Food, Beverage and Departmental Cost Control

Introduction

Food and beverage operations are simultaneously production systems, service systems, and commercial enterprises. They purchase perishable inputs, transform them through recipes and labour, sell an uncertain volume at differentiated prices, and must deliver quality at the point of consumption. Consequently, departmental cost control is not merely the reduction of expenditure. It is the systematic process of establishing standards, measuring actual performance, explaining variances, and taking corrective action without damaging guest satisfaction, safety, employee welfare, or long-term profitability.

In hotel accountancy, the food and beverage department is commonly analysed through food cost, beverage cost, labour cost, departmental expenses, sales mix, contribution, and departmental profit. Reliable control requires integration between accounting records and operating records: purchase invoices must agree with receiving reports; issues from stores must agree with requisitions; recipes must agree with production quantities; and point-of-sale data must agree with the quantities served.

This chapter develops a practical control framework for restaurants, bars, banquets, room service, cafés, and related hotel departments. It emphasises standard costing, yield management, waste analysis, menu and beverage profitability, labour productivity, and managerial interpretation of deviations.

Learning Objectives

After studying this chapter, the learner should be able to:

1. Calculate recipe, portion, beverage, labour, and departmental costs.
2. Distinguish standard cost from actual cost and interpret cost variances.
3. Calculate edible yield, waste, sales mix, contribution, and departmental profitability.
4. Design operational controls for purchasing, receiving, storage, production, service, and cash handling.
5. Diagnose the causes of adverse variances and recommend proportionate corrective action.
6. Evaluate the role of technology, governance, ethics, and sustainability in cost control.

1. The Cost-Control Cycle

A sound control system follows a continuous cycle:

Plan → establish standards → record actual activity → compare → investigate variances → act → revise standards when justified.

A standard is a predetermined expectation under stated operating conditions. Examples include the standard quantity of chicken for one portion, the standard selling price of a cocktail, the standard minutes of labour per cover, and the standard beverage pour. Standards must be realistic. A standard that assumes zero waste or impossible service speed is not a control; it is a source of misleading variances and employee frustration.

Cost control differs from cost reduction. Cost reduction seeks a sustainable decrease in the cost of achieving a specified level of output. Cost control asks whether actual cost conforms to the approved standard. Replacing quality ingredients with inferior substitutes may reduce recorded cost but destroy value, reputation, and repeat business.

Important terminology

• Direct cost: A cost traceable to a product or department, such as ingredients used in a dish.
• Indirect cost: A cost requiring allocation, such as shared kitchen depreciation.
• Prime cost: Usually direct food and beverage cost plus direct labour.
• Fixed cost: A cost that does not change proportionately with short-term volume, such as a salaried manager’s pay.
• Variable cost: A cost that changes with activity, such as ingredients consumed.
• Controllable cost: A cost substantially influenced by the responsible manager during a specified period.
• Standard cost: Expected cost for a defined quantity and quality of output.
• Actual cost: Cost incurred according to accounting and operating records.
• Variance: The difference between actual and standard or budgeted performance.
• Yield: Usable output obtained from an input after trimming, cooking, dilution, or other processing.

2. Recipe and Portion Costing

Recipe costing identifies the cost of producing a defined quantity of a menu item. A standard recipe should specify ingredients, quantities, preparation method, yield, portion size, equipment, presentation, and allergen information. It is both a costing document and a quality-control document.

The basic ingredient cost is:

The units must be compatible. If quantity is measured in kilograms, unit cost must be per kilogram; if quantity is measured in litres, unit cost must be per litre. For multiple ingredients:

where q_i is the quantity of ingredient i used and p_i is its cost per unit. The formula assumes that ingredient quantities and prices are measured on the same basis and that discounts, applicable taxes, and purchase returns have been treated consistently.

If a recipe produces Y portions, the standard food cost per portion is:

If the desired food-cost percentage is F and expressed as a decimal, the theoretical selling price, excluding taxes and service charges unless specifically included, is:

This is a pricing aid, not a complete pricing decision. Market positioning, competition, demand, labour, overhead, perceived value, and contribution must also be considered.

Worked example 1: recipe costing

A soup recipe uses 4 kg vegetables at CU 2.40 per kg, 1.5 litres stock at CU 1.20 per litre, 0.4 kg cream at CU 5.00 per kg, and herbs costing CU 1.60. The recipe yields 20 portions.

Vegetables: 4 × 2.40 = CU 9.60

Stock: 1.5 × 1.20 = CU 1.80

Cream: 0.4 × 5.00 = CU 2.00

Herbs: CU 1.60

Total recipe cost = CU 15.00

Standard portion cost = 15.00 ÷ 20 = CU 0.75.

At a target food-cost percentage of 30%, the theoretical price is 0.75 ÷ 0.30 = CU 2.50, before considering tax, service charge, overhead, and market conditions.

Portion control

Portion control converts the recipe standard into consistent service. It may involve calibrated ladles, scales, scoops, slicers, bottle measures, recipe cards, pre-portioned ingredients, and supervisory checks. Over-portioning is often invisible at the individual transaction level but financially significant in aggregate. Under-portioning may reduce cost while causing complaints and reputational damage.

The cost of over-portioning can be estimated as:

For example, serving 120 steaks with an additional 20 g each, when meat costs CU 12 per kg, causes 120 × 0.020 × 12 = CU 28.80 of excess meat cost.

3. Yield, Trim, Waste, and Conversion

Purchase weight is not necessarily usable weight. Peeling, trimming, bones, evaporation, cooking loss, spoilage, and preparation errors affect yield. Yield analysis prevents managers from comparing unlike costs.

The yield percentage is:

The waste percentage, where waste is measured as the unusable portion of the purchased quantity, is:

Under these definitions, yield percentage plus waste percentage equals 100%. The relationship applies when all purchased material is classified as either usable or waste and quantities are measured in the same units.

The edible or usable cost per unit is:

A purchase price that appears low may be uneconomic if its yield is poor.

Worked example 2: yield-adjusted cost

A 10 kg case of fish costs CU 80. After trimming and removing bones, 6.4 kg is usable.

Yield = 6.4 ÷ 10 × 100 = 64%.

Waste = (10 − 6.4) ÷ 10 × 100 = 36%.

Usable-unit cost = 80 ÷ 6.4 = CU 12.50 per usable kg.

If each portion requires 160 g, the ingredient cost per portion is 0.160 × 12.50 = CU 2.00, before other recipe ingredients. Purchasing decisions should therefore compare usable-unit cost, quality, reliability, and safety—not merely invoice price.

Managers should distinguish unavoidable process loss from avoidable waste. Bone and peel may be normal technical loss; expired stock, careless trimming, incorrect cooking, rejected plates, and theft are avoidable or controllable losses. Waste logs should record date, item, quantity, estimated value, reason, employee or station where appropriate, and action taken.

4. Beverage Cost Control

Beverage control is particularly sensitive because products are relatively high in value, easily portioned, and vulnerable to spillage, unauthorized consumption, dilution, substitution, and recording errors. Controls should cover purchasing, receiving, cellar or bar storage, requisition, standard recipes, dispensing, sales recording, and stocktaking.

For a beverage product or category, cost percentage is commonly calculated as:

For a period, beverage cost may be calculated from opening inventory, purchases, and closing inventory:

This equation assumes that inventory is valued consistently and that transfers, returns, complimentary issues, breakages, and interdepartmental movements are separately recorded. Beverage cost percentage is then consumed beverage cost divided by beverage sales, multiplied by 100.

Standard drink cost

A standard drink cost is the sum of the cost of each measured component, including mixers and garnish where relevant:

The standard beverage gross profit per drink is:

The gross-profit percentage is gross profit divided by selling price, multiplied by 100. A bottle-control system can compare theoretical usage with actual usage:

Alternatively, for a single spirit, theoretical usage can be derived from recorded sales multiplied by the standard quantity per sale, with approved complimentary drinks and staff drinks included according to policy.

Worked example 3: cocktail cost

A cocktail uses 50 ml spirit costing CU 0.06 per ml, 100 ml mixer costing CU 0.008 per ml, and garnish costing CU 0.10.

Spirit cost = 50 × 0.06 = CU 3.00

Mixer cost = 100 × 0.008 = CU 0.80

Garnish cost = CU 0.10

Standard drink cost = CU 3.90.

At a selling price of CU 13.00, gross profit is CU 9.10 and gross-profit percentage is 9.10 ÷ 13.00 × 100 = 70%. The result depends on accurate measures and a selling price stated on the same tax and service-charge basis as the cost analysis.

Useful controls include locked storage, restricted keys, daily requisitions, calibrated jiggers or automated dispensers, numbered breakage reports, independent stock counts, separation of bartender and cashier duties, and investigation of unusual theoretical-to-actual differences.

5. Labour Cost and Productivity

Labour is both a cost and a service resource. Excess staffing raises cost; inadequate staffing damages service, safety, quality, and employee wellbeing. Labour analysis should therefore use operational indicators rather than a simple target percentage.

Labour cost percentage is:

Labour cost should include wages, overtime, employer contributions, benefits, and other items included by the organisation’s accounting policy. The policy must remain consistent across periods.

A basic labour productivity measure is:

Another operational measure is covers per labour hour:

These measures are incomplete if product complexity, banquet setup, cleaning, training, opening and closing duties, or service quality changes. They should be interpreted with guest complaints, waiting time, employee turnover, overtime, and safety incidents.

A labour schedule should reflect forecast demand by day, hour, meal period, occupancy, banquet commitments, and service style. Cross-training can improve flexibility, but excessive multitasking may create errors and fatigue. A fair control system records hours accurately, complies with employment law, respects breaks and minimum wages, and does not encourage unpaid work.

Worked example 4: labour cost

A restaurant records CU 18,000 in eligible labour cost and CU 72,000 in sales for a month.

Labour cost percentage = 18,000 ÷ 72,000 × 100 = 25%.

If 2,400 labour hours were worked, sales per labour hour = 72,000 ÷ 2,400 = CU 30 per labour hour. Neither statistic alone proves good performance. A banquet-heavy month may require setup hours that generate sales in a different period; this requires managerial interpretation.

6. Standard versus Actual Cost and Variance Analysis

Standard costing enables management by exception. Actual cost is compared with the standard cost allowed for the actual volume and mix of output. This is important: comparing actual cost with a budget based on a different sales volume can produce a misleading variance.

For a menu item, the standard cost allowed is:

The total cost variance is:

A positive result indicates an adverse cost variance; a negative result indicates a favourable cost variance, provided the sign convention is stated. Some organisations reverse the signs, so reports must label favourable and adverse explicitly.

For ingredient costs, a useful decomposition is:

The price variance concerns the purchase price, while the usage variance concerns quantity consumed. The formulas assume the standard price and standard quantity are defined for comparable quality and output. Purchase price variance may be affected by supplier prices, quantity discounts, exchange rates, or emergency purchases. Usage variance may reflect over-portioning, waste, yield changes, theft, recipe changes, or inaccurate records.

Worked example 5: ingredient variance

A department produced 1,000 portions. Standard ingredient quantity is 0.180 kg per portion at a standard price of CU 8 per kg. Thus, standard quantity allowed is 180 kg. Actual usage was 190 kg at an actual price of CU 8.50 per kg.

Actual cost = 190 × 8.50 = CU 1,615.

Standard cost allowed = 180 × 8 = CU 1,440.

Total variance = 1,615 − 1,440 = CU 175 adverse.

Price variance = 190 × (8.50 − 8.00) = CU 95 adverse.

Usage variance = 8 × (190 − 180) = CU 80 adverse.

Total variance = CU 95 + CU 80 = CU 175 adverse. The purchasing manager may investigate the price variance, while the chef or production manager may investigate usage, although responsibility is often shared.

Variance investigation should consider materiality, frequency, controllability, operational context, and risk. A small adverse variance in a food-safety-critical item may deserve immediate attention; a large favourable variance caused by under-portioning may not represent success.

7. Sales Mix, Menu Engineering, and Contribution

Sales mix is the proportion of total unit sales represented by each menu item. It affects the weighted average contribution and therefore profitability. The contribution of an item is:

For a set of items:

The weighted average contribution per unit is:

A menu item with a high food-cost percentage may still generate a high contribution, while a low food-cost percentage may produce modest contribution if its price is low. Managers should therefore use both contribution and popularity, together with capacity, preparation complexity, guest perception, and strategic objectives.

A conventional menu-engineering matrix classifies items as:

• Stars: High popularity and high contribution.
• Plough-horses: High popularity and low contribution.
• Puzzles: Low popularity and high contribution.
• Dogs: Low popularity and low contribution.

The classification depends on chosen benchmarks. “High” popularity may mean above the average popularity percentage; “high” contribution may mean above average contribution margin. The matrix is a decision aid, not an automatic instruction to remove items.

Worked example 6: sales mix

A restaurant sells 100 pasta dishes at CU 14 with variable cost CU 5, and 60 steak dishes at CU 24 with variable cost CU 12.

Pasta contribution = 14 − 5 = CU 9; total = 100 × 9 = CU 900.

Steak contribution = 24 − 12 = CU 12; total = 60 × 12 = CU 720.

Total contribution = CU 1,620 from 160 units.

Weighted average contribution = 1,620 ÷ 160 = CU 10.125 per unit.

Increasing steak sales may raise total contribution if capacity and demand permit, but aggressive promotion could reduce pasta sales rather than create additional volume. Sales mix must therefore be analysed with substitution effects and operational constraints.

8. Departmental Profitability

A departmental income statement separates revenue, cost of sales, labour, and controllable operating expenses. A simplified structure is:

Examples of departmental expenses include linen, cleaning supplies, casual equipment hire, music, smallwares, and departmental administration, depending on the hotel’s chart of accounts. Shared overheads, interest, and corporate expenses may be excluded from departmental profit and reported below departmental profit. The allocation policy must be documented because different allocations produce different apparent profitability.

A useful diagnostic is prime cost:

Prime-cost percentage is prime cost divided by departmental sales, multiplied by 100. It is often closely monitored because food, beverage, and labour are the major controllable operating costs.

Departmental reporting principles

1. Record sales by outlet, meal period, revenue category, and tender type.
2. Record food and beverage cost separately where meaningful.
3. Reconcile point-of-sale reports to cash, card, and room-charge settlements.
4. Record transfers, complimentary items, staff meals, and promotions transparently.
5. Match costs to the period in which related revenue is earned.
6. Compare actual results with both budget and flexible standards.
7. Explain material variances in operational language, not merely accounting labels.

9. Operational Control Across the Supply Chain

Purchasing

Purchasing controls begin with approved specifications stating quality, grade, size, pack, brand, acceptable substitutes, and delivery requirements. Competitive quotations or contracted prices can reduce price risk, but the lowest quotation is not necessarily the lowest total cost. Reliability, yield, delivery frequency, credit terms, food safety, and supplier performance matter.

Purchase orders should be authorised before commitment. Unauthorised purchasing creates price, fraud, and budget risks. Forecasting should consider occupancy, reservations, banquets, historical demand, seasonality, lead times, and minimum order quantities.

Receiving

Receiving staff should compare the purchase order, delivery note, and physical goods. They should inspect quantity, weight, temperature, packaging, expiry dates, quality, and signs of damage. Variances should be documented immediately. The person receiving goods should not be the sole person approving invoices and recording payment.

Storage

Stores should use labelled locations, restricted access, suitable temperature and humidity, stock rotation, and regular counts. FIFO means first in, first out; FEFO—first expiry, first out—is often more appropriate for perishables. Inventory valuation may use weighted average, FIFO, or another accepted policy, but the selected method must be applied consistently and comply with applicable accounting standards.

Production and service

Daily production sheets should be based on forecast demand and opening stock. Kitchen requisitions document issues from stores. Standard recipes, batch yields, tasting controls, and waste records link production to cost. At service, POS access should be role-based; voids, discounts, refunds, complimentary items, and cancellations should require appropriate authorisation.

Inventory counting and reconciliation

Physical inventory should be counted at an appropriate frequency, with high-value and high-risk items counted more often. Count sheets should record item, unit, quantity, unit cost, and extension. Independent review reduces manipulation. Differences between book and physical stock should be investigated rather than automatically written off.

10. Illustrative Case: The Harbour View Hotel Bistro

This is a fictional illustrative case.

Background

The Harbour View Hotel Bistro reported strong sales but declining departmental profit. Monthly sales were CU 120,000. Food cost was 34% against a standard of 29%, beverage cost was 27% against a standard of 22%, and labour cost was 31% against a standard of 28%. Guest ratings remained acceptable, but kitchen waste and overtime had increased.

Problem diagnosis

The controller first tested whether the variance was caused by sales volume. A flexible comparison was prepared using actual covers and the approved standard costs per cover. Recipe audits revealed that a seafood entrée yielded 18 portions rather than the standard 20 because of inconsistent trimming. Portion checks found that the average protein portion exceeded specification by 15 g. The bar used free-poured spirits, and theoretical usage exceeded actual stock by 8% of spirit sales. The labour schedule retained two staff members during a low-demand late-afternoon period, while overtime occurred at closing because cleaning tasks were not scheduled realistically.

Approach and solution

The hotel introduced revised yield-tested recipes, calibrated portion tools, and a daily waste log. The seafood supplier was evaluated using usable-unit cost rather than invoice price. The bar adopted measured pours, locked storage, and manager-authorised breakage records. Labour scheduling was linked to reservation forecasts and expected covers, with closing duties distributed across the shift rather than concentrated in overtime. The controller introduced a weekly dashboard showing sales, food cost, beverage cost, labour hours, waste value, voids, discounts, and theoretical-versus-actual beverage usage.

Outcome

After two months, food cost fell to 30.1%, beverage cost to 23.4%, and labour cost to 28.6%. The figures had not yet reached all standards, but the direction was favourable without reducing menu quality. The hotel retained the seafood item because its contribution remained strong after yield correction, but revised its selling price and specification.

Learning points

1. A departmental variance often has several operational causes.
2. Flexible standards are more informative than static budgets when volume changes.
3. Yield-adjusted purchasing can overturn a low-price purchasing decision.
4. Beverage control requires physical measurement as well as accounting records.
5. Labour productivity must be improved through scheduling and process design, not indiscriminate staffing cuts.
6. A good dashboard supports action only when managers investigate causes and assign responsibility.

11. Technology, Governance, and Contemporary Practice

Integrated POS, property-management, purchasing, inventory, scheduling, and accounting systems can provide near-real-time information. Recipe databases can update theoretical costs when ingredient prices change. Barcode or RFID systems can improve traceability, while automated dispensing can reduce variation in beverage measures. Forecasting tools can combine occupancy, reservations, weather, events, and historical demand.

Artificial intelligence may assist demand forecasting, anomaly detection, menu recommendations, waste prediction, and automated variance commentary. However, AI outputs depend on data quality and may reproduce historical bias. A human manager must validate unusual recommendations, protect personal and commercial data, and retain accountability for decisions. Automated controls should not be treated as proof that fraud or waste is impossible.

Governance requires segregation of duties, authorisation limits, audit trails, access controls, data retention, documented write-off policies, and periodic review of standards. Ethical control includes honest recording of complimentary meals, fair treatment of employees, accurate menu descriptions, transparent allergen information, and no concealment of waste or safety failures.

Sustainability is increasingly linked to cost control. Reducing avoidable food waste can lower cost and environmental impact, but sustainability initiatives must measure the full system. For example, a substitute product may have lower waste but higher transport, packaging, or quality costs. Useful indicators include waste per cover, energy per meal, water use, local purchasing proportion, and donated or repurposed surplus, subject to food-safety rules.

12. Challenges and Limitations

Cost percentages can be distorted by menu price changes, complimentary sales, transfers, tax treatment, and sales mix. Inventory figures may be inaccurate because of late postings, unrecorded breakage, inconsistent units, or poor counting discipline. Standard recipes may become obsolete when suppliers, equipment, portion sizes, or guest expectations change. Departmental profit may appear better after allocating fewer shared costs, without any real improvement in total hotel profitability.

Control systems can also create dysfunctional behaviour. Employees may under-portion, delay necessary purchases, hide waste, or avoid recording errors to achieve targets. Excessive surveillance can damage trust and service culture. Managers should therefore combine quantitative targets with quality, safety, guest satisfaction, employee wellbeing, and compliance measures.

The most effective control system is proportionate, transparent, timely, and operationally owned. Standards should be reviewed when conditions change, but frequent unjustified revisions can conceal poor performance. Variance investigation should focus on material and controllable causes while recognising uncertainty and legitimate operational judgement.

Chapter Summary

Food, beverage, and departmental cost control integrates accounting information with operating discipline. Recipe costing establishes the cost of ingredients and portions; yield analysis converts purchase cost into usable-unit cost; and portion control protects both profitability and guest value. Beverage control depends on standard recipes, measured pours, inventory reconciliation, and investigation of theoretical-to-actual differences. Labour analysis combines labour cost percentage with productivity, service, quality, and legal considerations.

Standard-versus-actual analysis allows managers to separate price and usage effects and to investigate causes rather than merely observe percentages. Sales mix and contribution analysis clarify which products create value, while departmental income statements show the relationship among sales, cost of sales, labour, controllable expenses, and profit. Controls must extend through purchasing, receiving, storage, production, service, cash handling, and inventory reconciliation.

Technology can improve speed, visibility, traceability, and forecasting, but it does not replace professional judgement, ethical governance, or data validation. Contemporary cost control seeks sustainable profitability: it protects quality, safety, employees, guests, and the environment while reducing avoidable loss.

Key Terms

Standard cost: Predetermined expected cost for a specified output under stated conditions.

Actual cost: Cost recorded as incurred during a period.

Recipe costing: Calculation of the cost of ingredients required for a defined recipe yield.

Portion cost: Cost attributable to one standard serving.

Yield: Usable output obtained from a purchased input.

Waste: Purchased material that is unusable, rejected, lost, or discarded.

Usable-unit cost: Purchase cost divided by usable quantity.

Food-cost percentage: Food cost expressed as a percentage of food sales.

Beverage-cost percentage: Beverage cost expressed as a percentage of beverage sales.

Prime cost: Food and beverage cost of sales plus direct labour cost.

Labour productivity: Output or sales generated in relation to labour input.

Variance: Difference between actual and standard or budgeted performance.

Price variance: Difference caused by actual purchase price differing from standard price.

Usage variance: Difference caused by actual quantity used differing from standard quantity allowed.

Sales mix: Relative proportion of different products sold.

Contribution: Selling price less variable cost.

Departmental profit: Departmental revenue less defined departmental costs and expenses.

Theoretical usage: Expected consumption calculated from recorded activity and standards.

FEFO: Inventory rotation method meaning first expiry, first out.

Segregation of duties: Division of responsibilities so that one person cannot control an entire transaction without review.

Review Questions

Short Answer Questions

1. Define standard cost and explain why standards must be realistic.
2. What is the difference between yield percentage and waste percentage?
3. State two controls that reduce beverage over-pouring.
4. Why is contribution often more useful than food-cost percentage alone when analysing menu items?
5. Identify three documents or records commonly used in receiving and inventory control.

Long Answer Questions

1. Explain the complete cost-control cycle in a hotel food and beverage department.
2. Describe how a standard recipe supports costing, quality, purchasing, training, and allergen control.
3. Explain price variance and usage variance, including their managerial causes and limitations.
4. Discuss how labour scheduling can improve profitability without damaging service quality or employee welfare.
5. Evaluate the role of technology and AI in contemporary departmental cost control, including governance risks.

Analytical / Application Questions

1. A 12 kg purchase costs CU 96 and produces 7.2 kg of usable product. Calculate yield percentage, waste percentage, usable-unit cost, and the cost of a 180 g portion.
2. A restaurant sells 240 meals at CU 18 with variable cost CU 6 and 160 meals at CU 25 with variable cost CU 11. Calculate total contribution and weighted average contribution per meal. Recommend one additional measure needed before changing the sales mix.
3. A bar’s actual beverage usage is materially higher than theoretical usage. Design an investigation covering records, physical controls, employee practices, and possible legitimate explanations.

Multiple Choice Questions with Answers

Question 1

A recipe costs CU 24 and yields 16 portions. What is the standard cost per portion?

A. CU 0.67

B. CU 1.50

C. CU 8.00

D. CU 16.00

Correct Answer: B. CU 1.50

Question 2

A 10 kg purchase produces 7.5 kg of usable product. What is the yield percentage?

A. 25%

B. 33.3%

C. 75%

D. 133.3%

Correct Answer: C. 75%

Question 3

Which formula calculates usable-unit cost?

A. Purchase cost ÷ usable quantity

B. Usable quantity ÷ purchase cost

C. Purchase cost × waste percentage

D. Selling price ÷ purchase quantity

Correct Answer: A. Purchase cost ÷ usable quantity

Question 4

Opening beverage inventory is CU 8,000, purchases are CU 22,000, and closing inventory is CU 6,000. What is beverage consumed?

A. CU 12,000

B. CU 20,000

C. CU 24,000

D. CU 36,000

Correct Answer: C. CU 24,000

Question 5

Actual ingredient usage is 190 kg at CU 8.50 per kg; standard quantity allowed is 180 kg at CU 8 per kg. What is the usage variance?

A. CU 80 adverse

B. CU 95 adverse

C. CU 175 adverse

D. CU 80 favourable

Correct Answer: A. CU 80 adverse

Question 6

A dish sells for CU 20 and has a variable cost of CU 7. What is its unit contribution?

A. CU 7

B. CU 13

C. CU 20

D. CU 27

Correct Answer: B. CU 13

Question 7

Which menu-engineering category describes an item with high popularity and high contribution?

A. Dog

B. Puzzle

C. Plough-horse

D. Star

Correct Answer: D. Star

Question 8

A department has sales of CU 80,000 and eligible labour cost of CU 20,000. What is labour cost percentage?

A. 20%

B. 25%

C. 40%

D. 60%

Correct Answer: B. 25%

Question 9

Which control most directly reduces beverage over-pouring?

A. Increasing menu variety

B. Using calibrated measures or controlled dispensers

C. Reducing inventory counts

D. Allowing unrestricted storeroom access

Correct Answer: B. Using calibrated measures or controlled dispensers

Question 10

Which statement best describes prime cost in the chapter’s framework?

A. Sales less fixed costs

B. Food and beverage cost of sales plus direct labour cost

C. Purchase cost less closing inventory

D. Departmental profit plus overhead allocation

Correct Answer: B. Food and beverage cost of sales plus direct labour cost