Deck 11: Monthly Physical Inventory and Monthly Food Cost Calculations

Question 1

Which of the following methods typically generates the greatest credit for employee meals?

A) monthly budget
B) sales credit
C) requisition method
D) all are equal

Answer 1

B

Question 2

Inventory value is recorded as a liability in the company financial balance sheet.

Answer 2

False

Question 3

The beginning inventory for February 2009 is not equal to the ending inventory for January 2009.

Answer 3

False

Question 4

Determine the total value of the inventory based on the FIFO method. Count Price Extensions
Beginning inventory 6 $5.65 $33.90
Purchases on 2/6 before inventory 6 $6.30 $37.80
Purchases on 2/13 before inventory 12 $6.10 $73.20
Purchases on 2/20 before inventory 6 $6.30 $37.80
Purchases on 2/27 before inventory 4 $5.80 $23.20
Ending inventory 12 units

A) $69.60
B) $73.20
C) $71.90
D) $72.67

Question 5

A perpetual inventory records all items purchased and requisitioned, and should match the physical inventory.

Question 6

Sales of food or beverage products to employees at cost are called steward sales.

Question 7

Calculate the cost of food consumed assuming the following: Beginning inventory $05,890
Net purchases $22,500
Transfers in $0,0870
Transfers out $0,0490
Ending inventory $05,010

A) $23,760
B) $24,250
C) $29,260
D) $23,380

Question 8

Determine the total value of the inventory based on the average price method. Count Price Extensions
Beginning inventory 6 $5.65 $33.90
Purchases on 2/6 before inventory 6 $6.30 $37.80
Purchases on 2/13 before inventory 12 $6.10 $73.20
Purchases on 2/20 before inventory 6 $6.30 $37.80
Purchases on 2/27 before inventory 4 $5.80 $23.20
Ending inventory 12 units

A) $69.60
B) $73.20
C) $71.90
D) $72.67

Question 9

It is not the responsibility of the manager to maintain storeroom inventory turnover within the company's guidelines to minimize product deterioration, interest on borrowed funds, and the impact on cash flow or other company obligations.

Question 10

How is an inventory turnover ratio calculated?

A) average inventory/cost of sales
B) cost of sales/average inventory balance
C) revenue/average inventory balance
D) cost of sales/revenue

Question 11

Accrual accounting is an accounting system in which revenues are recognized when they are not earned and expenses are recognized when they are not incurred.

Question 12

Establishing a perpetual inventory eliminates the need to take physical inventory.

Question 13

Calculate the cost of food consumed assuming the following: Beginning inventory $05,890
Net purchases $22,500
Transfers in $0,0870
Transfers out $0,0490
Ending inventory $05,010
Employee meals $0,0870
Promotional food cost $0,0440

A) $22,890
B) $22,450
C) $23,380
D) $27,950

Question 14

Ethical standards provide sound, practical advice for managers. Most of the rules in the ethical standards are motivated by a very practical consideration: if these rules were not followed in business, then the economy and all of us suffer.

Question 15

Food sales for the month total $90,000. What is the actual food cost of sales percentage for the month assuming these data? Beginning inventory $05,890
Net purchases $22,500
Transfers in $0,0870
Transfers out $0,0490
Ending inventory $05,010
Employee meals $0,0870
Promotional food cost $0,0440

A) 24.94%
B) 26.4%
C) 23.86%
D) 25.43%

Question 16

Determine the total value of the inventory based on the last price method. Count Price Extensions
Beginning inventory 6 $5.65 $33.90
Purchases on 2/6 before inventory 6 $6.30 $37.80
Purchases on 2/13 before inventory 12 $6.10 $73.20
Purchases on 2/20 before inventory 6 $6.30 $37.80
Purchases on 2/27 before inventory 4 $5.80 $23.20
Ending inventory 12 units

A) $69.60
B) $73.20
C) $71.90
D) $72.67

Question 17

Food turnover ratios are typically higher than beverage turnover ratios.

Question 18

In an accrual accounting system, if you purchase and receive $50 worth of chicken on January 31, but will not be billed for the chicken until February 6, and the chicken remains in inventory until used on February 2, what date is the expense for the chicken actually accrued?

A) January 31
B) February 6
C) February 2
D) none of these answers is correct

Question 19

Because no revenue is generated, which of the following should not be recorded?

A) spending on the staff
B) promotional or entertainment expenses
C) employee meals
D) "spending on the staff," "promotional or entertainment expenses," and "employee meals" should all be recorded

Question 20

You can determine the value of your inventory by either physical inventory or perpetual inventory.

Question 21

Why is taking a physical inventory critical?

Question 22

How is the beginning inventory for a period calculated?

Question 23

On what items is a perpetual inventory most important?

Question 24

Why is it important to include transfers in calculating the cost of food sold?

Question 25

If food sales for the month were $75,000, what is the turnover ratio assuming the following data?
Beginning inventory = $3,250
Purchases = $23,560
Transfers out = $450
Transfers in = $600
Ending inventory = $4,218

Question 26

Why is it important to include promotions and employee meals in calculating the cost of food sold?

Question 27

What is a perpetual inventory?

Question 28

How should the inventory sheets be arranged?

Question 29

What is the FIFO method? What are its advantages and disadvantages?

Question 30

What is the LIFO method? What are its advantages and disadvantages?