Food Cost Management & Pricing Flashcards

A brewery's taproom sells a pint of IPA for $8.00 with a pour cost of $1.60. What is the pour cost percentage?

Answer: 20%

Pour cost percentage = (cost / selling price) × 100 = ($1.60 / $8.00) × 100 = 20%.

Which inventory valuation method assigns the cost of the most recently purchased ingredients to goods sold first?

Answer: LIFO

LIFO (Last-In, First-Out) assumes the most recently purchased inventory is sold first, which can reduce taxable income during inflationary periods.

A craft brewery wants to price a new seasonal ale using a 28% target pour cost. If the ingredient cost per pint is $2.24, what should the selling price be?

Answer: $8.00

Selling price = cost / target pour cost percentage = $2.24 / 0.28 = $8.00.

What does 'yield percentage' refer to in brewing ingredient cost calculations?

Answer: The usable portion of an ingredient after waste and loss

Yield percentage represents the usable amount of an ingredient after trimming, spoilage, or processing losses, directly affecting the true cost per usable unit.

A brewer purchases 500 lbs of malt at $0.80/lb but records 10% shrinkage during milling. What is the true cost per usable pound?

Answer: $0.89

Usable weight = 500 × 0.90 = 450 lbs; true cost = (500 × $0.80) / 450 = $400 / 450 ≈ $0.889 per lb.

In a brewery taproom, 'velocity pricing' refers to:

Answer: Adjusting prices based on time of day or demand levels

Velocity pricing (dynamic pricing) adjusts drink prices based on demand patterns, such as lowering prices during slow periods and raising them during peak hours.

Which cost is considered a semi-variable cost in brewery operations?

Answer: Utility bills that have a fixed base charge plus usage charges

Semi-variable costs have both a fixed component (base utility charge) and a variable component (usage-based charges), making them neither purely fixed nor purely variable.