HMGT 618 ACTUAL UPDATED
QUESTIONS AND CORRECT ANSWERS
Factors Influencing Menu Price - CORRECT ANSWERS✅✅-local competition
-service levels
-guest type
-product quality
-portion size
-ambience
-meal period
-location
-sales mix
total revenue (calculation) - CORRECT ANSWERS✅✅price X number sold
marketing approaches to pricing - CORRECT ANSWERS✅✅• In a sales approach to
marketing, the goal is to maximize volume (number of covers sold). Other managers, usually
in full-service restaurants, use the marketing philosophy of maintaining your current
competitive position relative to the other restaurants in your market that target the same
customers as you.
cost approaches to pricing - CORRECT ANSWERS✅✅• Another approach, which the
authors believe is the best way to examine menu pricing, is to view it primarily from a cost
approach to pricing.
the two most popular pricing systems are those that are based upon: - CORRECT
ANSWERS✅✅-food cost percentage
-item contribution margin
selling price (calculation) - CORRECT ANSWERS✅✅item food cost/item food cost%
pricing based upon food cost percentage - CORRECT ANSWERS✅✅•A second formula for
arriving at appropriate selling prices based on predetermined food cost % goals can be
, employed. This method uses a cost factor or multiplier that can be assigned to each desired
food cost percentage
pricing factor - CORRECT ANSWERS✅✅1.00/desired item food cost %
pricing based upon item contribution margin - CORRECT ANSWERS✅✅• Some managers
prefer an approach to menu pricing that is focused on an item contribution margin, defined as
the amount that remains after the food cost of a menu item is subtracted from that item's
selling price
item contribution margin (calculation) - CORRECT ANSWERS✅✅selling price-item food
cost
food cost % vs. item contribution margin - CORRECT ANSWERS✅✅•For the average
managerial accountant, understanding the use of food cost percentage, item contribution
margin, or a combination of both will enable him or her to arrive at appropriate pricing
decisions.
•Pricing should be viewed as but an important process with an end goal of establishing a
good price/value relationship in the mind of your guest while achieving profits for your
operation.
•It is important that the menu not be priced so low that no profit is possible or so high that
you will not be able to sell a sufficient number of items to make a profit.
menu price analysis - CORRECT ANSWERS✅✅• The best method of analyzing the
profitability of a menu and its pricing structure should simply seek to answer the question,
"How does the sale of this menu item contribute to the overall success of my operation?"
The menu analysis methods that have been widely used each seek to perform the analysis
using one or more of the following important operational variables: - CORRECT
ANSWERS✅✅- food cost %
-popularity (Sales mix)
-contribution margin
-selling price
-variable costs
QUESTIONS AND CORRECT ANSWERS
Factors Influencing Menu Price - CORRECT ANSWERS✅✅-local competition
-service levels
-guest type
-product quality
-portion size
-ambience
-meal period
-location
-sales mix
total revenue (calculation) - CORRECT ANSWERS✅✅price X number sold
marketing approaches to pricing - CORRECT ANSWERS✅✅• In a sales approach to
marketing, the goal is to maximize volume (number of covers sold). Other managers, usually
in full-service restaurants, use the marketing philosophy of maintaining your current
competitive position relative to the other restaurants in your market that target the same
customers as you.
cost approaches to pricing - CORRECT ANSWERS✅✅• Another approach, which the
authors believe is the best way to examine menu pricing, is to view it primarily from a cost
approach to pricing.
the two most popular pricing systems are those that are based upon: - CORRECT
ANSWERS✅✅-food cost percentage
-item contribution margin
selling price (calculation) - CORRECT ANSWERS✅✅item food cost/item food cost%
pricing based upon food cost percentage - CORRECT ANSWERS✅✅•A second formula for
arriving at appropriate selling prices based on predetermined food cost % goals can be
, employed. This method uses a cost factor or multiplier that can be assigned to each desired
food cost percentage
pricing factor - CORRECT ANSWERS✅✅1.00/desired item food cost %
pricing based upon item contribution margin - CORRECT ANSWERS✅✅• Some managers
prefer an approach to menu pricing that is focused on an item contribution margin, defined as
the amount that remains after the food cost of a menu item is subtracted from that item's
selling price
item contribution margin (calculation) - CORRECT ANSWERS✅✅selling price-item food
cost
food cost % vs. item contribution margin - CORRECT ANSWERS✅✅•For the average
managerial accountant, understanding the use of food cost percentage, item contribution
margin, or a combination of both will enable him or her to arrive at appropriate pricing
decisions.
•Pricing should be viewed as but an important process with an end goal of establishing a
good price/value relationship in the mind of your guest while achieving profits for your
operation.
•It is important that the menu not be priced so low that no profit is possible or so high that
you will not be able to sell a sufficient number of items to make a profit.
menu price analysis - CORRECT ANSWERS✅✅• The best method of analyzing the
profitability of a menu and its pricing structure should simply seek to answer the question,
"How does the sale of this menu item contribute to the overall success of my operation?"
The menu analysis methods that have been widely used each seek to perform the analysis
using one or more of the following important operational variables: - CORRECT
ANSWERS✅✅- food cost %
-popularity (Sales mix)
-contribution margin
-selling price
-variable costs
