Question

question 13 (1 point)
the term ______ cost is used to mean all costs other than prime cost.
overhead
controllable
unit
question 14 (1 point)
it is normal for high volume restaurants to have a higher overhead cost percentage than restaurants with lower volume of sales.
false
true
question 15 (1 point)
if the given cost % were 39.0 % and the food cost for the item were $5.75, the appropriate sales price would be
$0.07
$2.24
$14.74

Explanation:

Question 13

Prime cost consists of direct materials and direct labor. Overhead cost includes indirect materials, indirect labor, and other indirect costs, which are all costs other than prime cost. Controllable cost refers to costs that can be influenced by a manager's actions. Unit cost is the cost per unit of production.

High - volume restaurants can spread their overhead costs (such as rent, equipment depreciation) over a larger number of units (meals sold). So, the overhead cost percentage (overhead cost/sales) is likely to be lower for high - volume restaurants compared to low - volume ones.

If the cost percentage \(C = 39.0\%=0.39\) and the food cost \(FC=\$5.75\). We know that \(C=\frac{FC}{SP}\), where \(SP\) is the sales price. Rearranging the formula for \(SP\), we get \(SP=\frac{FC}{C}\).

Step1: Substitute the values into the formula

\(SP=\frac{5.75}{0.39}\)

Step2: Calculate the value

\(SP=\frac{5.75}{0.39}\approx14.74\)

Answer:

Overhead

Question 14