A fast-food restaurant uses a standard cost approach to aid in controlling its food cost. The following are the standard cost, selling prices, and quantities sold of each of the five items featured on the menu during a particular week:

Total actual cost for the week was $3,804.10 and total actual sales revenue was $8,873.40.

a. Calculate total standard (food) cost, total standard sales revenue, and cost of sales percentages. Comment on the results.

b. The following week, with no change in menu or standard cost and selling prices, there was a change in the sales mix. Although quantities sold of Items 2, 3, and 5 were virtually the same, many more of Item 4 and many less of Item 1 were sold. As a result of this, would you expect the overall standard cost percentage to increase or decrease?
Explain your answer.LO1

Transcribed Image Text:

Item Standard Cost Selling Price Quantity Sold 1 $1.80 $3.95 260 234 2 2.10. 4.95 411 3 4.20 8.95 174 4 3.05 6.95 319 5 1.40 3.95 522