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67 Cards in this Set

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what is payroll cost?
amount of money spent for employee wages, both fixed (salaried) and variable (hourly)
payroll cost is what kind of cost?
variable - increasing and decreasing in direct proportion to sales
combining fixed (management) payroll cost with variable (hourly) payroll cost results in what kind of cost?
semivariable payroll cost
labor cost is more than money spent on salaries and wages. It includes what?
Fica
medicare
worker's comp
unemployment insurance
employee benefits
payroll cost is the gross, not net, total of paychecks before what is deducted?
taxes
What does FICA stand for?
Federal Insurance Contributions Act - for retirement and medical benefits, which employees and employers both pay
the FICA contribution rate is what?
6.2%, plus another 1.5% for Medicare for a total of 7.7%
what are employee benefits?
benefits given by the employer that have monetary value but don't affect basic wage rate
what do you add to get total labor cost?
payroll costs plus FICA, Medicare and benefits
Management is most concerned about which relationship?
between labor costs and sales
how do you calculate labor cost %?
labor cost divided by sales = labor cost%
to calculate estimated daily payroll cost% do what?
weekly fixed cost divided by 7 (if for 7 days a week) = daily fixed cost%

daily fixed cost% + daily variable payroll cost = total daily payroll cost

total daily payroll cost divided by anticipated sales = estimated daily payroll cost%
what is a budget?
projection of sales, costs, profit used to guide day to day decisions
what are budgets based on?
historical figures and educated forecasts on sales and costs in a specific period

projected monthly, totaled yearly
the amount allocated for labor is dependent on what factors?
menu items
level of expertise needed
method, amount of prep needed
type of service
location
special events, holidays
for an operation to achieve budgeted profit, sales projections listed in the budget must be met, true or false?
true

costs must be held to standard, too
an important part of management function is to make sure payroll cost is in line with . . .
budgeted standard
what is the first step in making sure labor cost meets standard?
creation of a work schedule
payroll controls and budget start with what?
a master schedule based on projected sales (which are based on historical sales)
how do you first start to create a work schedule?
analyze historical sales figures, which are then translated into sales projection. From there, figure dollars available for labor cost
what is historical sales info?
an account of past sales volume in foodservice industry
what are sales projections?
estimates of future sales based on historical sales records

past sales are used as a baseline
after determining anticipated sales, management must determine payroll dollars, which are what?
the number of dollars available for payroll for a scheduling period
payroll dollars are calculated from anticipated labor costs, true or false?
true
how do you calculate total available labor dollars?
1) standard labor cost% X projected sales = dollars available for labor
2) Subtract cost of benefits, deductions = remaining payroll available dollars

3) subtract fixed labor = dollars available for variable cost employees
what is a master schedule?
a template showing number of people needed in each position to run a restaurant
how can you determine the hourly staff needed?
by using productivity standards
what is the most efficient method of scheduling service staff?
with a labor productivity standard known as covers per server
what is covers per server?
the number of customer meals that a wait staff can serve in an hour
each operation should have a standard figure for covers per server based on past customer counts and productivity levels. this standard is measured against what?
sales forecast to determine number of servers to schedule
If the forecast is for 300 in a 4-hour period, and the standard cover per server is 20, how many servers should be scheduled?
300 divided by 4 = 75 covers per hour.

75 divided by 20 = 3.75 servers
once servers are scheduled, the number of hours for the rest of the positions needs to be figured out, true or false?
true
payroll dollars available - fixed cost - server payroll dollars = what?
remaining payroll dollars available
How do you divide by average wage per hour?
remaining payroll dollars available divided by average wage per hour = number of hours available to schedule remaining hourly employees
once the master schedule is written, it needs to be what to see if it meets company standard?
validated
what's the formula for validation?
fixed payroll + variable payroll = total payroll

total payroll + FICA/Medicare/benefits = total forecasted labor cost
how do you calculate forecasted labor cost percent?
total forecasted labor cost divided by forecasted sales = forecasted labor cost percent
the forecasted labor % figure should agree with what?
company standard
if labor forecast is lower than standard, do what?
add hours to the schedule
after master schedule has been written, validated and meets standard, it can be used to make what?
management and crew schedules
what is a crew schedule?
a chart that shows employees' names and days/time to work
what is the primary control for managing labor cost?
the schedule
what is the most difficult part of proper scheduling?
forecasting sales
what is another control in maintaining labor cost?
tracking time employees work
factors that affect labor cost directly include . . .
turnover
benefits
labor contracts
factors that affect labor cost indirectly include . . .
quality and productivity standards
what is employee turnover?
number of employees hired to fill one position in a year's time
how do you calculate employee turnover rate?
number of employees hired in a year, divided by average number needed, X 100 = turnover rate
what are some expenses associated with turnover?
lost management time through interviewing, training;
labor cost of one employee shadowing another;
unproductive time during training;
cost of seeking applicants;
accounting costs
where does the cost of hiring come out of?
profit
what are 3 methods for tracking time?
timesheet
timecard
electronic check-in with password
what are 2 prevalent indirect costs of employee turnover?
loss of productivity
customer dissatisfaction
what is a quality standard?
a level of excellence used to measure customer satisfaction
what is a productivity standard?
level set by management to measure amount of work performed
some standards may include . . .
job description
menu
production chart (quantity standards)
standardized recipe
what is a return chart?
explains why a customer returned an item to the kitchen
how is productivity measured?
sales per person-hour

covers per person-hour

sales per cover
what are person-hours, also known as labor hours?
total hours worked by hourly employees for a given period

Ex: 3 people X 5 hours = 15 person-hours
sales per person-hour tells you what?
how productive the staff is
how do you calculate number of sales per person-hour?
sales divided by number of person-hours = sales per person-hour

Ex: $1,000 divided by 15 per person-hours = $66.67 sales per person-hour
how do you calculate covers per person-hour?
covers divided by person-hour = covers per person-hour

Ex: 225 covers divided by 9 per-person hours = 25 covers per person-hour
when analyzed together, sales per cover and covers per person-hour will tell who the best servers are in terms of productivity (table turnover) and sales ability (high average check), true or false?
true
what does sales per cover measure?
sales ability of a server
how do you calculate sales per cover?
total sales per server divided by covers sold by server = sales per cover
what is a control that management uses to keep labor costs in control?
budget
what is gross payroll?
amount of money spent in exchange for a person's work
factors directly affecting labor costs include . . .
time tracking,
sales levels,
schedule modification,
overtime,
benefits offered,
labor contracts,
employee turnover