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Food Costing
Solved problems
1. A restaurant requires a following profits on the selling prices of various items or dishes:- a. Paulet Saute Maringo 60%
b. Chicken a la kieve 45%
c. Coffee 80%
You are required to:-
a) Find out the selling price of the above items/ dishes if the cost were:- a. Paulet sauté maringo Rs 50
b. Chicken a la kieve Rs 70
c. Coffee Rs 10.
b) List the factors that must be considered when deciding on the selling price.

Answer:-
a) Using the formula:-
Selling Price = Total Cost x (1 + Mark-Up Percent)
i. Paulet sauté meringo
Selling price = 50 x (1 +60%)
=50 X 1.6
= Rs 80
ii. Chicken a la kieve
selling price = 70X (1+ 70%)
= 70 X 1.7
=Rs 119
iii. Coffee
Selling price = 10 X (1+80 %)
= 10 X 1.8
= Rs 18.

a. List the factors that must be considered when deciding on the selling price. Ans:
Factors that need to be considered in the menu pricing include: * Elasticity of demand, or whether a change in selling prices will have a significant effect on customer demand. * Perception of value, or what a customer perceives the meal or food item is worth regardless of what it costs to produce. * Effect of competition by which competition can hold selling prices down or lack of competition can allow higher prices than normal. * Whether the operation might try to increase profit by using low selling prices to increase volume or concentrate on higher unit profits with fewer unit sales. Besides the menu, the other major costs in foodservice industry include: a) Purchasing of food: As mentioned earlier, the quantity of raw materials ordered should be as accurate as possible since storage and perish ability in the nature of food materials can be a cause of loss. Proper inventory of the raw materials in storage will ensure that misuse of stored material doesn’t happen. Cost materials till the driving experience and cleaning of the equipments. b) Labour Cost: Labour cost is another major cost involved in food production. Untrained workers will tend to cause more harm than good for the restaurant. Having a good Human Resources policy will ensure that good workers are employed and retained by the 0rganisation. Recognition of labour/personnel needed for a job and motivation of personnel’s will tend to cut costs.

Q 2. The food cost of a particular dish is Rs 46.75 per portion. Calculate:- a. The selling price per portion to achieve a 70% gross profit. b. What gross profit percentage would be achieved if the dish was sold for Rs 165?

Ans:
a. Selling Price = Total Cost x (1 + Mark-Up Percent)
=46.75 X (1 + 70%)
= 46.75 X 1.7
= Rs 79.48
= Rs 80 ( approx).
b. Gross profit = sales – food cost
= 165 – 46.75
= Rs 118.25
Therefore,
Gross profit % = (Gross Profit / selling price) X 100
= (118.25 / 165) X 100
= 0.72 X 100
= 72 %

Q3. Allowing 38% for wastage calculate the amount of meat to be ordered by a food and beverage unit, if 70 Kg was required to be served. Ans: By using the formula:
Ap = (EPX100) / 100% - W %
= (70X 100)/ 100 – 38
= 7000 / 62
=112.90 kg

Q4. The following problems are calculations with food cost
Percentages, portion cost, and menu price. For each problem, two of these figures are given. Find the third.
Food cost percentage Portion cost Menu price
a. ______ 62 247.5 b. 40% ______ 125
c. 30% 142.5 ______

Ans:
a.Food cost percentage = Potion cost / menu price.X 100
= 62/247.5X 100
=0.250 x100 = 25 %
B Portion cost = fc % X Menu price
=40/100 X125
=.40 X 125
=...
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