Answered: A restaurant has a food cost average of…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 10RE: Jessie Stores uses the periodic system of calculating inventory. The following information is...

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A restaurant has a food cost average of 38 percent. The inventory on August 31 is $11,000 and the inventory on September 30 is $11,965. The following are transactions for the month of September:

Purchases $ 36,000

Officers’ checks 925 at menu price

Employee meals 210 at standard cost

Transfer to bar 90

Transfer from bar 70

Compute the cost of food sold for the month of September if the periodic inventory system is used in the storeroom.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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