Food Cost Management & Pricing Flashcards

A restaurant's beginning inventory is $8,200, purchases total $14,500, and ending inventory is $7,800. What is the cost of goods sold?

Answer: $14,900

COGS = Beginning Inventory + Purchases – Ending Inventory = $8,200 + $14,500 – $7,800 = $14,900.

Which pricing method sets menu prices based on what competitors charge rather than internal cost analysis?

Answer: Competitive pricing

Competitive pricing uses market rates as the primary benchmark instead of calculating prices from food cost percentages.

What does a 'yield test' primarily determine?

Answer: The usable portion of a raw ingredient after trimming and cooking

A yield test measures what percentage of a purchased ingredient is actually usable after waste, trimming, and cooking loss.

If a menu item's food cost is $4.50 and the target food cost percentage is 30%, what should the selling price be?

Answer: $15.00

Selling price = Food Cost ÷ Food Cost % = $4.50 ÷ 0.30 = $15.00.

Which inventory valuation method assumes the most recently purchased items are used first?

Answer: LIFO

LIFO (Last In, First Out) assumes the newest inventory is consumed first, which can raise COGS when prices are rising.

A steakhouse purchases beef tenderloins at $18/lb. After trimming, only 70% is usable. What is the edible portion cost per pound?

Answer: $25.71

Edible portion cost = As-purchased price ÷ Yield % = $18.00 ÷ 0.70 = $25.71 per pound.

What is 'contribution margin' in menu pricing?

Answer: The selling price minus the food cost of the item

Contribution margin is the amount each menu item contributes to covering fixed costs and profit after deducting its variable food cost.