Cost and sales concepts
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Transcript of Cost and sales concepts
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Food, Beverage and Labour Cost ControlUnit 1
September, 2012Presenter: C. Bogle
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The Cost-To-Sales Ratio: Cost Percent
Food service managers calculate costs in dollars and
compare those costs with sales in dollars. This enables them
to discuss the relationship between costs and sales,
sometimes described as the cost per dollar of sale, the ratio
of costs to sales, or simply as the cost-to-sales ratio.
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FORMULA FOR CALCULATING COST-TO-SALES RATIO
COST \SALES = COST PER DOLLAR OF SALE
COST \SALES x 100 = Cost%
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Extended Formula
Food Cost \ Food Sales x 100 = Food Cost%
Beverage Cost \ Beverage Sales x 100 = Beverage Cost%
Labour Cost \ Total sales x 100 = Labour Cost%
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COST PERCENTAGE FORMULA
Cost \ Sales x 100 = Cost%
Cost \ Cost% (expressed as a decimal) = Sales (or sales price)
Sales x Cost% (expressed as a decimal) = Cost
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COST PERCENTS ARE USEFUL:
They provide a means of comparing costs relative to sales for two or more periods of time
They provide a means of comparing two or more operations
NB: Because food cost is variable, it increases and decreases with sales volume.
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ReferenceDittmer, R. Paul & Keefe, J. Desmond. (2009). Principles
of Food, Beverage, and Labour Cost Controls. John Wiley & Sons, INC. New Jersey