Question

Chef's cost comes under the category of _______ cost.

Hint:

In hotel service costing, costs are divided into Standing Charges (fixed costs like supervisor and chef salaries, rent, and depreciation) and Running Charges (variable costs like food ingredients, laundry, and power).

Answer 1

Step 1: Contextualizing Chef Costs in Service Costing:
A chef's salary is a key operational expense in the hospitality industry (hotels and restaurants). To classify this cost correctly, we must analyze how it behaves relative to business volume.

Step 2: Evaluating Cost Behavior:
A chef is typically hired on a monthly or annual salary. This salary must be paid regardless of daily room occupancy rates or the exact number of meals served. Because this cost does not fluctuate with minor changes in guest volume, it is classified as a fixed cost (or a standing charge).

Step 3: Evaluating Alternative Classifications:
In hotel cost accounting, expenses are also classified by function:
• Under a functional classification, a chef's salary is categorized as a direct labor cost (or personnel cost) for the restaurant or food and beverage department. Both classifications are correct depending on the framework used, with fixed (or standing) and labor being the primary designations.