Manage First: Controlling Foodservice Costs – Final Exam
Review Complete 200-Practice-Question Bank with Answers
& Explanations
BLOCK 1: INTRODUCTION TO FOODSERVICE COST CONTROL (Questions 1–25)
Q1. The primary goal of foodservice cost control is to:
A) Minimize food quality at all costs
B) Maximize profit while maintaining quality standards
C) Eliminate all waste regardless of cost
D) Increase menu prices weekly
Answer: B
Explanation: Cost control aims to balance cost reduction with quality and customer satisfaction to
achieve maximum profit and operational efficiency.
Q2. Which of the following is NOT a controllable cost in a foodservice operation?
A) Food cost
B) Labor cost
C) Property taxes
D) Supplies cost
Answer: C
Explanation: Property taxes are fixed, non‑controllable costs determined by local government
assessment. Food, labor, and supplies are variable and controllable by management.
Q3. The difference between the actual food cost and the standard food cost is called:
A) Prime cost
B) Cost variance
,C) Overhead
D) Contribution margin
Answer: B
Explanation: Cost variance measures the difference between actual incurred costs and budgeted
(standard) costs. A negative variance indicates cost overrun.
Q4. Prime cost in a foodservice operation consists of:
A) Food cost + beverage cost
B) Food cost + labor cost
C) Labor cost + utilities
D) Rent + marketing
Answer: B
Explanation: Prime cost = total cost of goods sold (food + beverage) + total labor cost (including
benefits). It represents 60‑70% of revenue in most operations.
Q5. A restaurant has total sales of $100,000, food cost of $30,000, and labor cost of $35,000. The prime
cost percentage is:
A) 30%
B) 35%
C) 65%
D) 70%
Answer: C
Explanation: Prime cost = $30,000 + $35,000 = $65,000. Prime cost % = $65,000 / $100,000 = 65%.
Q6. Which costing method assumes that the oldest inventory items are used first?
A) LIFO (Last‑In, First‑Out)
B) FIFO (First‑In, First‑Out)
,C) Weighted average
D) Specific identification
Answer: B
Explanation: FIFO assumes the earliest purchased items are the first used. It matches actual product
flow in most kitchens and reduces spoilage.
Q7. In times of rising food prices, which inventory valuation method yields the highest cost of goods sold
(COGS)?
A) FIFO
B) LIFO
C) Weighted average
D) Actual purchase price
Answer: B
Explanation: LIFO assumes the most recent (higher‑cost) items are used first, increasing COGS and
reducing taxable income. However, LIFO is less common in foodservice due to perishability.
Q8. A menu item sells for $15.00 and has a food cost of $4.50. The food cost percentage is:
A) 15%
B) 30%
C) 45%
D) 70%
Answer: B
Explanation: Food cost % = (Cost / Selling price) x 100 = ($4.50 / $15.00) x 100 = 30%.
Q9. A restaurant wants a 35% food cost on a dish with a raw ingredient cost of $5.25. The menu price
should be:
A) $7.88
, B) $10.00
C) $12.50
D) $15.00
Answer: D
Explanation: Selling price = Cost / Desired cost % = $5..35 = $15.00.
Q10. The formula for contribution margin is:
A) Selling price – Food cost
B) Food cost / Selling price
C) Selling price – Variable costs
D) Fixed costs / Contribution margin per unit
Answer: A
Explanation: Contribution margin (per unit) = selling price – variable cost (primarily food cost). It shows
how much each menu item contributes to covering fixed costs and profit.
Q11. Which of the following is a fixed cost in a restaurant?
A) Food purchases
B) Hourly wages
C) Monthly rent
D) Utility bills (variable)
Answer: C
Explanation: Rent is a fixed cost that does not change with sales volume over a relevant range. Hourly
wages, food, and utilities typically vary with business volume.
Q12. A sales mix variance occurs when:
A) Total sales are lower than budgeted
Review Complete 200-Practice-Question Bank with Answers
& Explanations
BLOCK 1: INTRODUCTION TO FOODSERVICE COST CONTROL (Questions 1–25)
Q1. The primary goal of foodservice cost control is to:
A) Minimize food quality at all costs
B) Maximize profit while maintaining quality standards
C) Eliminate all waste regardless of cost
D) Increase menu prices weekly
Answer: B
Explanation: Cost control aims to balance cost reduction with quality and customer satisfaction to
achieve maximum profit and operational efficiency.
Q2. Which of the following is NOT a controllable cost in a foodservice operation?
A) Food cost
B) Labor cost
C) Property taxes
D) Supplies cost
Answer: C
Explanation: Property taxes are fixed, non‑controllable costs determined by local government
assessment. Food, labor, and supplies are variable and controllable by management.
Q3. The difference between the actual food cost and the standard food cost is called:
A) Prime cost
B) Cost variance
,C) Overhead
D) Contribution margin
Answer: B
Explanation: Cost variance measures the difference between actual incurred costs and budgeted
(standard) costs. A negative variance indicates cost overrun.
Q4. Prime cost in a foodservice operation consists of:
A) Food cost + beverage cost
B) Food cost + labor cost
C) Labor cost + utilities
D) Rent + marketing
Answer: B
Explanation: Prime cost = total cost of goods sold (food + beverage) + total labor cost (including
benefits). It represents 60‑70% of revenue in most operations.
Q5. A restaurant has total sales of $100,000, food cost of $30,000, and labor cost of $35,000. The prime
cost percentage is:
A) 30%
B) 35%
C) 65%
D) 70%
Answer: C
Explanation: Prime cost = $30,000 + $35,000 = $65,000. Prime cost % = $65,000 / $100,000 = 65%.
Q6. Which costing method assumes that the oldest inventory items are used first?
A) LIFO (Last‑In, First‑Out)
B) FIFO (First‑In, First‑Out)
,C) Weighted average
D) Specific identification
Answer: B
Explanation: FIFO assumes the earliest purchased items are the first used. It matches actual product
flow in most kitchens and reduces spoilage.
Q7. In times of rising food prices, which inventory valuation method yields the highest cost of goods sold
(COGS)?
A) FIFO
B) LIFO
C) Weighted average
D) Actual purchase price
Answer: B
Explanation: LIFO assumes the most recent (higher‑cost) items are used first, increasing COGS and
reducing taxable income. However, LIFO is less common in foodservice due to perishability.
Q8. A menu item sells for $15.00 and has a food cost of $4.50. The food cost percentage is:
A) 15%
B) 30%
C) 45%
D) 70%
Answer: B
Explanation: Food cost % = (Cost / Selling price) x 100 = ($4.50 / $15.00) x 100 = 30%.
Q9. A restaurant wants a 35% food cost on a dish with a raw ingredient cost of $5.25. The menu price
should be:
A) $7.88
, B) $10.00
C) $12.50
D) $15.00
Answer: D
Explanation: Selling price = Cost / Desired cost % = $5..35 = $15.00.
Q10. The formula for contribution margin is:
A) Selling price – Food cost
B) Food cost / Selling price
C) Selling price – Variable costs
D) Fixed costs / Contribution margin per unit
Answer: A
Explanation: Contribution margin (per unit) = selling price – variable cost (primarily food cost). It shows
how much each menu item contributes to covering fixed costs and profit.
Q11. Which of the following is a fixed cost in a restaurant?
A) Food purchases
B) Hourly wages
C) Monthly rent
D) Utility bills (variable)
Answer: C
Explanation: Rent is a fixed cost that does not change with sales volume over a relevant range. Hourly
wages, food, and utilities typically vary with business volume.
Q12. A sales mix variance occurs when:
A) Total sales are lower than budgeted
