Chapter 8, Question 1

Sophia’s Restaurant Amount Percentage

Sales $80,000 100%

Total cost of food 25,000 31.3%

Total cost of labor 22,000 27.5%
Other controllable expenses 11,000 13.3%
Non-controllable expenses 5,000 6.7%
Profit $15,000 20.0%

Chapter 8
Q1
Chapter 8, Question 2

Other Expenses Variable Expense Fixed Expense

Linen rental x
Piano rental x
Ice x
Insurance x
Pension plan payments x
Snow shoveling fees (parking lot) x
Paper products x
Kitchen equipment lease (mixer) x
Long-term debt payment x
Real estate tax x

Chapter 8
Q2
Chapter 8, Question 3

Crystal's Water and Sewage Bill Forecast

Item Charge Item Cost Units Total
2-in. inlet line $5.97 1 $5.97
Water Usage
Units 1-10 $0.58 10 $5.80
Units 11 and above $2.25 120 $270.00
Wastewater/sewage $3.15 130 $409.50
Month total forecast $691.27

If next month contains 31 days, what will be Crystal's

forecasted cost per day for water and sewage usage?

Answer:
Chapter 8, Question 4

Mixed Expense—Sales Consultant

For period: 1/1 to 6/30

Fixed 1% Variable Total

Month Sales Fee Expense Expense Cost %
January $81,000 $1,000 $810 $1,810 2.23%
February 80,000 $1,000 800 1,800 2.25%
March 88,000 $1,000 880 1,880 2.14%
April 92,000 $1,000 920 1,920 2.09%
May 110,000 $1,000 1,100 2,100 1.91%
June 108,000 $1,000 1,080 2,080 1.93%
6-Month Total/Average $93,167 $1,000 $932 $1,932 2.07%

A. NO SHE IS OVER
BUDGET BY .5%

B. yes the sales

increased and cost
percentage decreased

Tutti has decided that she cannot spend more than 2.2 percent of total sales for Tina’s services. Based on
the 6-month average cost percentage, can Tutti afford to hire Tina for another 6 months?

Last year’s average monthly sales for the first 6 months was $80,000. Based on this year's sales data, has
Tina done a good job at increasing sales? Should she be hired again?

Answer:

Chapter 8
Q3
. Based on

es data, has

Chapter 8
Q3
Chapter 8, Question 5

Other Expenses Controllable Non-controllable

Real estate tax x
Menu printing x
Professional musicians x
Interest on long-term debt x
Charitable donations x
Cleaning supplies x
Flowers and decorations x
Licenses and permits x

Chapter 8
Q4
Chapter 8, Question 6

a.
Expense Percentage and Cost per Guest Served—Bands
Unit Name: Luigi’s Lounge

Number Cost
of per
Band Lounge Guests Guest
Date Band Expense Sales Cost % Served Served
1/1 Tiny and the Boys $1,400 $11,400 12.3% 1,425 $0.98

Shakin' Bill and the

2/1 Billfolds $1,900 $12,250 15.5% 1,980 $0.96
3/1 La Noise $2,000 $12,000 16.7% 2,005 $1.00
4/1 The Hoppers $2,000 $10,250 19.5% 2,100 $0.95

b.

Number Cover
of Charge Total
Guests per Cover Lounge Total
Date Band Served Guest Charges Sales Sales
1/1 Tiny and the Boys 1,425 $10.00 $14,250 $11,400 $25,652
Shakin' Bill and the
2/1 Billfolds 1,980 $10.00 $19,800 $12,250 $32,050
3/1 La Noise 2,005 $10.00 $20,050 $12,000 $32,050
4/1 The Hoppers 2,100 $10.00 $21,000 $10,250 $31,250

Compute both band expense percentage and cost per guest served. Based on the cost
percentage of the bands, which one should Shanna select for booking?

Would your answer change if you knew Shanna charged a $10.00 cover charge to enter the
lounge on the nights she has a band, and that the cover charge is reported separately from the
lounge sales? If so, which band would you choose?

Answers:

Chapter 8
Q5
Chapter 8, Question 7

Six-Column Cost per Guest—Laundry Service

Unit Name: Marjorie's Date: 5/1–5/7

Number of
Laundry Service Cost Guests Served Cost Per Guest
Weekday Today To Date Today To Date Today To Date
1 $225 $225 400 400 $0.56 $0.56
2 $204 $429 375 775 $0.54 $0.55
3 $200 $629 350 1,125 $0.57 $0.56
4 $240 $869 425 1,550 $0.56 $0.56
5 $275 $1,144 450 2,000 $0.61 $0.57
6 $300 $1,144 500 2,500 $0.60 $0.58
7 $230 410 $0.57
Total $1,674 2,920 $0.57

ANSWER: SHE IS UNDER HER BUDGET BY 3 CENTS

She has budgeted $0.60 per guest on average. How is she doing at controlling her laundry costs?

Answer:

Chapter 8
Q6
Chapter 8, Question 8

Next Year Revenue

Franchise Last Year

Fees Revenue and Fees -2.5% 2.5%
Revenue $1,235,575
Monthly inspection fee $500
Royalty fee 6.50%
Marketing fee 2.25%
Total Franchise fees
Total Franchise fee %

What was the total amount of franchise fees Stella paid last year?

What was the total percent (rounded to two places) of her gross sales Stella paid in franchise fees last year?

What is the total percent of her gross sales (rounded to two places) Stella will pay in franchise fees next year if her sales incr

If her sales actually increase 10.0 percent next year, will the Total Franchisee Fee percent of sales Stella will pay her franchis
year? Why?

Answer:
 Next Year Revenue Change

5.0% 7.5% 10.0% 12.5%

hise fees last year?

chise fees next year if her sales increase 10.0 percent?

t of sales Stella will pay her franchisor be higher, or lower, than it was last
Chapter 8, Question 9

Number Cost
Electricity of kWh per kWh Estimated
Cost Last Used Estimate Electricity Cost
School Year Last Year Next Year for Next Year
Springdale Elementary $6,800.00 80,000 $0.092 $0.92
Jefferson Elementary 7,650.00 90,000 $0.092 $0.92
Clinton Middle School 10,200.00 120,000 $0.092 $0.92
Tri-Valley High School 12,750.00 150,000 $0.092 $0.92
Total $37,400.00 440,000 $0.092 $0.92

Assuming no operating changes, how much more will be spent next year? Who are some of
Josiam’s best resources for discovering ways to limit electricity usage in the kitchens?

Answer:

Chapter 8
Q7
Chapter 8, Question 10

Option 1 Option 2
No. of Flat Fee Flat
Sales Square per Square Monthly Fee per Five %
Month Forecast Feet Foot Lease $ Month of Sales
Jan $65,000 3,000 $6,000.00 $6,000 $3,000 $3,250
Feb 55,000 3,000 $6,000.00 $6,000 $3,000 2,750
Mar 65,000 3,000 $6,000.00 $6,000 $3,000 3,250
April 70,000 3,000 $6,000.00 $6,000 $3,000 3,500
May 80,000 3,000 $6,000.00 $6,000 $3,000 4,000
June 70,000 3,000 $6,000.00 $6,000 $3,000 3,500
July 70,000 3,000 $6,000.00 $6,000 $3,000 3,500
Aug 85,000 3,000 $6,000.00 $6,000 $3,000 4,250
Sept 90,000 3,000 $6,000.00 $6,000 $3,000 4,500
Oct 95,000 3,000 $6,000.00 $6,000 $3,000 4,750
Nov 110,000 3,000 $6,000.00 $6,000 $3,000 5,500
Dec 135,000 3,000 $6,000.00 $6,000 $3,000 6,750
Total $990,000 $72,000 $36,000 $49,500

ANSWER: HE SHOULD CHOOSE OPTION ONE, HE IS SPENDING LESS MONTH OVERALL

Which lease option should Enrique choose? Why?

Answer:

Chapter 8
Q8
Option 2

Monthly
Lease $
$6,250
5,750
6,250
6,500
7,000
6,500
7,250
7,500
7,750
7,750
8,500
9,750
$85,500

ONTH OVERALL

Chapter 8
Q8
Chapter 8, Question 11
Format the “Per Use Cost” column to five decimal places.
Hummingbird’s Glassware Purchase Worksheet

Total Per Estimated

Product Price per Number of Total Number Glass Uses Per Per Use
Durability Dozen Dozens Cost of Glasses Cost Glass Cost
Highest $50.00 40 $2,000 480 $4.17
Middle $35.00 40 $1,400 480 $2.92
Lowest $26.00 40 $1,040 480 $2.17

A. SHE SHOULD BUY THE LOWER QUALITY GLASS, LOWER INITAL COST AND LOWER COST PER USE
B. DURABILITY, CUSTOMER PRECEPTION, BRAND IMAGE
C. I WOULD BUY THE ITEMS IN THE MIDDLE TO SEE HOW THEY LAST IF NOT MOVE UP TO HIGHEST

Chapter 8
Q9
ER COST PER USE

UP TO HIGHEST

Chapter 8
Q9
Chapter 8, Question 12

The cost of maintaining an effective website as well as its social media presence is an
increasingly important marketing cost for every foodservice operation. Name some specific
“Other Expense” costs that you feel could be reduced through the effective use of an
operation’s website and social media presence.

Answer:

Chapter 8
Q 10