Mrs. Small and her partner, Mr. Carter, have started a Food and Beverage Operation.During the first six months of operating they have reflected a relatively high current and solvency ratios.

Their operation is insured for R1 million worth of stock and equipment.

On the third month of operations they reflected a R20000 worth of stock and they have made R15000 worth of purchases. At the start of the fourth month they reflected a R25000 worth of stock for their opening inventory.

On the sixth month the figures were the same as for the third month and revenue was R100000 for that month.

1.Use the relevant ratios to calculate the food cost of sale. (4)

2.Use the relevant ratios to calculate the food cost percentage. (3)

3.What does the food cost percentage mean to the operation? (3)