CDM Inventory, Costing & Business Operations Flashcards

What is the formula for calculating the food cost percentage of a doughnut product?

Answer: (Ingredient cost ÷ Selling price) × 100

Food cost percentage is calculated by dividing the total ingredient cost by the selling price and multiplying by 100 to express it as a percent.

In a bakery, what does FIFO stand for and why is it used?

Answer: First In, First Out — to ensure oldest inventory is used before newer stock

FIFO ensures that the oldest ingredients are used first, reducing spoilage, waste, and the risk of using expired products.

Which document is used to record the amount of each ingredient used in a standard batch of doughnuts?

Answer: A standardized recipe card

A standardized recipe card specifies exact ingredient quantities per batch, ensuring consistency and enabling accurate food cost calculations.

What does 'yield percentage' refer to when calculating ingredient costs for doughnuts?

Answer: The usable portion of an ingredient after trimming or processing compared to the as-purchased amount

Yield percentage accounts for the loss that occurs during ingredient preparation, ensuring accurate cost calculations based on usable ingredient amounts.

A baker produces 120 doughnuts per batch and the total ingredient cost is $36. What is the ingredient cost per doughnut?

Answer: $0.30

Dividing the total batch cost ($36) by the number of units (120) gives an ingredient cost of $0.30 per doughnut.

What is the purpose of a par level in bakery inventory management?

Answer: It sets the minimum stock quantity that triggers a reorder

A par level is the minimum on-hand quantity for an ingredient; when stock falls to or below this level, a reorder is placed to prevent stockouts.