HTM 2030 Study Guide - Midterm Guide: Operating Budget, Variable Cost, Foodservice

• School: University of Guelph
• Department: Hospitality and Tourism Management
• Course: HTM 2030
• Professor: William Murray

Document Summary

The expense to a foodservice establishment for goods or services when the goods are consumed or the services are rendered. Food and beverages are considered consumed when they are used, wastefully or otherwise. Normally unaffected by changes in sales volume. They have little direct relationship to business volume because they do not change significantly when the number of sales increases or decreases. Examples: rent, property taxes, insurance premiums, depreciation on equipment: variable costs. As the business volume increases, variable costs will increase; as volume decreases, variable costs will decrease. Example: every time you sell a steak you must buy one to have it available. This variable cost of steaks means that the relationship of costs to sales is constant. If each steak costs . 00 and you sell each for . 00, no matter how many or how few steaks you sell, good management those practices demand that relationships should be maintained.