Answer to Question 1
C
Answer to Question 2
The formula for calculating cost of sales starts with adding the opening inventory plus purchases, which is all of the food and beverages purchased during that period. The total of these two numbers equals the total food available, or the dollar amount of all food available for sale. The closing inventory is then subtracted from the total food available. This results in the cost of sales. Most operations take inventory and figure food cost monthly, but some quick-service operations conduct inventory on a weekly basis.
In addition to purchases, there are several other factors that should be considered in calculating the actual cost goods sold. These factors include credits such as employee meals, comps, and grease sales. Transfers to and from other units also impact the cost of sales.
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