P5.12 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 quan- tities sold of each of the five items featured on the menu during a par- ticular week:

Item Standard Cost Selling Price Quantity Sold

1 $1.80 $3.95 260

2 2.10 4.95 411

3 4.20 8.95 174

4 3.05 6.95 319

5 1.40 3.95 522

Total actual cost for the week was $3,804.10 and total actual sales rev- enue 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 sell- ing 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.