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Problem 1 The total ingredient (food) cost in a recipe is $4.73; the manager desires a 37.5-percent food Should the manager price the item in the above example at the base selling price you cost. What is the base selling price of the item using the ingredients mark-up method calculated? Why or why not? Problem ?

Problem 1 The total ingredient (food) cost in a recipe is $4.73; the manager desires a 37.5-percent food Should the manager price the item in the above example at the base selling price you cost. What is the base selling price of the item using the ingredients mark-up method calculated? Why or why not? Problem ?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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104 Chapter 3 Problems Problem 1 The total ingredient (food) cost in a recipe is $4.73; the manager desires a 37.5-percent food cost. What is the base selling price of the item using the ingredients mark-up method? Should the manager price the item in the above example at the base selling price you calculated? Why or why not? Problem 2 The chef has precosted the recipe for an entrée and a sauce, which is one item on the menu, the food cost is $6.34. A prime ingredient multiplier of 3.72 has been established. What is the base selling price when the prime ingredient mark-up method is used? Problem 3 The Prairie Town Grill does not serve alcoholic beverages. Its operating budget reveals the following: Revenue Food cost Non-food costs Profit Number of guests Guest check average Contribution margin $1,375,000 $585,000 $710,000 $80,000 161,580 $8.51 $790,000 (revenue - food costs) Using the above information, calculate the base selling price of a menu item with a total ingredient cost of $4.85 using: a. The contribution margin pricing method. b. The ratio pricing method. c. The simple prime costs method (note: the non-food costs include $426,250 in labor costs). Problem 4 The manager uses the mark-up with accompaniment cost method to establish a base selling price. What is that price when the entrée cost is $2.12, the plate cost is $1.70, and the mark-up multiplier is 2.1? Problem 5 The manager of the University Square Bistro has the following operating data available: Revenue Food cost Labor cost Other non-food costs Desired profit Number of guests $1,187,000 $403,580 (includes entrée costs of $274,434) $367,970 $316,550 (excludes labor) $98,900 107,900 The Menu: The Foundation for Control 105 Use the above information to establish the base selling price of a menu item with alternative pricing methods. Note: the item to be priced has a food cost of $4.57 (entrée cost = $3.12; plate cost = $1.45) a. What is the approximate base selling price using the ingredients mark-up method? b. What is the approximate base selling price using the prime ingredient mark-up method? What is the approximate base selling price using the mark-up with accompaniment costs method? d. What is the approximate base selling price using the contribution margin pricing method? e. What is the approximate base price using the ratio pricing method? f. What is the approximate base selling price using the simple prime costs method? Problem 6 Complete the menu engineering worksheet on the following page. Suggest strategies to effectively manage each item after the worksheet is completed.
Transcribed Image Text:104 Chapter 3 Problems Problem 1 The total ingredient (food) cost in a recipe is $4.73; the manager desires a 37.5-percent food cost. What is the base selling price of the item using the ingredients mark-up method? Should the manager price the item in the above example at the base selling price you calculated? Why or why not? Problem 2 The chef has precosted the recipe for an entrée and a sauce, which is one item on the menu, the food cost is $6.34. A prime ingredient multiplier of 3.72 has been established. What is the base selling price when the prime ingredient mark-up method is used? Problem 3 The Prairie Town Grill does not serve alcoholic beverages. Its operating budget reveals the following: Revenue Food cost Non-food costs Profit Number of guests Guest check average Contribution margin $1,375,000 $585,000 $710,000 $80,000 161,580 $8.51 $790,000 (revenue - food costs) Using the above information, calculate the base selling price of a menu item with a total ingredient cost of $4.85 using: a. The contribution margin pricing method. b. The ratio pricing method. c. The simple prime costs method (note: the non-food costs include $426,250 in labor costs). Problem 4 The manager uses the mark-up with accompaniment cost method to establish a base selling price. What is that price when the entrée cost is $2.12, the plate cost is $1.70, and the mark-up multiplier is 2.1? Problem 5 The manager of the University Square Bistro has the following operating data available: Revenue Food cost Labor cost Other non-food costs Desired profit Number of guests $1,187,000 $403,580 (includes entrée costs of $274,434) $367,970 $316,550 (excludes labor) $98,900 107,900 The Menu: The Foundation for Control 105 Use the above information to establish the base selling price of a menu item with alternative pricing methods. Note: the item to be priced has a food cost of $4.57 (entrée cost = $3.12; plate cost = $1.45) a. What is the approximate base selling price using the ingredients mark-up method? b. What is the approximate base selling price using the prime ingredient mark-up method? What is the approximate base selling price using the mark-up with accompaniment costs method? d. What is the approximate base selling price using the contribution margin pricing method? e. What is the approximate base price using the ratio pricing method? f. What is the approximate base selling price using the simple prime costs method? Problem 6 Complete the menu engineering worksheet on the following page. Suggest strategies to effectively manage each item after the worksheet is completed.
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