foregone for not using the facility originally planned. When a particular amount is available, this can be used for one purpose only. Although there may be two propositions. If one course is chosen then the door of the other one is closed. The loss incurred for not choosing the other one, thus termed opportunity cost. E.g. we can either open a discotheque or renovate the present Chinese restaurant. If we decide to renovate the present restaurant, the loss incurred is not opening the discotheque can be projected as opportunity cost.
Q: List three costs of a restaurant that are fixed
A: Rent, insurance and Salary
Q: Give any two possible conditions that can lead to differences between actual and standard costs
A: Standard Food Cost is a predetermined cost based on a technical estimate, which can be different from the actual cost. Possible conditions are a) More sales than expected b) Any additional cost incurred during the production such as material, labor or overhead.
Q: Give an example of discretionary cost and Explain.
A: Re-furbishing of a guest room in honor of a visiting dignitary or complimentary wine with every steak ordered at the same price prevailing are the examples of discretionary cost. These are the costs incurred totally on the discretion of some person or a group of person from the management. These costs also known as managed costs or programmed costs.
Q: Name 3 direct costs incurred by a Food and Beverage Operation.
A: Direct Material (Cost of Floor in Bread making), Direct Labor (Salary of Baker) and Direct Expenses (for special tools, repair of a machine) are the 3 direct costs incurred by a Food and Beverage Operation.
Q: Why is it important to compare Standard & Actual Food Cost?
A: The review of operation is done by comparing the Actual cost with the standard cost. The reason for difference is analyzed for the betterment operation in the future. In this regard the comparison of actual and standard food cost is very important.
Q: Explain the role played by adjustment factors in adjusting standard recipe yields.
A: The role played by adjustment factors are a) Increasing or decreasing the yield of a standard recipe. b) Determining the new quantity of ingredient required to produce a menu item if the portion size is altered.
Q: Explain Average Food Service Check.
A: Average Food Service Check is a ratio between the revenue from sales and the guests served during a meal period. This is obtained by dividing Total sales by no. of guests.
A: Rent, insurance and Salary
Q: Give any two possible conditions that can lead to differences between actual and standard costs
A: Standard Food Cost is a predetermined cost based on a technical estimate, which can be different from the actual cost. Possible conditions are a) More sales than expected b) Any additional cost incurred during the production such as material, labor or overhead.
Q: Give an example of discretionary cost and Explain.
A: Re-furbishing of a guest room in honor of a visiting dignitary or complimentary wine with every steak ordered at the same price prevailing are the examples of discretionary cost. These are the costs incurred totally on the discretion of some person or a group of person from the management. These costs also known as managed costs or programmed costs.
Q: Name 3 direct costs incurred by a Food and Beverage Operation.
A: Direct Material (Cost of Floor in Bread making), Direct Labor (Salary of Baker) and Direct Expenses (for special tools, repair of a machine) are the 3 direct costs incurred by a Food and Beverage Operation.
Q: Why is it important to compare Standard & Actual Food Cost?
A: The review of operation is done by comparing the Actual cost with the standard cost. The reason for difference is analyzed for the betterment operation in the future. In this regard the comparison of actual and standard food cost is very important.
Q: Explain the role played by adjustment factors in adjusting standard recipe yields.
A: The role played by adjustment factors are a) Increasing or decreasing the yield of a standard recipe. b) Determining the new quantity of ingredient required to produce a menu item if the portion size is altered.
Q: Explain Average Food Service Check.
A: Average Food Service Check is a ratio between the revenue from sales and the guests served during a meal period. This is obtained by dividing Total sales by no. of guests.
(Note: This blog is to provide some inputs to the students of hotel management. Additional referrence is suggested for the complete and indepth understanding of the subject.)
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