How to cost dinner.
The Gourmet Night
You have decided to branch out and offer a gourmet dinner for 4 of your guests. You know a good local chef who will prepare the meal for you for a total of $200 ie. $50 per head. He asks you to purchase the raw food ingredients from a reputable supplier and these cost $25 per head. You look at the figures from your profit and loss statement, prepared by your accountant and you estimate overheads at $30 per head. What Selling Price (S.P.) should you charge guests per person to make a net profit of 20%?
Hint: Look down at the columns from the previous entry for costing breakfast and substitute what you know into the following equation:
S. P. = Raw Food Cost + Labour + Overheads + Net Profit
100% = $25 + $50 + $30 + 20%
Think Back to School: When you take a term across to the other side of the equation the sign changes, in this case 20% goes from a positive to a negative.
Gather like terms together i.e. %’s and $’s:
100% - 20% = $105
80% = $105
100% = 105 x 100
80 1
Selling Price = $131.25 per person