Master Brewer Certification Food Cost Management & Pricing 3 — Questions and Answers
Question 1: A brewery produces a batch of 10 barrels of stout with total ingredient costs of $1,800. Each barrel contains approximately 248 twelve-ounce pints. What is the ingredient cost per pint?
- $0.58
- $0.68
- $0.73 (Correct answer)
- $0.80
Correct answer: $0.73
Total pints = 10 × 248 = 2,480; cost per pint = $1,800 / 2,480 ≈ $0.73.
Question 2: What is the primary purpose of a 'recipe costing sheet' in a brewery?
- To document quality control test results for each batch
- To calculate the total ingredient cost per unit of finished beer (Correct answer)
- To track employee hours spent on each brewing session
- To record compliance with TTB labeling requirements
Correct answer: To calculate the total ingredient cost per unit of finished beer
A recipe costing sheet itemizes all ingredient costs for a recipe, enabling the brewery to calculate the precise cost per unit and set profitable pricing.
Question 3: A taproom's actual pour cost was 24% while the theoretical pour cost was 20%. What does this 4% variance most likely indicate?
- The taproom is more profitable than expected
- There may be over-pouring, waste, or theft occurring (Correct answer)
- The target pricing strategy is incorrect
- Fixed costs have increased unexpectedly
Correct answer: There may be over-pouring, waste, or theft occurring
A gap between actual and theoretical pour cost (actual being higher) signals operational issues such as over-pouring, spillage, spoilage, or theft.
Question 4: Which pricing strategy sets a beer's price based on what the target customer segment is willing to pay rather than on production cost?
- Cost-plus pricing
- Value-based pricing (Correct answer)
- Competitive pricing
- Penetration pricing
Correct answer: Value-based pricing
Value-based pricing sets prices according to the perceived value and willingness to pay of the target customer, which can allow premium pricing for craft beers.
Question 5: A brewery's gross profit margin is calculated as:
- (Revenue – Operating Expenses) / Revenue
- (Revenue – COGS) / Revenue (Correct answer)
- (Net Income) / Total Assets
- (COGS – Overhead) / Revenue
Correct answer: (Revenue – COGS) / Revenue
Gross profit margin = (Revenue – Cost of Goods Sold) / Revenue, measuring the percentage of revenue remaining after direct production costs.
Question 6: When a brewery negotiates volume discounts with a malt supplier, this most directly affects which type of cost?
- Fixed overhead costs
- Variable direct material costs (Correct answer)
- Semi-variable utility costs
- Sunk costs
Correct answer: Variable direct material costs
Malt is a direct material and a variable cost; volume discounts lower the cost per unit of this variable input, directly reducing COGS per barrel.
Question 7: A brewery wants to evaluate its efficiency in converting raw materials to sellable product. Which metric best measures this?
- Brewhouse efficiency (Correct answer)
- Pour cost percentage
- Gross profit margin
- Contribution margin ratio
Correct answer: Brewhouse efficiency
Brewhouse efficiency measures the percentage of fermentable sugars extracted from grain that make it into the fermenter, directly impacting ingredient costs per barrel.
Master Brewer Certification Food Cost Management & Pricing 3
A brewery produces a batch of 10 barrels of stout with total ingredient costs of $1,800.
Each barrel contains approximately 248 twelve-ounce pints.
What is the ingredient cost per pint?