Financial Management and Cost Control Flashcards
6 cards from real CEC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Management and Cost Control flashcards as text
What is a contribution margin in menu engineering?
Answer: The dollar amount remaining after subtracting food cost from a menu item's selling price
Contribution margin is selling price minus food cost per item, representing how much each sale contributes toward covering labor, overhead, and profit.
In menu engineering, a menu item classified as a 'Star' has:
Answer: High popularity and high contribution margin
Stars are the ideal menu items—they sell frequently (high popularity) and generate strong profit per sale (high contribution margin), making them the cornerstone of a profitable menu.
What is the break-even point in restaurant financial management?
Answer: The sales volume at which total revenue equals total costs, resulting in zero profit or loss
The break-even point is where total revenue exactly equals total costs (fixed + variable), meaning the operation neither profits nor loses money at that sales level.
Which cost control tool tracks the actual versus theoretical food cost based on what was sold?
Answer: Food cost variance report
A food cost variance report compares theoretical food cost (calculated from sales mix and recipe costs) against actual food cost, highlighting discrepancies caused by waste, theft, or over-portioning.
A kitchen's theoretical food cost is 28% but actual food cost is 34%. Which action should the executive chef investigate first?
Answer: Audit portioning, waste, and unrecorded transfers or theft
A 6-point variance between theoretical and actual food cost indicates portions are larger than specified, waste is unrecorded, or product is being removed without documentation—all requiring an operational audit.
What does the term 'covers' refer to in restaurant financial reporting?
Answer: The total number of guests served during a given period
In financial reporting, covers represent the number of individual guests served, used to calculate per-person averages for revenue, food cost, and labor efficiency.