CCC Kitchen Financial Management 2 — Questions and Answers
Question 1: A restaurant's beginning inventory is $8,000, purchases are $22,000, and ending inventory is $6,000. What is the cost of goods sold?
- $28,000
- $20,000
- $36,000
- $24,000 (Correct answer)
Correct answer: $24,000
COGS = beginning inventory + purchases - ending inventory, so $8,000 + $22,000 - $6,000 = $24,000.
Question 2: A menu item has a food cost of $4.50 and the target food cost percentage is 30%. What should the menu price be?
- $18.00
- $12.00
- $15.00 (Correct answer)
- $13.50
Correct answer: $15.00
Menu price = food cost divided by target percentage, so $4.50 ÷ 0.30 = $15.00.
Question 3: Which of the following is considered a fixed cost in kitchen operations?
- Food purchases
- Linen usage fees based on volume
- Hourly labor wages
- Rent for the restaurant space (Correct answer)
Correct answer: Rent for the restaurant space
Rent stays constant regardless of sales volume, making it a fixed cost.
Question 4: A whole beef tenderloin costs $88 and yields 8 pounds of usable portions after trimming from an 11-pound purchase weight. What is the cost per usable pound?
- $8.00
- $9.68
- $11.00 (Correct answer)
- $12.57
Correct answer: $11.00
Cost per usable pound = total cost ÷ usable yield, so $88 ÷ 8 lb = $11.00.
Question 5: What does a prime cost of 62% indicate for a restaurant?
- Food cost alone is 62% of sales
- Profit margin is 62%
- Overhead is 62% of total expenses
- Combined food and labor costs equal 62% of sales (Correct answer)
Correct answer: Combined food and labor costs equal 62% of sales
Prime cost is the sum of cost of goods sold and total labor cost expressed as a percentage of sales.
Question 6: A kitchen's actual food cost is 34% but the theoretical food cost is 29%. What is the most likely explanation for the variance?
- Menu prices are too low
- The theoretical cost was calculated with vendor discounts
- Sales volume is too high
- Waste, over-portioning, or theft (Correct answer)
Correct answer: Waste, over-portioning, or theft
A gap between actual and theoretical food cost typically points to shrinkage such as waste, over-portioning, spoilage, or theft.
Question 7: Which inventory valuation method assumes the oldest stock is used first, matching standard kitchen rotation practice?
- Weighted average
- LIFO
- FIFO (Correct answer)
- Specific identification
Correct answer: FIFO
FIFO (first-in, first-out) values inventory as if the oldest items are consumed first, mirroring proper stock rotation.
CCC Kitchen Financial Management 2
A restaurant's beginning inventory is $8,000, purchases are $22,000, and ending inventory is $6,000.
What is the cost of goods sold?