Foundations Of Cost Control 1st Edition Daniel Traster - Solutions

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If you had the choice between owning or renting the space to create your dream restaurant, which would you choose? Why?
Select a specific location in your neighborhood to open a restaurant of your creation. Describe the restaurant briefly. Then, describe the type of security program you would create for that restaurant.Defend your approach to security.
Describe one way (not already stated in the chapter)that a restaurant could conserve or reclaim water.Be specific.
Think of an example of energy creation that you have seen or heard of in a business (not necessarily a food business). Describe how that technology might be applied to a small restaurant in your area. How feasible and practical would it be to implement?
Choose a restaurant concept (high-end, mid-range, or low-cost). For each of the italicized subheadings under section 15.1.1, describe the type of product you would purchase to support that restaurant. Be prepared to defend your choices.
List three bits of information to consider in the capital budgeting process.
List two advantages of buying a property for a restaurant and two advantages of renting a space for a restaurant.
List three types of expenses that fall under the heading “Repairs and Maintenance.”
List three things for which insurance might protect or cover a foodservice business.
List three categories into which “waste” might be separated as part of a waste management system.
Provide three examples of ways to reduce utility costs through energy conservation.
List three types of expenditures that would be classified as “music and entertainment.”
Pick one example of a direct operating expense.Provide an example of how that expense could be made high cost or low cost.
List seven types of expenses that fall under the heading “direct operating expenses.”
Assume that management has properly prepared an annual budget for a target profit margin. Early in the year, it appears that budget guidelines are not being met. Under what circumstances should management adjust course to maintain the profit goal, and under what circumstances should it decide to
Budgets can be divided to cover daily, weekly, monthly, or annual periods. Which time period would you imagine to be the most useful for managing and controlling revenue and costs? Why?What are the risks/challenges to using that particular time frame?
A certain company conducts a common size analysis of its income statement performance against its budget. The variance threshold is +/- 0.2. Revenue is exactly on budget. Every individual expense category has a variance of exactly + 0.1, well below the variance threshold, so no red flags are
Of the two types of income statement analysis—common size and comparative—which do you prefer? Why?
Each expense category plays a role in the overall operation of the business. Pick one controllable expense category. What would be the impact on revenue and/or on other expenses if that category were insufficiently funded?
Some foodservice businesses operate without a budget. Are there any benefits to working without a budget? What are the risks of not using a budget?
Below is a portion of an annual budget. December’s revenues represent 18.2% of annual sales. If management wishes for all sales mix and expense percentages in the spreadsheet to remain the same in December as they are for the annual budget, complete the December budget columns in the spreadsheet.
Referring to question 6, management would like to hit a profit before taxes of 4.5% of sales. Has it hit that profit target with the budget guidelines listed in question 6? If not, what changes would you recommend to the budget to realize a 4.5% profit?(There are many possibilities.)
Using the income statement and the following management goals provided, generate a first-draft budget for the upcoming year. ( Note: Profit is not specified as a goal in this question.) Management Goals:a) Total sales growth of 1.7%b) Sales mix of 71% food and 29% beveragec) Food cost of 32.0% and
Using the revenue portion of the income statement and budget below, conduct a common size analysis and a comparative analysis. Fill in all missing sales and percentage data, too.
On an income statement, depreciation is listed as$14,795. Total sales are $987,450. What percentage should be written on the depreciation expense line?
List three expenses that might be categorized as“general and administrative.”
What kinds of expenses might be categorized under“direct operating expenses?” Give at least five examples.
Most of the percentages in a common-size budget are determined by dividing the line item dollars by total sales dollars. Which expenses are the exceptions to this rule, and how are their percentages calculated?
Are there any downsides to using a POS system in a restaurant? When might a manager decide not to use one? When would a manager or owner absolutely want to have a complete POS system with all the bells and whistles?
POS systems can perform many of the cost control functions that managers do, but they cannot do all of them. What things does a manager do to control costs and drive revenue that a computer cannot do?(List at least three things.)
The text argues that managers must learn how to perform by hand a wide range of computations that a POS system can do for them. Do you agree? Why or why not?
Upselling is commonly discussed in relation to alcohol sales because it is safer (legally) to increase alcohol sales dollars by selling higher quality than by selling additional drinks to the same customer. How might a server apply upselling to food sales to get customers to spend more without
A restaurant is operating at maximum capacity.Does it still need to engage in marketing activities?Why or why not? If yes, what kind of marketing activities would you recommend?
A restaurant currently operates at a loss. If it could increase its customer base by 5%, it would break even. A marketing study shows that by paying for some local advertising, the restaurant would increase its business by exactly 5%. Should management buy that advertising or look at other
You conduct a cost/volume/profit analysis for your business in three situations: at current menu prices, with higher menu prices, and with lower menu prices. It just so happens that because of forecast business volume shifts, the break-even point is the same for all three scenarios. Knowing this,
What is the reason for a manager to calculate a break-even point? What would you expect him to do with this information, or is it just nice to know?
List three ways in which a POS system helps a manager to drive revenue and three ways in which it helps a manager to control costs.
List four examples of external marketing and four examples of internal marketing. Describe the difference between internal and external marketing.
What are the four classifications of marketing approaches?
A restaurant manager is considering keeping the business open two hours later. He estimates his labor cost for the additional two hours to be $287 and the cost for additional utilities and other expenses to be$71. If the variable rate (covering all other variable expenses) for the restaurant is
If the owner of the restaurant in question 9 wants to make $20,000 in profit, how many dollars in sales must the restaurant generate? How many customers does that represent?
What is the annual break-even point in sales for a restaurant with a variable rate of 0.673 and annual fixed costs of $187,500? What is the break-even point in number of customers if the guest check average is $67.87?
Using the information in question 7, what will the profit or loss be if annual sales are $750,000?
If a restaurant has a variable rate of 0.574 and annual fixed costs of $288,750, what will the profit or loss be on $650,000 in annual sales?
A restaurant has variable costs of $76,244 and fixed costs of $49,902 for a month. The profit for that month is $3,870. Calculate the total sales dollars, variable rate, and contribution rate for this restaurant.
Variable rate covers all variable costs. What does the contribution rate cover?
What is the contribution rate for a company with a variable rate of 0.664?
A restaurant has a variable rate of 0.584. In one month, its variable costs are $72,487. What should sales be for that month?
Using the information from question 1, calculate the restaurant’s variable rate.
A restaurant has sales of $300,000 during the same period in which its variable costs are $185,300 and its fixed costs are $103,000. What are the restaurant’s profits for this period?
You have noticed that over the past few months, sales have decreased in the restaurant you manage.The average guest check has dropped by over a dollar and the customer counts are flat from a year ago. Because your kitchen has so few cooks, you decide the only place to cut labor cost is in the
Your restaurant’s void sheet tends to list 10 to 20 mishaps each day, but you never have any discrepancies on the food sales reconciliation sheet. You typically serve 80-100 customers on a given night.What is going right and what is going wrong in your restaurant? How would you deal with such a
In conducting a menu analysis, you notice that your upscale restaurant menu has only one “dog”—the steak tartare. The dish is your least profitable and least popular, but you have been written up in the local paper as the only place in town to get steak tartare. Additionally, the local dining
The owners at two different restaurants wish to increase their revenue. Restaurant A has a seat turnover rate of 0.78. Restaurant B has a seat turnover rate of 3.81. Both restaurants have advertised dinner hours of 5:30–9:30 p.m. What suggestions should the managers at each restaurant propose to
Will her system be effective at getting accurate forecasts? Why or why not?
A novice manager starts her first management job at an established restaurant and wants to make a good impression on the owners. She notices that the guest counts seem to bounce around from one day to the next. She begins by setting up a forecasting process using rolling averages. Her process is to
A restaurant owner comes into her restaurant to review the books. She notices that the daily reports for two straight weeks show a forecast that matches the kitchen production and sales exactly—in other words, no voids, no leftovers. Should the owner be thrilled or concerned that the manager on
The food sales reconciliation form that follows is missing some information. Complete the form and then list (in the notes column) which dishes, if any, require further investigation for potential theft.
Describe the purpose of a void sheet (or food mishap report). List four “acceptable” reasons for a food mishap that might end up on a void sheet.
Using the menu mix information in question 8, forecast the quantities of each entrée to prepare
Combining the information in questions 8 and 9, label each entrée as a star, plowhorse, puzzle, or dog.
Complete the following chart:
Complete the following chart:
A restaurant sells 371 entrées on a given night. Of those, 48 entrées are the seared salmon. What is the menu mix percentage for the salmon entrée that night?
An upscale restaurant typically serves 88 customers on a Sunday evening. The restaurant only has 60 seats.What is the seat turnover rate for this operation?
A luncheonette has a consistent guest check average of $9.14. The manager forecasts 1,372 customers for the upcoming week. How much revenue should the manager expect next week?
A restaurant generates $189,030 in revenue for a given period. During that time, it serves 5,983 customers.What is the guest check average for this restaurant during that period?
List four pieces of qualitative data that might cause a manager to increase or to decrease her forecast guest count for an upcoming service.
Over a four-week period, a cafeteria sees 384, 471, 402, and 399 customers respectively. Using a rolling average approach that considers guest counts from the past four weeks, how many customers should the cafeteria forecast for next week?
A restaurant serves 2,118 customers for lunch in June, 2,202 customers for lunch in July, and 2,290 customers for lunch in August. What is the current trend, as expressed by monthly percentage increase, for this operation? How many customers might the restaurant expect for lunch in September?
You have two different teams of back-of-the-house workers in your restaurant. One group works Monday through Thursday. The other works Friday through Sunday. You notice that the Friday through Sunday group consistently has a higher sales per person-hour and covers per person-hour ratio than the
Your company’s sales volume is projected to decline significantly in the upcoming year due to a poor local economy. You employ full-time senior workers with high wage rates, part-time workers with low wage rates, and salaried managers who earn benefits.You need to cut your labor cost. How would
A chef earns an additional bonus for every percentage point he reduces the food cost percentage. There are no other bonuses. Is this a good bonus system from management’s point-of-view? What possible problem exists with this system?
Why does absenteeism (for any reason) impact labor cost so much? In other words, if one employee is out (and not getting paid) while another employee works his job for him, why isn’t that essentially an equal swap in labor cost?
When a restaurant operates exactly on budget, its labor cost (including hourly wages, salaries, and benefits) is 30% of sales. If sales do not meet their targets, should an owner still expect the management to hit a labor cost percentage of 30%? Why or why not?
The restaurant from questions 13 and 14 sees an increase of $2,000 in its cost of goods sold and an increase of $1,000 in its labor cost in April. Sales for April are $165,000. Calculate the prime cost percentage for April. Did the restaurant control costs better in March or in April?
Using the information from question 13, calculate the prime cost percentage if the restaurant has sales of $161,000 in March.
Calculate the prime cost for a restaurant that has a cost of goods sold of $36,000 and a labor cost of$66,000 for the month of March.
List five factors within the control of management that impact labor cost.
A restaurant handles 180 customers but has 6 errors during service on Monday. The same restaurant handles 220 customers but has 8 errors during service on Tuesday. Calculate the errors per cover for each day. Assuming each error results in a guest having to wait for a dish to be remade, on which
The same restaurant from question 9 serves 220 guests and earns $7,260 in sales during the following day’s three-hour dinner service. However, it takes six back-of-the-house employees to handle the workload. Calculate the sales per person-hour and the covers per person-hour for the
A restaurant serves 180 guests and earns $5,760 in sales during a three-hour dinner service. Five backof-the-house employees work during the entire dinner service. Calculate the sales per person-hour and the covers per person-hour for the back-of-thehouse team.
Of the measures of sales per person-hour, covers per person-hour, and errors per cover, which ones measure employee quantity output and which measure employee work quality?
The bakery in question 6 was scheduled to have a standard labor cost of $2,600 with forecast sales of$8,100. Did the actual labor cost percentage from question 6 beat, meet, or fall below the standard labor cost percentage? State the standard labor cost percentage in your answer.
A bakery has an actual labor cost of $2,780 the same week it earns $8,240 in sales. What is the labor cost percentage for this week at the bakery?
Using the chart below, calculate the standard labor cost for the department assuming that cooks earn$10/hour, servers and cashiers earn $9/hour, and bussers and dishwashers earn $8/hour. You are the only manager, and you earn a $48,000 annual salary. Benefits for all employees, including you, are
Using the information from question 3, what is the worker’s weekly labor cost? How much does he get paid if he works a forty-hour week? If he works a fifty-hour week?
A salaried worker earns $42,000 a year. His company provides him with benefits worth 34.5% of his salary. What is his preliminary daily labor cost and his daily labor cost with benefits?
Using the information from question 1, what is the actual preliminary labor cost and actual labor cost for this worker if he works a forty-hour week? If he works a forty-two-hour week?
A worker earns $12.25/hour and is scheduled to work a thirty-eight-hour week. What is the preliminary standard labor cost for this worker? If the benefits percentage for the company is 18.2%, what is the standard labor cost including benefits for this worker?
You have worked your way up to the executive chef position in a restaurant. Your duties now include a range of management functions; cooking food for customers is no longer a required task for you. If the restaurant is open from 11:00 a.m. to midnight, six days a week, what hours do you feel you
A business is co-owned by two people equally. The organizational chart shows that the front-of-thehouse staff reports directly to one owner while the back-of-the-house staff reports directly to the other owner. There are no management levels between the employees and the owners, and the owners
Which type of employee would you prefer to manage, a part-timer or a full-timer? Why? What challenges would you face if you hired 90% of your staff in that format (part-time or full-time)?
Imagine you own a restaurant. Which positions would you make salaried and which hourly? What benefits would you offer to all of your staff and which benefits only to some? Why?
Using the chart you completed in question 5, create a work schedule for your staff. Each type of position has one full-time employee who must be scheduled for an eight-hour shift. The rest of the workers are all part time. For the sake of simplicity, only the full-time employees will need a break
A museum is open from 10:00 a.m.–5:00 p.m. The chart on the next page shows forecast business volume each hour for a given day in the museum’s cafeteria. You are in charge of scheduling variable cost employees. Production standards suggest that 1 cook can handle up to 60 people in an hour, 1
What is the difference between a job description and a job specification? Write an example of a performance standard for a prep cook who peels carrots and cucumbers and washes lettuce for a restaurant’s salads.
Explain the difference between a fixed cost and a variable cost.
List six benefits commonly given to at least some employees in a foodservice business. Are any benefits required for all employees?
A restaurant averaged 40 employees over the course of a year. What is the turnover rate for that restaurant if it employed 112 employees over the course of the year but only has 36 employees on staff at year’s end?

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