A standard cost approach, A fast-food restaurant uses a

A standard cost approach

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Reference no: EM13912769

A fast-food restaurant uses a standard cost approach to aid in controlling its food cost. The following are the standard cost, sales prices, and quantities sold of each of the five items featured on the menu during a particular week:

Item Standard Cost Sales Price Quantity Sold
1 $1.80 $3.95 260

2 2.10 4.95 411

3 4.20 8.95 174

4 3.05 6.95 319

5 1.40 3.95 522

Total actual cost for the week was $3,804.10 and total actual sales revenue was $8,873.40. a. Calculate actual and standard food cost percentages and comment on the results. b. The following week, with no change in menu or standard cost and selling prices, there was a change in the sales mix. Although quantities sold of items two, three, and five were virtually the same, many more of item four and many less of item one was sold. As a result of this, would you expect the overall standard cost percentage to increase or decrease? Explain your answer.

Reference no: EM13912769

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