Lesson 2 : Cost and Sales Concept

Controllable and Non-controllable Costs

1. Cost may also labelled controllable and non-controllable.
2. Controllable cost are those cost that can be changed in the short -term .eg .variable cost
3. Non-controllable costs are those cannot normally be changed in the short-term fixed costs.

Unit and Total Costs

1. Unit costs may be food and beverages portions.Examples : one steak or one martini,or unit of work,as in hourly rate for employee.
2. Total costs represent all the cost of the food served in one portion.
3. Total costs and unit costs are affected in different ways as illustrated by the following diagram.

Prime cost

1. Defined s the sum of the food costs,beverage costs,and labor costs.
2. It determines if establishment will meet its financial goals.

Overhead Costs

1. Refer to all costs other than prime cost.
2. Normally consists of all the fixed cost associated with the operating the business.eg. electricity,water

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