Deck 8: Controlling Other Expenses

Question 1

What are the operating costs that are excluded from an operation's "Other expenses" cost category?

A) Food and labor
B) Rent and insurance
C) Equipment and repairs
D) Franchisee fees and credit card fees

Answer 1

A

Question 2

On what financial document will managers report their operations' controllable and non-controllable other expenses?

A) Balance Sheet
B) Income Statement
C) Statement of Cash Flows
D) Statement of Financial Position

Answer 2

B

Question 3

What is a cost that would be classified as an "Other expense" in a foodservice operation that features fried chicken on its menu?

A) Salaries
B) Electricity
C) Payroll taxes
D) Chicken quarters

Answer 3

B

Question 4

A manager must pay a $500 annual fee to the state in order to obtain a license to serve alcohol. What type of "Other expense" is the amount paid for the license?

A) Controllable, fixed
B) Controllable, variable
C) Non-controllable, fixed
D) Non-controllable, variable

Question 5

What is an example of a controllable fixed expense in a foodservice operation that also serves alcoholic beverages?

A) Glassware costs
B) Mortgage payments
C) Annual liquor license fees
D) Trade association membership fees

Question 6

A foodservice manager pays $300 per month for landscaping services. What type of "Other expense" is the amount paid for the landscaping services?

A) Controllable, fixed
B) Controllable, variable
C) Non-controllable, fixed
D) Non-controllable, variable

Question 7

A manager's restaurant uses paper napkins. What type of "Other expense" is the amount paid for the napkins?

A) Controllable, fixed
B) Controllable, variable
C) Non-controllable, fixed
D) Non-controllable, variable

Question 8

A manager pays a monthly mortgage on a restaurant building. What type of "Other expense" is the amount paid for the mortgage?

A) Controllable, fixed
B) Controllable, variable
C) Non-controllable, fixed
D) Non-controllable, variable

Question 9

A cost that changes in direct relationship to changes in an operation's sales volume is considered to be a

A) fixed expense.
B) variable expense.
C) controllable expense.
D) non-controllable expense.

Question 10

A manager pays $5,000 per month plus 2% of total monthly sales to the owner of the building that houses the manager's restaurant. How much will the manager have to pay to the building's owner in a month in which the total sales for the restaurant are $80,000?

A) $1,600
B) $5,000
C) $6,600
D) $10,000

Question 11

The total dollar amount of an operation's fixed expenses

A) varies with volume.
B) only varies with changes in the number of guests served.
C) varies with changes in volume and changes in the number of guests served.
D) does not vary with changes in volume or changes in the number of guests served.

Question 12

What is the effect on an operation's mixed expense when the operation's sales volume increases?

A) Mixed expense amount increases, mixed expense percentage decreases
B) Mixed expense amount increases, mixed expense percentage increases
C) Mixed expense amount decreases, mixed expense percentage decreases
D) Mixed expense amount decreases, mixed expense percentage increases

Question 13

What is an example of a mixed other expense in a foodservice operation?

A) Payroll taxes
B) Insurance policy premiums
C) Expense of heating and cooling dining rooms
D) Contributions to employee 401(k) plans.

Question 14

What is the formula a manager uses to calculate an "Other expense" cost percentage?

A) Total sales x Other expense = Other expense percentage
B) Total sales ÷ Other expense = Other expense percentage
C) Other expense + Total sales = Other expense percentage
D) Other expense ÷ Total sales = Other expense percentage

Question 15

What will be a manager's "Other expense" percentage for utilities if sales were $75,000 in a month and utility costs for the month were $6,000?

A) 0.8%
B) 1.25%
C) 8.0%
D) 12.5%

Question 16

What is a manager's "Other expense" Cost per guest for marketing, if sales in the manager's operation in a month were $90,000, 3,000 guests were served, and marketing costs for the month were $1,500?

A) $0.30
B) $0.50
C) $3.00
D) $5.00

Question 17

What is the formula managers use to calculate Other expense cost per guest?

A) Other expense x Number of guests served = Other expense cost per guest
B) Other expense ÷ Number of guests served = Other expense cost per guest
C) Number of guests served + Other expense = Other expense cost per guest
D) Number of guests served ÷ Other expense = Other expense cost per guest

Question 18

Monitoring Other expense cost per guest is especially useful when an operation

A) collects revenue on a daily basis.
B) has fixed costs that exceed its variable costs.
C) has variable costs that exceed its fixed costs.
D) does not collect revenue on a daily basis.

Question 19

What will be the effect on an operation's fixed expense when the operation's sales volume increases?

A) Fixed expense amount increases, fixed expense percentage increases
B) Fixed expense amount increases, fixed expense percentage decreases
C) Fixed expense amount is unchanged, fixed expense percentage increases
D) Fixed expense amount is unchanged, fixed expense percentage decreases

Question 20

An operation has an expense that is 100% variable. If that operation's sales volume decreases, the amount spent on this variable expense will

A) increase and the variable expense percentage will increase.
B) decrease and the variable expense percentage will decrease.
C) increase and the variable expense percentage will be unchanged.
D) decrease and the variable expense percentage will be unchanged.

Question 21

What type of "Other expense" is an operation's usage of kilowatt hours (kWh)?

A) Controllable, fixed
B) Controllable, variable
C) Non-controllable, fixed
D) Non-controllable, variable

Question 22

How frequently should contracts for services such as HVAC maintenance and grounds keeping be put out for bid?

A) Weekly
B) Monthly
C) Quarterly
D) Annually

Question 23

For a foodservice manager who is not the building's owner, the majority of that manager's occupancy costs will be

A) fixed and controllable.
B) variable and controllable.
C) fixed and non-controllable.
D) variable and non-controllable.

Question 24

What is an example of an occupancy cost?

A) Cost of food
B) Cost of utilities
C) Cost of interest on debts
D) Cost of grounds maintenance

Question 25

What is the typical range for a foodservice operation's total "Other expense" costs?

A) Less than 5% of sales volume
B) 5% to 15% of sales volume
C) 25% to 35% of sales volume
D) 45% to 55% of sales volume

Question 26

Other expenses typically equal less than five percent of a foodservice operation's total sales volume.

Question 27

The cost of utilities in a foodservice operation is a non-controllable other expense.

Question 28

Occupancy costs in a foodservice operation are a non-controllable expense.

Question 29

When expressed as a percentage of sales, a mixed expense will decrease as sales increases.

Question 30

A fixed expense percentage in a foodservice operation will decline as sales volume declines.

Question 31

A variable "Other expense" increases as sales volume increases and decreases as sales volume decreases.

Question 32

As sales volume increases, an operation's mixed-expense percentage decreases while the total dollar amount paid for the mixed expense increases.

Question 33

To calculate their "Other expense" cost percentage and their "Other expense" cost per guest, managers must know their total sales, the amount of the other expense, and the number of guests they have served.

Question 34

In most cases performing routine maintenance on mechanical equipment prolongs its life but increases its total operational costs.

Question 35

A kilowatt hour (kWh) is a measure of natural gas usage.