Production Calculations
(Recipe Costing)
(Recipe Costing)
Calculate the cost of goods sold:
Beginning of the month inventory: $4,050
Purchases made (October): $7,800
End of the month inventory: $3,250
COGS = $8,600
How is a franchise restaurant location different from a chain?
A franchisee is the owner of the location. A franchisor licenses the "franchise outlet" to the franchisee. This includes the trademarks and proven methods. The franchisee pays royalty fees in exchange. Usually recurring or annual fee AND a percentage of the sales or profits. A chain restaurant location is owned by the parent company and controls all business practices, marketing, purchasing, and distribution.
Monday 120
Tuesday 150
Wednesday 135
Thursday 146
Friday 150
Monday 132
Tuesday 151
What are the forecasted sales for Wednesday using a 5-day moving average?
143
135+146+150+132+151 = 714/5
Owner's capital: 75,000
Bank loan: 50,000
Cash in the bank: 25,000
Kitchen equipment and inventory: 100,000
What is the basic accounting equation using these numbers?
Assets = liabilities + owner's equity
25,000 + 100,000 = 75,000 + 50,000
What are the pieces of information commonly found on a Credit Memo?
Invoice number, date, item numbers, and discrepancies
Calculate the EP cost. Strawberries cost $2.10 per lb and have a yield of 92%
$2.28
AP cost/yield percent
$2.10/0.92
Name 4 of the external forces that impact the marketing channel?
Economic forces
Political forces
Ethical forces
Legal forces
Technological forces
Monday 120
Tuesday 150
Wednesday 135
Thursday 146
Friday 150
Monday 132
Tuesday???
What are the forecasted sales for Tuesday using exponential smoothing?
Monday forecast 5-day moving average: 140
Tuesday forecast ES: 138
New forecast=(0.3 x 132)+(1-0.3) x 140
New forecast =(0.3 x 132)+(0.7 x 140)
39.6 + 98 = 137.6 or 138
Balance Sheet vs. Income statement
Which one shows a company's status (net worth) at a specific point in time?
Balance sheet
What are the objectives of "receiving"
Obtaining the correct amount and correct quality at the correct time with the correct supplier services for the correct EP cost
You need to have 30-4oz portions of chicken. You know the yield is 85%. How many pounds of chicken would you need to purchase?
8.8 lbs
30 x 4 oz = 120 oz
120/0.85 = 141.18 oz (AP)
141.18 oz / 16 oz per lb = 8.8 lbs
Can't buy 8.8 lbs though - Round up to 9 lbs
How did the Wheeler-Lea Act of 1938 amend the FTC (1914)?
Protects consumers from false adversizement.
It required food labels to accurately depict the product - No happy chickens running around if they were really caged up.
Only "approved health claims" to prevent against
quackery"
When determining your par levels, what is a common safety factor to use?
5%
What is included on an income statement?
Total revenue
COGS
Gross profit
Operating expenses
Operating income
Interest
Income before taxes
Income taxes
Net income
Describe the 3 types of receiving methods
1. Invoice (check invoice to the purchase order)
2. Blind (invoice quantities are blank) - count and check against the purchase order
3. Electronic receiving (UPC codes are scanned as they are brought in - uploaded to the inventory system)
1 lb of non-pitted, stemmed cherries costs $8 (AP)
Cherries have a 50% yield
Explain why EP cost = AP cost/yield percent
If the yield is less than 100%, The EP cost is always going to be BIGGER than the AP cost.
The true cost of the cherries is seen once the final weight is determined and a new cost is calculated.
After pitting and stemming, you are left with only a half a pound. So really, you paid $8 for a half a pound of cherries. The EP cost per pound is $8/0.50. It costs $16 for a pound of cherry flesh.
How does genetic modification of foods act as a technological force on the marketing channel
Using technology (scientific advancement) to improve product characteristics (shelf-life, increase flavor, aesthetic appeal, etc.) increase the availability, increase farming yield
True or false: Using a "par stock" inventory method when ordering is most useful for organizations that change their menu frequently.
False. Best for organizations that do not change menu items frequently and have a relatively steady flow of business (hospitals and schools)
?? - COGS = Gross Profit
Total Revenue (Food and Beverage Sales)
What is the difference between physical inventory and perpetual inventory?
Physical inventory: Actual physical count and valuation of all items on hand. It is done periodically (End of the month)
Perpetual inventory: A theoretical count based on goods received and issued (can look at the computer at any given time to see what should be hand)
A serving of pasta salad costs $1.23 to produce and you sell it for $3.50. What is your food cost percentage?
35%
$1.23/$3.5 = 0.3514
on the flip side: What would you sell it for if you wanted your food cost percentage to be 30%?
Explain how supply and demand affect the price of goods
When supply goes up price comes down (to encourage buying)
When supply goes down price goes up
When demand goes up price goes up
When demand goes down price goes down (to encourage buying)
WILD CARD for 1000 points
What is a tariff and what is its effect on consumers and farmers/manufacturers
A tariff or duty is a tax that is paid to the government when foreign goods are imported or exported. Tariffs are usually intended to regulate foreign trade and encourage domestic trade by making imports and/or exports more expensive. The effect on consumers is often higher prices on foreign goods. The effect on farmers/manufacturers is decreased foreign demand for their product which increases their supply, decreasing prices and decreasing revenue. Tariffs are meant to be painful and governments sometimes use them to punish other countries (The US and China)
What's the difference between a liability and an asset?
A liability is what a company owes
Loans to the bank, bills that need to be paid (food orders), payroll that is due to employees.
Assets are things that are owned by the company, or money brought in by the owner, borrowed money from a lender
What is the ABC method for controlling inventory and why is it used?
Categorize products into A, B, or C (High value, medium value, lower value). Products of high value make up 15-20% of the inventory but account for 75-80% of the inventory dollar. Medium value products make up 20-25% of the inventory and account for 10-15% of the inventory dollar. Lower value product makes up 60-65% of the inventory but account for only 5-10% of the inventory dollar. Putting security measures around high value products efficiently protects the inventory dollar.