CDM Inventory, Costing & Business Operations Flashcards

Which factor most directly affects the shelf life of finished doughnuts in a retail display case?

Answer: Humidity and temperature of the display environment

High humidity causes glazes to dissolve and dough to become soggy, while improper temperature accelerates staling and microbial growth.

What is 'contribution margin' in the context of doughnut pricing?

Answer: Selling price minus variable ingredient and production costs

Contribution margin is the amount each unit sale contributes toward fixed costs and profit after subtracting variable costs.

When ordering ingredients for a busy holiday weekend, which approach best minimizes waste while preventing stockouts?

Answer: Order based on sales history from the same period in prior years plus a safety buffer

Historical sales data provides the most reliable forecast for seasonal demand, and a safety buffer accounts for unexpected demand spikes.

What is the main reason bakeries track 'waste' separately from 'usage' in inventory records?

Answer: To identify inefficiencies and reduce unnecessary ingredient loss

Tracking waste separately allows management to pinpoint where ingredients are being lost unnecessarily and implement corrective measures to improve profitability.

In bakery cost accounting, what does 'overhead' typically include?

Answer: Rent, utilities, equipment depreciation, and insurance

Overhead comprises all fixed and semi-fixed indirect costs—such as rent, utilities, and depreciation—that are not directly tied to a specific product batch.

Why is it important for a doughnut shop to track sell-through rates for each variety?

Answer: To identify slow-selling items and adjust production quantities to reduce end-of-day waste

Sell-through rate data shows which varieties sell out quickly and which are left over, allowing production planning to align output with actual demand.