Explain the elements of cost and the behaviour of cost in a food service establishment.

1. 1 · Open in two lines. Cost is the amount spent to produce and serve food. It is built from three elements and behaves differently as the number of meals changes.
2. 2 · Basic concepts. Cost unit, cost centre, direct and indirect cost.
3. 3 · Elements of cost.
   • Material: food and beverages.
   • Labour: wages, salaries, benefits, staff meals.
   • Overheads: rent, fuel, power, repairs, depreciation.
4. 4 · Cost sheet. Prime cost + overheads = total cost; total cost + profit = selling price.
5. 5 · Behaviour of cost with a graph. [Graph: meals on x-axis, ₹ on y-axis; fixed cost flat line; variable cost rising from zero; total cost starting at the fixed level and rising]
6. 6 · In a real kitchen. A canteen with ₹60,000 fixed cost and ₹30 variable cost: cost per meal is ₹60 at 2,000 meals and ₹45 at 4,000.
7. 7 · Close in one line. Knowing which costs are fixed and which vary is the key to pricing and break-even.

Scoring tip: The small worked example at two volumes shows behaviour of cost better than any definition.