Deck 1: Cost and Sales Concepts

Question 1

Foods and beverages become costs to restaurants when the food and beverages are consumed.

Answer 1

True

Question 2

Directly variable costs are normally controllable.

Answer 2

True

Question 3

If a restaurant purchases one shell strip for $60.00 and cuts 15 steaks from it, the unit cost for each steak is $4.00.

Answer 3

True

Question 4

While total variable cost may change as sales volume changes, variable cost per unit should remain unchanged.

Question 5

Dollar figures are normally more useful than cost percentages for comparing one operating period with another in a given restaurant.

Question 6

Historical costs can be documented and established through business records.

Question 7

The industry-wide standard for food cost percent is 33.3%.

Question 8

The food cost percentage in a gourmet-style restaurant is typically higher than the food cost percentage in a fast-food restaurant.

Question 9

Meaningful comparisons of cost percentages can only be made between operations that are similar, such as two or more units in one national chain.

Question 10

Low-margin operations are normally profitable if they maintain low sales volume.

Question 11

In the hotel and restaurant business, a sale is the exchange products or services for value.

Question 12

Sales may be expressed in terms of the number of units sold.

Question 13

Beverage cost is normally considered a fixed cost.

Question 14

If food cost is $200 for a given period, and food sales for that period is $500, food cost percent is 2.5%.

Question 15

Prime cost is the sum of food cost, beverage cost, and labor cost.

Question 16

Average dollar sale is equal to total number of covers divided by total dollar sales.

Question 17

Fixed costs are unaffected by normal fluctuations in sales volume.

Question 18

As business volume increases, fixed cost per unit decreases.

Question 19

Planned or budgeted costs are usually based on historical costs.

Question 20

Fixed costs are those that:

A) may be readily controlled.
B) change as sales volume changes.
C) are unaffected by normal fluctuations in sales volume.

Question 21

Every increase or decrease in sales volume brings a corresponding and proportionate change in:

A) noncontrollable costs.
B) directly variable costs.
C) semivariable costs.

Question 22

Examples of directly variable costs are:

A) depreciation and license fees.
B) real estate taxes and insurance premiums.
C) food costs and beverage costs.

Question 23

The cost of a single portion of a given menu item may be considered:

A) a unit cost.
B) a total cost.
C) a noncontrollable cost.

Question 24

The costs expressed on a statement of income are:

A) planned costs
B) total costs
C) unit costs

Question 25

Increases in sales volume result in:

A) unchanged variable cost per unit, but increased total variable costs.
B) increased variable cost per unit, but unchanged total variable costs.
C) decreased variable cost per unit, but increased total variable costs.

Question 26

The term overhead means:

A) gross profit less occupation costs.
B) all costs other than prime cost.
C) the total of food costs, beverage costs, and labor costs combined.

Question 27

Cost percentages provide a useful means of comparing:

A) costs for two or more different types of businesses.
B) two or more different types of costs.
C) costs for two or more time periods in one establishment.

Question 28

If a business is to be profitable, costs must always be:

A) more than 100.0% of sales
B) less than 100.0% of sales
C) equal to sales

Question 29

In restaurants with relatively low menu prices, food cost percentages tend to be:

A) lower than restaurants with high menu prices
B) the same as restaurants with high menu prices
C) higher than restaurants with high menu prices

Question 30

The term average dollar sale refers to:

A) total dollar sales divided by total number of customers.
B) prime cost divided by the number of covers.
C) the menu sales price for a given item, plus tax and tip.

Question 31

If 150 customers are served in a two-hour period in a restaurant with 50 seats, seat turnover for the period would be:

A) 1.5
B) 3.0
C) 0.667

Question 32

Of the following, the best example of semi-variable costs is:

A) total food cost.
B) total prime cost.
C) total payroll cost.

Question 33

One example of a controllable fixed cost is:

A) advertising.
B) paper napkins.
C) depreciation.

Question 34

As used in cost control, the term cover means:

A) those seated at one table in the dining room, regardless of the number of people.
B) one diner.
C) a heat-retaining device placed over dinner plates which permits them to be stacked.