CEC Financial Management and Cost Control 2 — Questions and Answers
Question 1: What is a contribution margin in menu engineering?
- The percentage of food cost for each menu item
- The dollar amount remaining after subtracting food cost from a menu item's selling price (Correct answer)
- The profit generated after all overhead costs are deducted
- The difference between budgeted and actual labor cost
Correct 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.
Question 2: In menu engineering, a menu item classified as a 'Star' has:
- High popularity and low contribution margin
- Low popularity and high contribution margin
- High popularity and high contribution margin (Correct answer)
- Low popularity and low contribution margin
Correct 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.
Question 3: What is the break-even point in restaurant financial management?
- The sales volume at which total revenue equals total costs, resulting in zero profit or loss (Correct answer)
- The point at which food cost percentage drops below 30%
- The minimum number of covers needed to justify full staffing
- The sales level at which labor costs are fully covered
Correct 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.
Question 4: Which cost control tool tracks the actual versus theoretical food cost based on what was sold?
- Perpetual inventory sheet
- Food cost variance report (Correct answer)
- Portion control card
- Budget forecast worksheet
Correct 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.
Question 5: A kitchen's theoretical food cost is 28% but actual food cost is 34%. Which action should the executive chef investigate first?
- Increase menu prices by 6%
- Audit portioning, waste, and unrecorded transfers or theft (Correct answer)
- Reduce the number of menu items offered
- Switch to a lower-cost supplier immediately
Correct 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.
Question 6: What does the term 'covers' refer to in restaurant financial reporting?
- The number of menu items available per service
- The total number of guests served during a given period (Correct answer)
- The physical table settings prepared for service
- The number of reservations accepted per shift
Correct 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.
CEC Financial Management and Cost Control 2
What is a contribution margin in menu engineering?