Test Bank Managing Food And Beverage Pricing Chapter 6

Chapter 6

Managing Food and Beverage Pricing

Multiple Choice Exam Questions

1. Which menu format allows management to most quickly respond to changes in the purchase price of needed ingredients or items?
2. Cycle menu
3. Daily menu
4. Standard menu
5. Prix fixe menu
6. Which menu format is best used where the same guests, or the same types of guest, are served every day?
7. Cycle menu
8. Daily menu
9. Standard menu
10. À la carte menu
11. In which menu format do guests choose from a pre-determined list of items presented as a multi-course meal sold for one set price?
12. Cycle
13. Daily
14. Ala cart
15. Prix fixe
16. What is a marketing tool managers use to implement relatively minor menu changes on a regular basis?
17. Bundling
18. Menu specials
19. À la carte menus
20. Prix fixe menus
21. A restaurant’s ambience is unaffected by its
22. exterior décor
23. selling prices.
24. staff uniforms.
25. background music.
26. What are the two components that make up an operation’s total revenue?
27. Selling price and cost
28. Number sold and cost
29. Selling price and number sold
30. Number sold and contribution margin
31. What is the term used to describe the pricing of products with very different individual cost percentages to achieve a favorable overall product cost percentage?
32. Value pricing
33. Price blending
34. Prix fixe pricing
35. Ambience pricing
36. A menu item costs a manager $2.20 to produce. The manager wants to achieve a 40% food cost on the item. What should be this item’s selling price?
37. $4.50
38. $5.00
39. $5.50
40. $6.00
41. The standardized recipe for a menu item costs $980.00 to produce and it yields 200 portions. If each portion sells for $17.50, what is the item’s food cost percentage?
42. 22%
43. 24%
44. 26%
45. 28%
46. When management uses a target food or beverage cost percentage to price menu items, it believes
47. portion cost in relationship to selling price is of most importance.
48. item popularity in relationship to selling price is of most importance.
49. profit percentage in relationship to selling price is of most importance.
50. contribution margin in relationship to selling price is of most importance.
51. What pricing factor would managers use if they want to establish drink prices that will yield a 20% beverage cost?
52. 4.0
53. 4.5
54. 5.0
55. 5.5
56. What is the formula used to establish a menu item’s price when the Pricing Factor method is applied?
57. Pricing Factor + Food Cost = Menu Price
58. Pricing Factor - Food Cost = Menu Price
59. Pricing Factor x Food Cost = Menu Price
60. Pricing Factor ÷ Food Cost = Menu Price
61. What is the formula used to calculate a menu Pricing Factor?
62. 1.00 + Desired Product Cost % = Pricing Factor
63. 1.00 - Desired Product Cost % = Pricing Factor
64. 1.00 x Desired Product Cost % = Pricing Factor
65. 1.00 ÷ Desired Product Cost % = Pricing Factor
66. What is a plate cost?
67. The total EP cost of ingredients in a recipe
68. The total AP cost of ingredients in a recipe
69. The sum of all product costs included in a single meal
70. The sum of all product costs included in a single menu item
71. What is the amount that remains after the product cost of a menu item has been subtracted from the item’s selling price?
72. Profit
73. Portion cost
74. Product yield
75. Contribution margin
76. A standardized recipe for a menu item costs $73.50 to produce and yields 15 portions. The menu item sells for $17.50. What is this item’s contribution margin?
77. $11.60
78. $12.60
79. $13.60
80. $14.60
81. Contribution margin is the amount that a menu item “contributes” to pay for
82. food.
83. food and labor.
84. labor, all other expenses, and to provide for a profit.
85. food, labor, all other expenses, and to provide for a profit.
86. A standardized recipe costs $58.80 to produce and it yields 12 portions. The manager wants to achieve a $12.00 contribution margin when selling the item produced by the recipe. What should be the manager’s selling price for the item?
87. $13.90
88. $14.90
89. $15.90
90. $16.90
91. A sandwich shop estimates it will serve 3,000 guests in a coming accounting period. The nonfood operating costs for the period are estimated to be $13,000, and the operation seeks to achieve profits in the period of $1,850. What will be contribution margin per guest the manager will want to achieve in the period?
92. $0.61
93. $4.33
94. $4.75
95. $4.95
96. At the beginning of a buffet meal a manager placed $1,400 worth of food on the buffet line. During the meal another $800 of food was added to the line. At the end of the meal the value of the remaining food was $300. What was the total product cost of the manager's buffet during this meal period?
97. $300
98. $800
99. $1,900
100. $2,200
101. At the beginning of a buffet meal a manager placed $1,100 worth of food on the buffet line. During the meal another $500 of food was added to the line. At the end of the meal the value of the remaining food was $400. The manager served 100 guests. What was the buffet’s cost per guest served during this meal period?
102. $12.00
103. $12.50
104. $13.00
105. $13.50
106. In the food service industry, the term “price spread” refers to the
107. average amount spent by guests in an operation.
108. difference between a menu's highest and lowest priced item.
109. average selling price of all similar items offered on a menu.
110. difference between a menu item's food cost and its contribution margin.
111. Pricing beverages for open-bar receptions can often be challenging because
112. prices paid for alcoholic beverages vary daily.
113. there may be differences in the consumption habits of each group served.
114. management cannot effectively control the portion sizes of the alcoholic beverages served.
115. in a hosted bar setting the host will want their guests to pay separately for each drink consumed.
116. A manager buys a 12-bottle case of chardonnay for $59.40. The manager wants to achieve a contribution margin of $12.00 per bottle for this type of wine. At what price should the manager sell each bottle of chardonnay?
117. $15.95
118. $16.95
119. $17.95
120. $18.95
121. One reason why craft beers typically sell for prices higher than regular beers is that craft beers
122. are in greater supply.
123. are mass produced.
124. have a greater ABV.
125. have a lesser ABV.

True/False Exam Questions

1. The “Standard” menu format is the type of menu format most commonly used in commercial restaurants.
   1. True
   2. False
2. In most cases, the production skills required to produce a cycle menu are less than the skills needed to produce a standard menu.
   1. True
   2. False
3. As the level of service provided in an operation increases, the operation’s selling prices should also be increased.
   1. True
   2. False
4. If a menu item cost an operation $4.00 to produce, and the operation seeks to achieve a 25% food cost, the item should be sold for $10.00.
   1. True
   2. False
5. Operations should always seek to price their menu items at, or below, the prices charged by their competitors.
   1. True
   2. False
6. Product cost percentage and product contribution margin are the two primary methods used to establish foodservice prices.
   1. True
   2. False
7. It costs an operation $3.00 to produce a menu item. The operation sells the item for $12.00. As a result, the food cost percentage for this item is 20%.
   1. True
   2. False
8. Contribution margin is the amount of money that remains after an item’s product cost has been subtracted from its selling price.
   1. True
   2. False
9. Value pricing refers to the strategy of reducing prices on selected menu items for the purpose of increasing an operation’s total sales revenue.
   1. True
   2. False
10. The vintage of a wine refers to the type of grape used to produce it.
    1. True
    2. False