Answer to Question 1
Food cost percentage is the relationship between sales and the cost of sales. To calculate the food cost percentage, managers divide the food cost by the sales revenue. Food cost percentage is often the standard against which food cost is judged. Food cost percentage is generally analyzed by comparing it to company standards, historical cost percentage, or even industry standards.
Answer to Question 2
Purchasing is the process of selecting, buying, and evaluating products and services needed by the operation to generate revenue. Its objectives are to obtain the right product or service, at the right price, from the right source, in the right amount, and at the right time.
Purchasing impacts many aspects of the operation. Adequate products must be available when needed, and quality standards must be met. Also, costs must be minimized to maintain a competitive advantage. Wise purchasers know that the actual usage cost of a product, accounting for all factors such as labor, is most important.
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