How to determine Selling Price with Factor Pricing Method (Traditional or Markup
Method)? -
\1. Determine Markup Factor = 100/FC % (Fixed Cost)
2. Determine Selling Price = markup factor x raw FC
If the food cost % is 30, and the raw food cost of the item is $.18, what is the selling
price using the factor method? -
\ans= $.59
100/30= 3.3 (markup factor) x .18= .59
if including hidden costs: 3.3 x (.18 + .018) = $.65
Selling Price with Hidden Costs -
\markup factor x (raw FC + 10% of raw FC) FC=Fixed Cost
Markup is determined how? -
\Cost - Selling Price =
* How to determine selling price with prime cost method -
\1. determine prime cost = raw FC + Direct LC
2. determine price factor = 100 / (FC% + LC%)
3. determine Selling Price = prime cost x price factor
Determine the selling price using the prime cost method.
Raw food: 1.80 labor: 5 min at $12/hr raw food cost %: .333 Labor cost %: .467 -
\ans= $3.50
raw food cost 1.80 + labor cost 1.00 = prime cost 2.80
Food cost % + labor cost %= 80% 100/80= 1.25 markup price factor
, selling price = 2.80 x 1.25 = $3.50
Determining BEP (Break Even Point) in units: -
\fixed costs / (Sales - Variable costs)
determining BEP (Break Even Point) in sales volume -
\fixed costs / (1-(Variable Costs/Sales))
Determining Cost of Profit Pricing -
\1. Add up all costs as %
2. Find desired FC% = subtract total from 100%
3. determine Selling Price = Actual FC ($) / desired FC%
* FC is Fixed Cost
To find the selling price: .78 food cost/ .30 desired food cost % = selling price $2.60
Determining popularity Index (menu mix) -
\# servings of certain item / total # servings of all items that day = %
M T W TH F
broccoli 60 55 78 62 82
green beans 28 25 35 45 33
carrots 80 75 92 90 89
A) What is the popularity index for green beans on Wednesday?
B) If you expect to serve 300 people next Friday how many servings of carrots can you
expect to serve? -
\A) 17%
35/205=17%
B) 129 carrots
89/204= 43% PI
43% of 300 expected= 129 carrots
What percent determines if an item is not popular? -
\<70%
How to forecast needs/sales: -
\1. # servings of desired food for that day / total # servings of all items that day = %
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