Question 1

The menu pricing method that uses desired food cost percentage in determining the menu sales price is termed the ________ pricing method.

Accepted Answer

The factor pricing method involves calculating a price factor, which is the desired food cost percentage divided by 100, and multiplying it by the food cost of the item to determine the selling price. This method is commonly used in the foodservice industry and allows for consistent pricing based on desired profit margins.

Question 2

A foodservice operation with a food cost of 40% has food costs that are equal to 40% of ________.

Accepted Answer

The food cost of 40% is equal to 40% of the revenue generated by the foodservice operation. It is not necessarily equal to operating costs, total costs, or labor costs, as these costs may vary independent of food costs.

Question 3

The ________ says that a company who chooses to use the LIFO method for valuing their inventory must use that same method each year.

Accepted Answer

The consistency principle states that a company should use the same accounting methods and principles from year to year. Therefore, if a company chooses to use LIFO for valuing their inventory, they must continue to use LIFO in subsequent years to ensure consistency in their financial reporting.

Question 4

The financial statement that shows financial position at a point in time is the ________.

Accepted Answer

The balance sheet is the financial statement that shows the financial position at a point in time. The income statement shows the financial performance over a period of time, the statement of change in financial position shows the changes in various balance sheet accounts over a period of time, and P&L statement is another term for the income statement.

Question 5

Typically the first step in the budget process is to compile the ________.

Accepted Answer

The first step in the budget process is typically to compile the sales budget, as it outlines expected sales and serves as the foundation for other components of the budget, such as production and expenditure budgets.

Question 6

Cash,marketable securities,and accounts receivable are all categorized as ________ on a balance sheet.

Accepted Answer

Cash, marketable securities, and accounts receivable are considered current assets because they are expected to be converted into cash within the next 12 months or operating cycle, whichever is longer. Current assets are listed on the balance sheet in order of liquidity, which means the most liquid assets (easiest to convert to cash) are listed first.

Question 7

Sam Jones owns a local restaurant.He buys steaks from the restaurant to serve his family at home for dinner.Sam should record this sale in the restaurant's books because of the:

Accepted Answer

The business entity principle requires that the owner of the restaurant must keep his personal transactions separate from those of the business. Recording the sale of steak to himself as an individual would violate this principle.

Question 8

Jim had a beginning inventory of $5,500.During the month of April he purchased $4,000 of food and had an ending inventory of $3,800 at the end of the month.His sales for April were $8,750.What was his inventory turnover?

Accepted Answer

The inventory turnover is calculated by dividing the cost of goods sold (COGS) by the average inventory. COGS = Beginning Inventory + Purchases - Ending Inventory = $5,500 + $4,000 - $3,800 = $5,700. Average Inventory = (Beginning Inventory + Ending Inventory) / 2 = ($5,500 + $3,800) / 2 = $4,650. Inventory Turnover = COGS / Average Inventory = $5,700 / $4,650 = 1.225, which rounds to approximately 1.2 or "1 times" when simplified for the options provided.

Question 9

Having customers pay by the ounce for items purchased on sandwich or salad bars is an example of ________.

Accepted Answer

Pricing by the ounce is a strategy that leverages pricing psychology, as it allows customers to feel they have control over the cost by choosing the amount they purchase, potentially leading to increased satisfaction and perceived value.

Question 10

A pro forma income statement:

Accepted Answer

A pro forma income statement is a financial document that forecasts revenue and expenses for a future period, usually for the upcoming fiscal year. It is used to estimate the financial performance of a business, project potential profits or losses, and help with the budgeting process. Therefore, option B is the correct answer. Option A is incorrect because a common-size income statement expresses financial figures as a percentage of sales, and a pro forma income statement is not necessary to complete it. Option C is incorrect because the income statement summarizes sales and expenses for a past period, usually the most recent reporting cycle, while a pro forma income statement projects future financial results. Option D is incorrect because the pro forma income statement is not limited to showing revenues and expenses for the past month, but rather it forecasts future financial performance.

Question 11

Calculation of the current ratio would involve which two pieces of data?

Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. Therefore, the two pieces of data needed are current assets and current liabilities.

Question 12

One difference between a for-profit and a not-for-profit organization is:

Accepted Answer

Excess revenue over expenses in a for-profit organization can go to the organization's owners as profit, while in a not-for-profit organization, this excess goes back into the organization's mission or is used for future operations.

Question 13

The breakeven point is where:

Accepted Answer

The breakeven point is the level of sales or the volume of units sold at which total revenues equal total costs. At this point, there is no profit or loss, and the company has covered all of its expenses. Therefore, option A is the correct answer.

Question 14

Ratios that are used to examine an establishment's ability to meet its long-term financial obligations are termed ________ ratios.

Accepted Answer

Solvency ratios are used to examine an establishment's ability to meet its long-term financial obligations. These ratios include debt-to-equity, interest coverage, and debt service coverage ratios. Profitability ratios measure an establishment's ability to generate profit, operating ratios assess an establishment's efficiency in operating its business, and liquidity ratios measure an establishment's ability to meet its short-term financial obligations.

Question 15

Accumulated depreciation is applied to which balance sheet category?

Accepted Answer

Accumulated depreciation is a contra-asset account that reduces the value of fixed assets on the balance sheet. Therefore, it is applied to the fixed assets category.

Question 16

The denominator used when calculating a common size income statement is ________.

Accepted Answer

The denominator used when calculating a common size income statement is total sales. This approach standardizes the income statement by expressing all line items as a percentage of total sales, allowing for easier comparison across periods and companies.

Question 17

Assets and liabilities are a part of which financial statement?

Accepted Answer

Assets and liabilities are reported on the balance sheet, which is a financial statement that shows a company's financial position at a specific point in time. The balance sheet summarizes a company's assets, liabilities, and equity.

Question 18

Perception of value:

Accepted Answer

Perception of value is the worth or value that customers assign to a product or service. It is based on the customer's perception of the benefits they receive compared to the price they pay. Therefore, option C is the best choice. Options A, B, and D are incorrect because they don't accurately define perception of value.

Question 19

Sarah Michaels wants to evaluate her operation's efficiency by calculating the number of labor minutes per meal.Data from the previous week indicate that she served 7,500 meals.Her timecards indicated that employees worked a total of 625 hours for the week.What were labor minutes per meal for Sarah's operation?

Accepted Answer

The answer of Sarah Michaels wants to evaluate her operation's...

Question 20

Which of the following statements is true?

Accepted Answer

Total fixed costs do not vary with changes in sales volume as they are costs that are consistent regardless of the level of production or sales. Total variable costs, on the other hand, do vary with changes in sales volume as they include costs such as materials, labor, and other expenses that increase or decrease depending on the level of production or sales. Total costs, in general, will vary with changes in sales volume as they are the sum of both the fixed and variable costs. Option A and B are incorrect as they are opposite to the actual statement.

Quiz 13: Management of Financial Resources