A manager targets a 35% food cost for an entrée that costs $4.20 to produce. What selling price would meet the target?

A manager targets a 35% food cost for an entrée that costs $4.20 to produce. What selling price would meet the target?

• A. $12.00
• B. $11.50
• C. $14.60
• D. $13.20

Answer: (A)

To meet a 35% food cost target, the food cost must be 35% of the selling price. So set 4.20 = 0.35 × Price and solve for Price: Price = 4.20 / 0.35 = 12.00. At $12.00, the food cost share is exactly 4.20 / 12.00 = 0.35 (35%). If you price higher, the percentage drops below 35%; if you price lower, it rises above 35%. For example, $11.50 yields about 36.5%, $14.60 yields about 28.8%, and $13.20 yields about 31.8%. Therefore, $12.00 is the correct selling price.

To meet a 35% food cost target, the food cost must be 35% of the selling price. So set 4.20 = 0.35 × Price and solve for Price: Price = 4.20 / 0.35 = 12.00. At $12.00, the food cost share is exactly 4.20 / 12.00 = 0.35 (35%). If you price higher, the percentage drops below 35%; if you price lower, it rises above 35%. For example, $11.50 yields about 36.5%, $14.60 yields about 28.8%, and $13.20 yields about 31.8%. Therefore, $12.00 is the correct selling price.