CEC Financial Management and Cost Control

Question 1

A restaurant's food cost percentage is calculated as:

Accepted Answer

Cost of Goods Sold ÷ Net Sales × 100

Answer

Net Sales ÷ Cost of Goods Sold × 100

Answer

Gross Profit ÷ Net Sales × 100

Answer

Labor Cost ÷ Cost of Goods Sold × 100

Question 2

A restaurant achieves $40,000 in food sales with a $14,000 cost of goods sold. What is the food cost percentage?

Accepted Answer

35%

Answer

28.6%

Answer

40%

Answer

22.5%

Question 3

Which of the following is a fixed cost in restaurant operations?

Accepted Answer

Monthly rent

Answer

Food purchases

Answer

Hourly labor wages

Answer

Utility bills that vary with production volume

Question 4

What is prime cost in foodservice financial management?

Accepted Answer

The sum of cost of goods sold and total labor costs

Answer

The cost of the highest-priced menu items only

Answer

The combined total of food cost and beverage cost

Answer

Overhead costs plus depreciation

Question 5

A well-managed full-service restaurant typically targets a prime cost percentage of:

Accepted Answer

55%–65% of total sales

Answer

25%–35% of total sales

Answer

70%–80% of total sales

Answer

45%–50% of total sales

Question 6

An executive chef increases a menu price to offset rising ingredient costs. What is the potential downside of this strategy?

Accepted Answer

Guests may perceive reduced value and choose competitors, lowering overall revenue

Answer

Higher menu prices always increase profitability

Answer

It automatically reduces labor cost percentage

Answer

It eliminates the need for portion control