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55 Cards in this Set
- Front
- Back
what is a control?
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a method of exercising some amount of power over events or situations to achieve a particular result.
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why establish controls, 2 reasons . . .
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prevent problems
achieve goals of organization |
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where do cost controls start?
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with the menu
They continue through: purchasing receiving storage production service |
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without controls, the organization has no way to know what?
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whether it's profitable
whether it's meeting budget |
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what is a standard?
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a measure established to compare levels of attainment for a goal, or a measure of adequacy
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what should standards cover?
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the entire spectrum of the business:
sales quality quantity production service employment |
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standards are an integral part of what?
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controlling costs
Standards are the regulating force behind controlling costs |
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what are the 2 most common classifications of costs?
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controllable and noncontrollable
also fixed, variable and semivariable |
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understanding the types of costs helps managers do what?
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interpret cost-related information, and
make control-related decisions |
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what is the portion cost equal to?
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cost of ingredients divided by number of portions
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what are controllable costs?
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those costs management can directly control
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what are noncontrollable costs?
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those over which management has little or no control
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what is an example of a controllable cost?
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food cost
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how can management control food costs?
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use standardized recipes
make a standardized procedure for portion control, menu listing and pricing take an item off the menu |
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what kind of cost is a labor cost?
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controllable
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give an example of a noncontrollable cost
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insurance
license fees lease/mortgage |
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what are based on each's cost relationship to sales volume?
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fixed
variable semivariable costs |
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what are fixed costs?
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those that remain the same regardless of sales volume
Example: Insurance |
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what is a variable cost?
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they increase and decrease in direct proportion to sales
Example: food costs |
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what are semivariable costs?
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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 |
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variable and semivariable costs are usually what?
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controllable costs
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fixed costs are typically what kind of costs?
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noncontrollable
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what are the 2 largest costs management has to control?
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food cost
labor cost |
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what are food and labor costs together known as?
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the prime cost
the 2 highest costs in the operation |
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prime cost should not exceed what percentage of sales?
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65%
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what is the primary objective of a restaurant?
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to build sales
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any controls implemented must ensure a continuation of what?
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standard levels for:
safety sanitation customer service |
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start with accurate sales information, including what, to know whether costs are in appropriate range?
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historical sales
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sales should be tracked for which time periods?
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yearly
monthly weekly daily meal period hourly |
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where do you find the yearly and monthly sales info?
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income statement
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where do you find the hourly, daily, and weekly figures?
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a POS (point of sale) system report,
or from guest checks or periodic cash register readings |
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where do you get cost information from?
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operational records
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what's the best way to tell at a glance how an operation is performing?
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read the income statement
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what is an income statement?
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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 |
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what is the income statement also called?
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profit and loss report
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the profit and loss report helps managers do what?
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gauge profitability and compare results to goals or standards
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what is sales?
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the dollar amount the restaurant takes in for food
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what does "cost of foods sold" show?
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dollar amount spent on that food
It is opening inventory plus purchases, minus ending inventory |
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what is gross profit?
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the amount of money made on the cost of food sold
Subtract cost of food sold from sales |
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what is labor expense?
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payroll for hourly employees plus salaried management
(includes federal taxes and employee benefit costs) |
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total expenses include . . .
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labor, controllable and noncontrollable expenses
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what is profit?
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what remains after all expenses are paid
Subtract total expenses and food costs from sales |
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what is a line item review?
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every item on the budget is checked against actual figures - and the difference is noted
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how can you express differences between the budget and actual amounts?
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in dollar amount or in percentage
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what does the standard represent?
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the level at which cost should be
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with labor standard, what's the goal?
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produce a quality product and offer quality service
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if the food cost is off, what action can be reviewed?
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purchasing
prepping receiving |
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if labor cost is off, what do you review?
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scheduling
production standards |
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what is a corrective action?
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correction of a problem
they can only be used to affect controllable costs |
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how often should you review forecasts of the operating budget?
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at least once a month
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what are some corrective actions for controlling food costs?
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reduce portion size
replace item with one more cost effective feature an item with a higher profit raise menu price |
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what are some corrective actions for food waste?
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monitor portion control
monitor food storage and rotation improve communication to reduce production errors monitor food ordering |
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what are some corrective actions for inventory cost?
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order appropriate quantities so you don't have too much or too little in storage
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what's a corrective action for labor cost?
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reduce number of employees on the schedule
ask workers to end their shifts early schedule cross-trained staff |
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once actual sales and costs are calculated, what do you compare them to?
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budgeted amount
operational standards historical info |