CDM Inventory, Costing & Business Operations Flashcards

What document outlines the daily or weekly production targets and scheduling for a doughnut bakery?

Answer: Production schedule

A production schedule details what products to make, in what quantities, and when, ensuring efficient use of labor, equipment, and ingredients.

Which cost is considered a 'variable cost' in doughnut production?

Answer: Ingredient costs that change with production volume

Variable costs like ingredients fluctuate directly with production volume—the more doughnuts made, the higher the ingredient spend.

What is 'dead stock' in the context of bakery inventory?

Answer: Ingredients that have expired or are unlikely to be used before their expiration date

Dead stock refers to inventory items that are no longer usable or will expire before being consumed, representing a direct financial loss.

A doughnut shop's monthly frying oil cost is $400, and it produces 8,000 doughnuts per month. What is the oil cost per doughnut?

Answer: $0.05

Dividing the monthly oil cost ($400) by the number of doughnuts produced (8,000) yields an oil cost of $0.05 per unit.

What is the purpose of conducting a physical inventory count in a bakery at the end of each week?

Answer: To verify actual stock levels against theoretical usage and identify discrepancies or theft

Physical counts validate whether actual consumption matches what the recipe-based usage records predict, flagging waste, theft, or recording errors.

Which pricing strategy involves setting the selling price based on a desired food cost percentage?

Answer: Cost-plus pricing

Cost-plus pricing starts from the ingredient and production cost and adds a markup calculated to achieve a target food cost percentage and profit margin.