HM 351 Study Guide - Fall 2018, Comprehensive Midterm Notes - Serving Size, Fish As Food, Wine
12 Oct 2018
School
Department
Course
Professor
HM 351
MIDTERM EXAM
STUDY GUIDE
Fall 2018
HM 351 – Class 1 8/30
Ch. 1: Cost and Sales Concepts
Important Concepts:
Revenue: the amount of dollars you take in
Expenses: the costs of the items required to operate the business
Profit: the amount of dollars that remain after all expenses have been paid
Profit = Revenue – Expenses
Costs:
Four Major Costs
1. Food costs
2. Beverage costs
3. Labor costs
4. Overhead costs – utility, rent, equipment
Percentage calculation is more useful (due to inflation)
• Food prices can change, etc
Food costs
• The costs associated with actually producing the menu items
• Includes non-alcoholic beverages
• Usually the largest of second largest expense category
Beverage Costs
• Related to alcoholic beverages (beer, wine, liquor)
• May include ingredients (cherries, lemons, olives, juices, soda, etc)
Labor Costs
• Salary & wages
• The cost of all employees necessary to run the business
• Includes taxes and benefits
• About second largest expense
Overhead costs
• All expenses that are neither food, beverage, nor labor
• Utilities, rent, linen, etc
find more resources at oneclass.com
find more resources at oneclass.com
Cost Percent:
Food cost % = food cost / food sales
Beverage cost % = beverage cost / beverage sales
Labor cost % = labor cost / total sales
Percent (%): out of each hundred
• Common form: % (ex. 10%)
• Fraction form: a portion of 100, (ex. 10/100)
• Decimal form: use decimal point (ex. 0.10 or .10)
Types of Costs:
• Fixed Costs
o Rent, insurance, taxes, utility, marketing fee
o Normally unaffected by changes in sales volume
• Variable costs
o Food cost, beverage costs
o Related to business volume
o Direct variable costs: directly linked to volume of business (f & b)
o Semi-variable costs: both fixed and variable elements (labor)
• Controllable costs
o Wages, ingredients/ f & b, marketing fee
o Can be changed in the short term
o Normally variable costs
• Non-controllable costs
o Rent, tax, insurance, depreciation
o Cannot normally be changed in the short term
o Usually fixed costs
• Unit costs: food or beverage portions or units of work
• Total costs: the total cost of labor for one period
o Example: rent = $2,000(total cost) ; serve 2,000 customers = rent costs $1 per
customer (unit cost)
• Prime cost
o The sum of food costs, beverage costs, and labor costs (salaries and wages,
employee benefits)
• Historical costs
o Helpful to forecast
o From business records, books of account, other financial record
• Planned costs
o Projections of costs for a future period
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Revenue: the amount of dollars you take in. Expenses: the costs of the items required to operate the business. Profit: the amount of dollars that remain after all expenses have been paid. Four major costs: food costs, beverage costs, labor costs, overhead costs utility, rent, equipment. Percentage calculation is more useful (due to inflation: food prices can change, etc. Food costs: the costs associated with actually producing the menu items, usually the largest of second largest expense category. Beverage costs: related to alcoholic beverages (beer, wine, liquor, may include ingredients (cherries, lemons, olives, juices, soda, etc) Labor costs: salary & wages, the cost of all employees necessary to run the business, about second largest expense. Overhead costs: all expenses that are neither food, beverage, nor labor, utilities, rent, linen, etc. Food cost % = food cost / food sales. Beverage cost % = beverage cost / beverage sales. Labor cost % = labor cost / total sales.
