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| Math Central | Quandaries & Queries |
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Question from Kam, a parent: Your store guidelines states that when Actual Food Cost is 3% or more above Projected Food Cost, immediate corrective action be taken by the Unit Manager. In January, your Actual Food Cost was $11,000, and your Projected Food Cost was $10,850. To find out what percentage the difference is do I divide the difference ($150) by Actual Food Cost ($11,000) or Projected Food Cost ($10,8500)? What would be the answer? Thanks |
Kam,
This is a problem with the way we use the term percentage. Whenever we say percentage we should say percentage of what. In this case I expect what is intended is that the store manager determines the projected food cost and then adds 3% of this cost to determine the actual food cost. Thus
(actual food cost - projected food cost)/(projected food cost) should be at least 0.03.
Harley
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