Extra Credit: A foodservice director has decided to switch t…

Extra Credit: A foodservice director has decided to switch their pricing procedure from the factor method to the prime cost method. In the past, they used 30% for their factor method percentage. In the new method, they repriced one of their entrees with the following information:  EP raw food cost per portion: $2.40 Direct labor cost per portion: $1.35. The operation uses a 40% labor markup and a 25% food markup Target prime cost percentage: 60% a) Calculate the selling price using both factor method and prime cost method.  b) Explain why a director might choose prime cost over the factor method.