CRM Food Cost Management & Pricing 2 — Questions and Answers
Question 1: 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?
- $14,900 (Correct answer)
- $15,200
- $13,800
- $22,700
Correct answer: $14,900
COGS = Beginning Inventory + Purchases – Ending Inventory = $8,200 + $14,500 – $7,800 = $14,900.
Question 2: Which pricing method sets menu prices based on what competitors charge rather than internal cost analysis?
- Competitive pricing (Correct answer)
- Cost-plus pricing
- Contribution margin pricing
- Demand-based pricing
Correct answer: Competitive pricing
Competitive pricing uses market rates as the primary benchmark instead of calculating prices from food cost percentages.
Question 3: What does a 'yield test' primarily determine?
- The usable portion of a raw ingredient after trimming and cooking (Correct answer)
- The number of portions a recipe produces
- The selling price needed to cover food cost
- The variance between actual and theoretical food cost
Correct 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.
Question 4: If a menu item's food cost is $4.50 and the target food cost percentage is 30%, what should the selling price be?
- $15.00 (Correct answer)
- $13.50
- $16.50
- $12.00
Correct answer: $15.00
Selling price = Food Cost ÷ Food Cost % = $4.50 ÷ 0.30 = $15.00.
Question 5: Which inventory valuation method assumes the most recently purchased items are used first?
- LIFO (Correct answer)
- FIFO
- Weighted average
- Specific identification
Correct answer: LIFO
LIFO (Last In, First Out) assumes the newest inventory is consumed first, which can raise COGS when prices are rising.
Question 6: A steakhouse purchases beef tenderloins at $18/lb. After trimming, only 70% is usable. What is the edible portion cost per pound?
- $25.71 (Correct answer)
- $12.60
- $21.60
- $18.00
Correct answer: $25.71
Edible portion cost = As-purchased price ÷ Yield % = $18.00 ÷ 0.70 = $25.71 per pound.
Question 7: What is 'contribution margin' in menu pricing?
- The selling price minus the food cost of the item (Correct answer)
- The total revenue minus all operating expenses
- The gross profit divided by total sales
- The difference between food cost and labor cost
Correct 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.
CRM Food Cost Management & Pricing 2
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?