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

Food cost percentage equals Cost of Goods Sold divided by Net Sales multiplied by 100, expressing the portion of revenue consumed by food costs.

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

$14,000 ÷ $40,000 × 100 = 35% food cost percentage.

Question 3

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

Accepted Answer

Monthly rent

Answer

Fixed costs such as rent remain constant regardless of sales volume, unlike variable costs (food, hourly labor) that fluctuate with business levels.

Question 4

What is prime cost in foodservice financial management?

Accepted Answer

The sum of cost of goods sold and total labor costs

Answer

Prime cost equals cost of goods sold (food + beverages) plus total labor costs (wages, benefits, payroll taxes), representing the two largest controllable expense categories.

Question 5

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

Accepted Answer

55%–65% of total sales

Answer

Industry benchmarks place prime cost for full-service restaurants at 55%–65% of total sales, leaving sufficient margin to cover overhead and generate profit.

CEC - Certified Executive Chef Practice Test

CEC - Certified Executive Chef Practice Test

CEC Financial Management and Cost Control