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55 Cards in this Set

  • Front
  • Back
what is a control?
a method of exercising some amount of power over events or situations to achieve a particular result.
why establish controls, 2 reasons . . .
prevent problems

achieve goals of organization
where do cost controls start?
with the menu

They continue through:
purchasing
receiving
storage
production
service
without controls, the organization has no way to know what?
whether it's profitable

whether it's meeting budget
what is a standard?
a measure established to compare levels of attainment for a goal, or a measure of adequacy
what should standards cover?
the entire spectrum of the business:

sales
quality
quantity
production
service
employment
standards are an integral part of what?
controlling costs

Standards are the regulating force behind controlling costs
what are the 2 most common classifications of costs?
controllable and noncontrollable

also fixed, variable and semivariable
understanding the types of costs helps managers do what?
interpret cost-related information, and

make control-related decisions
what is the portion cost equal to?
cost of ingredients divided by number of portions
what are controllable costs?
those costs management can directly control
what are noncontrollable costs?
those over which management has little or no control
what is an example of a controllable cost?
food cost
how can management control food costs?
use standardized recipes
make a standardized procedure for portion control, menu listing and pricing

take an item off the menu
what kind of cost is a labor cost?
controllable
give an example of a noncontrollable cost
insurance
license fees
lease/mortgage
what are based on each's cost relationship to sales volume?
fixed
variable
semivariable costs
what are fixed costs?
those that remain the same regardless of sales volume

Example: Insurance
what is a variable cost?
they increase and decrease in direct proportion to sales

Example: food costs
what are semivariable costs?
they increase and decrease as sales go up or down, but not in direct proportion.

They are made up of fixed and variable costs.

Example: Labor costs
variable and semivariable costs are usually what?
controllable costs
fixed costs are typically what kind of costs?
noncontrollable
what are the 2 largest costs management has to control?
food cost

labor cost
what are food and labor costs together known as?
the prime cost

the 2 highest costs in the operation
prime cost should not exceed what percentage of sales?
65%
what is the primary objective of a restaurant?
to build sales
any controls implemented must ensure a continuation of what?
standard levels for:

safety
sanitation
customer service
start with accurate sales information, including what, to know whether costs are in appropriate range?
historical sales
sales should be tracked for which time periods?
yearly
monthly
weekly
daily
meal period
hourly
where do you find the yearly and monthly sales info?
income statement
where do you find the hourly, daily, and weekly figures?
a POS (point of sale) system report,

or from guest checks or periodic cash register readings
where do you get cost information from?
operational records
what's the best way to tell at a glance how an operation is performing?
read the income statement
what is an income statement?
a report showing sales, costs and the profit or loss of a business.

It shows whether you made or lost money during the report time period
what is the income statement also called?
profit and loss report
the profit and loss report helps managers do what?
gauge profitability and compare results to goals or standards
what is sales?
the dollar amount the restaurant takes in for food
what does "cost of foods sold" show?
dollar amount spent on that food

It is opening inventory plus purchases, minus ending inventory
what is gross profit?
the amount of money made on the cost of food sold

Subtract cost of food sold from sales
what is labor expense?
payroll for hourly employees plus salaried management

(includes federal taxes and employee benefit costs)
total expenses include . . .
labor, controllable and noncontrollable expenses
what is profit?
what remains after all expenses are paid

Subtract total expenses and food costs from sales
what is a line item review?
every item on the budget is checked against actual figures - and the difference is noted
how can you express differences between the budget and actual amounts?
in dollar amount or in percentage
what does the standard represent?
the level at which cost should be
with labor standard, what's the goal?
produce a quality product and offer quality service
if the food cost is off, what action can be reviewed?
purchasing
prepping
receiving
if labor cost is off, what do you review?
scheduling

production standards
what is a corrective action?
correction of a problem

they can only be used to affect controllable costs
how often should you review forecasts of the operating budget?
at least once a month
what are some corrective actions for controlling food costs?
reduce portion size
replace item with one more cost effective

feature an item with a higher profit
raise menu price
what are some corrective actions for food waste?
monitor portion control
monitor food storage and rotation
improve communication to reduce production errors

monitor food ordering
what are some corrective actions for inventory cost?
order appropriate quantities so you don't have too much or too little in storage
what's a corrective action for labor cost?
reduce number of employees on the schedule

ask workers to end their shifts early

schedule cross-trained staff
once actual sales and costs are calculated, what do you compare them to?
budgeted amount

operational standards

historical info