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Chapter 6, Question 1
Product Contribution Pizza Size Cost Selling Price Food Cost % Margin Small $3.60 $9.99 36.0% $6.39 Medium $4.60 $11.99 38.4% $7.39 Large $5.60 $13.99 40.0% $8.39 Extra large $6.60 $15.99 41.3% $9.39
ANSWER: Food cost percentage for Small pizza 36%
The extra large pizza I think is more profitable, the earning is $9.39 a pizza What is the food cost percentage of Carlita’s small pizza? Which pizza size do you think is Carlita’s most profitable? Why?
Answer:
Chapter 6 Q1 Chapter 6, Question 2
Selling Number Item Total Food
Combo 1 Price Sold Cost Cost Cost % Hamburger $7.99 200 $2.08 416 3.84 Combo Items Hamburger 200 $1.50 $300.00 French fries (large) 200 $0.38 $76.00 Soft drink (16 oz.) 200 $0.20 $40.00 Total $2.08 $416.00 3.8% Contribution margin per sale
Guest count forecast 1,700 $ % Revenue forecast $13,500 100% Breads $1,300 9.6% Cheese $1,200 8.9% Meats $350 13.0% Produce $210 1.6% Toppings and other foods $450 3.3% Total cost of food $3,510 26.0% Cost of labor $4,050 30.0% Other operating expenses $3,375 25.0% Profit $2,295 17.3% Contribution margin per guest $7.94
ANSWER: should make a profit of $2,295. Profit margin is 17.3.
Assume Karis' revenue and cost forecast assumptions are correct. What will be her profit margin percentage? What will be her contribution margin per guest? Assume Karis creates a new “Scottish” style sub featuring Ruby Red smoked salmon and that it costs her $3.90 to make one. At what price should Karis sell the new “Scottish"- style sub?
Chapter 6 Q5 Chapter 6, Question 7 Use the ROUND function for “Cost per Guest” and “Desired Selling Price Based on Cost” to two decimal pl
Buffet Product Usage (Sunday, June 1): Gabriel's Tex-Mex Restaurant
Beginning Ending Menu Item Category Unit Amount Additions Amount Steak Fajitas A lb. 20 60 6 Chicken Fajitas A lb. 15 70 10 Carne Asada A lb. 10 50 4 Cheese Enchiladas B lb. 2 80 15 Beef Enchiladas B lb. 3 60 10 Enchiladas Verde B lb. 1 70 8 Chili Rellenos B lb. 10 45 5 Tacos C each 0 150 20 Bean Chalupas C each 0 175 5 Tortilla Soup C gal. 2 10 4 Spanish Rice C lb. 5 70 12 Refried Beans C lb. 15 75 6 Sopapillas C each 25 200 30 Total Product Cost
Guests Served: 400 Desired Food Cost %:
Total Product Cost: Desired Selling Price Based on Cost: Cost per Guest:
Revenues, June 1: Projected Revenues, June 8:
After completing this analysis, what should be Gabriel’s selling price? If he uses this new selling price and he serves 625 gues total revenue increase? If so, how much?
In addition to her product costs, what other factors should Stella consider prior to agreeing to partner with Grab-On in the sale What will be the total increase in her contribution margin if 500 coupons are sold? Would you recommend to Stella that she agree to the proposed partnership?
eeing to partner with Grab-On in the sale of the coupons?
Chapter 6, Question 10
Value Meal and Beverage
Number Item Total Selling Total Food
Menu Item Sold Cost Cost Price Sales Cost % Stir-fry dish 75 $0.65 $48.75 $1.00 $75.00 65% Beverage 60 $0.20 $12.00 $1.00 $60.00 20% Total 135 $60.75 $135.00 45%
Based on the information given, calculate the overall product cost percentage of the value meals and beverages. Would you advise Ming to “go for it”? Why or why not?
Answer: You would not advise Ming to "go for it" because her overall product cost percentage would be 45%. This would be 10% above her target of 35%.
Number of Beverages to Achieve Target Overall Product Cost Percentage
Number Item Total Selling Total Food
Menu Item Sold Cost Cost Price Sales Cost % Stir-fry dish 75 $0.65 $48.75 $1.00 $75.00 65% Beverage 150 $0.20 $30.00 $1.00 $150.00 20% Total 225 $78.75 $225.00 35%
ANSWER: 150, NEEDS TO UPDAEL MEALS
How many beverages must be sold in addition to the value meals if Ming is to achieve her target food cost percentage goal? Is this number feasible?
Answer:
Chapter 6 Q8 s and
ould be
Chapter 6 Q8 Chapter 6, Question 11
Wedding Number of Beer Wine Spirit Total Cost per
Date Guests Served Cost Cost Cost Cost Guest June 07 250 $700 $600 $1,100 $2,400 $9.60 June 14 325 $850 $1,425 $1,800 $4,075 $12.54 June 21 400 $525 $1,000 $2,250 $3,775 $9.44 Total 975 $2,075 $3,025 $5,150 $10,250 $10.51
A. $10.51 B. 52.55 C. I would definiely charge half of B for a 2 hour bar
Chapter 6 Q9 10.51*100/20
Chapter 6 Q9 Chapter 6, Question 12
One criticism of both the product cost percentage and CM methods used for determining menu prices is that both are based primarily on the cost of food (or beverages) and ignore the cost of labor. In many foodservice operations, however, the cost of labor equals or even exceeds the cost of food and beverages. Do you foresee the cost of labor playing an increasing role in the calculation of menu prices? Explain your answer.
ANSWER: Absolutely, the cost of living and everything in society is rising.
People are demanding more money for for all jobs. To be able to pay for good labor managers are going to have to raise their food cost to cover labor.
