Podcast
Questions and Answers
Which of the following is an example of a variable cost?
Which of the following is an example of a variable cost?
- Hourly wages (correct)
- Insurance
- Salaries
- Rent
Which of the following is an example of a fixed cost?
Which of the following is an example of a fixed cost?
- Supply costs
- Hourly wages
- Food costs
- Salaries (correct)
What is gross profit?
What is gross profit?
- The money remaining from sales after all costs are paid.
- The restaurant's total revenue
- The total cost of all goods sold
- The money remaining from sales after food and beverage costs are paid. (correct)
According to the base price method, what is the food cost for a dish that must sell for $4.95 at a food cost percentage of 30%?
According to the base price method, what is the food cost for a dish that must sell for $4.95 at a food cost percentage of 30%?
Why is it risky to set menu prices by matching competitors' prices?
Why is it risky to set menu prices by matching competitors' prices?
Flashcards
Variable Cost
Variable Cost
Costs that change with the level of production or sales.
Fixed Cost
Fixed Cost
Costs that remain constant regardless of production or sales volume.
Gross Profit
Gross Profit
Revenue after subtracting the cost of goods sold (food and beverage costs).
Base Price Method Risk
Base Price Method Risk
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Uncomfortable Price Points
Uncomfortable Price Points
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Study Notes
- Hourly wages are an example of a variable cost.
- Salaries are an example of a fixed cost.
- Gross profit is the money remaining from sales after food and beverage costs are paid.
- Using the base price method, the food cost for a dish that must sell for $4.95 at a food cost percentage of 30% is $1.49.
- Setting menu prices by matching competitors' prices is risky because the menu planner doesn't know the competitor's costs.
- The base price method will not calculate a sales price.
- $5.01 is not a price that is typically comfortable for customers.
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Description
Explore menu pricing, distinguishing variable costs (hourly wages) from fixed costs (salaries). Learn about gross profit calculation and the base price method, including its limitations. Understand the risks of competitor-based pricing, and psychological pricing strategies.
