Definition of Cost
- Defined as the expenses to a hotel or restaurant for good services when the goods are consumed or the services are rendered
- May be expressed in a variety of units:
- Portion-eg,slices
- Weight-eg. gm,kg
- Volume
- Per bottle
- Per drink
- Per hour
- Per week
Fixed Cost
- Normally unaffected by changes in sales volume.
- has little direct relationship to a business volume because they do not change when the numbers of sales increase or decrease.
- Example of fixed cost are insurance premium,real estate taxes,depreciation on equipment
- All fixed cost changes over time ,sometimes increasing and sometimes decreasing
- However,changes are not normally related to short -term changes in business volume
- They are sometimes indirectly tied to the long-term volumes changes
