Question 1

A menu item sells for $11.95 and has a 40 percent food cost. Variable costs for the item are 25 percent and 250 servings are sold. What is the item's goal value?

Accepted Answer

A)  435.98 
B)  543.23 
C)  590.34 
D)  627.38 
A)  435.98 
B)  543.23 
C)  590.34 
D)  627.38 D

Question 2

Experienced food service managers know that their budgets

Accepted Answer

A)  cannot be modified. 
B)  are static documents. 
C)  should not be modified. 
D)  are not static documents. 
A)  cannot be modified. 
B)  are static documents. 
C)  should not be modified. 
D)  are not static documents. D

Question 3

A loss leader is a menu item that is priced very low, and sometimes even below its total cost, for the purpose of

Accepted Answer

A)  increasing total revenue. 
B)  increasing contribution margin. 
C)  decreasing food cost percentage. 
D)  decreasing variable costs percentage. 
A)  increasing total revenue. 
B)  increasing contribution margin. 
C)  decreasing food cost percentage. 
D)  decreasing variable costs percentage. A

Question 4

Which type of menu item should be removed from the menu if managers use matrix analysis to evaluate their menus based on item popularity and contribution margin?

Accepted Answer

A)  An item with low contribution margin and low popularity 
B)  An item with high contribution margin and low popularity 
C)  An item with low contribution margin and high popularity 
D)  An item with high contribution margin and high popularity 
A)  An item with low contribution margin and low popularity 
B)  An item with high contribution margin and low popularity 
C)  An item with low contribution margin and high popularity 
D)  An item with high contribution margin and high popularity

Question 5

Managers who forecast increases in revenue should also forecast increases in their variable cost percentages.

Accepted Answer

A) True 
 B)False

Question 6

What is the area of least concern for managers who are carefully monitoring their budgets?

Accepted Answer

A)  Profits 
B)  Revenue 
C)  Fixed costs 
D)  Variable costs 
A)  Profits 
B)  Revenue 
C)  Fixed costs 
D)  Variable costs

Question 7

A primary purpose of budgets is to help managers estimate future operating results.

Accepted Answer

A) True 
 B)False

Question 8

Achievement budgets are typically prepared for a period of two to five years into the future and provide a long-term view about the direction of a business.

Accepted Answer

A) True 
 B)False

Question 9

Goal value menu analysis is performed using a 2x2 matrix to indicate menu item characteristics that are above and below the overall menu's average values.

Accepted Answer

A) True 
 B)False

Question 10

In most food service operations, when actual revenue is lower than budgeted revenue, the operations' fixed cost percentages

Accepted Answer

A)  will not change. 
B)  will be lower than budgeted. 
C)  will be exactly as budgeted. 
D)  will be higher than budgeted. 
A)  will not change. 
B)  will be lower than budgeted. 
C)  will be exactly as budgeted. 
D)  will be higher than budgeted.

Question 11

The purpose of menu analysis is to determine the

Accepted Answer

A)  number of different items to offer on a menu. 
B)  selling prices of the individual items offered on a menu. 
C)  profitability of the individual items offered on a menu. 
D)  order of placement of the individual items offered on a menu. 
A)  number of different items to offer on a menu. 
B)  selling prices of the individual items offered on a menu. 
C)  profitability of the individual items offered on a menu. 
D)  order of placement of the individual items offered on a menu.

Question 12

An operation had sales of $39,000 in an accounting period. The operation's food cost for the period was 38 percent. The operation spent $6,000 on meat in the period. What was the operation's meat cost percentage for the period?

Accepted Answer

A)  12.74% 
B)  14.7% 
C)  16.7% 
D)  18.7% 
A)  12.74% 
B)  14.7% 
C)  16.7% 
D)  18.7%

Question 13

The primary purpose of Cost/Volume/Profit (CVP) analysis is to

Accepted Answer

A)  forecast future sales more accurately. 
B)  find out which menu items are most profitable. 
C)  estimate an operation's income before income taxes. 
D)  identify the amount of sales revenue needed to avoid an operating loss. 
A)  forecast future sales more accurately. 
B)  find out which menu items are most profitable. 
C)  estimate an operation's income before income taxes. 
D)  identify the amount of sales revenue needed to avoid an operating loss.

Question 14

Last year an operation achieved a 35 percent food cost on sales of $800,000. For this year, the operation's manager anticipates a 5 percent increase in the prices the operation will pay for food. What should the manager estimate next year's food cost percentage to be if the operation does not raise its menu prices?

Accepted Answer

A)  36.00% 
B)  36.75% 
C)  40.00% 
D)  40.75% 
A)  36.00% 
B)  36.75% 
C)  40.00% 
D)  40.75%

Question 15

A manager budgeted $6,000 for kitchen equipment repairs this year. So far this year, the manager has spent $1,830 on these repairs. What percentage of the kitchen equipment repair budget has now been spent by the manager?

Accepted Answer

A)  30.5% 
B)  32% 
C)  34.5% 
D)  36% 
A)  30.5% 
B)  32% 
C)  34.5% 
D)  36%

Question 16

Cost/Volume/Profit (CVP) analysis is also referred to as break-even analysis.

Accepted Answer

A) True 
 B)False

Question 17

A manager utilizes contribution margin matrix analysis to evaluate a menu. What would be a good marketing strategy to use on an item the manger finds is very popular but has a low contribution margin?

Accepted Answer

A)  Promote the item well 
B)  Reduce the item's price 
C)  Remove the item from the menu 
D)  Reduce the item's prominence on the menu 
A)  Promote the item well 
B)  Reduce the item's price 
C)  Remove the item from the menu 
D)  Reduce the item's prominence on the menu

Question 18

Popularity is a factor utilized when performing both food cost percentage and contribution margin matrix analysis.

Accepted Answer

A) True 
 B)False

Question 19

Managers who forecast decreases in revenue should also forecast decreases in their fixed cost percentages.

Accepted Answer

A) True 
 B)False

Question 20

What type of menu item should be featured prominently on the menu if managers use matrix analysis to evaluate their menus based on item popularity and contribution margin?

Accepted Answer

A)  An item with low contribution margin and low popularity 
B)  An item with high contribution margin and low popularity 
C)  An item with low contribution margin and high popularity 
D)  An item with high contribution margin and high popularity 
A)  An item with low contribution margin and low popularity 
B)  An item with high contribution margin and low popularity 
C)  An item with low contribution margin and high popularity 
D)  An item with high contribution margin and high popularity

A menu item sells for $11.95 and has a 40 percent food cost. Variable costs for the item are 25 percent and 250 servings are sold. What is the item's goal value?

Experienced food service managers know that their budgets

A loss leader is a menu item that is priced very low, and sometimes even below its total cost, for the purpose of

Which type of menu item should be removed from the menu if managers use matrix analysis to evaluate their menus based on item popularity and contribution margin?

Managers who forecast increases in revenue should also forecast increases in their variable cost percentages.

What is the area of least concern for managers who are carefully monitoring their budgets?

A primary purpose of budgets is to help managers estimate future operating results.

Achievement budgets are typically prepared for a period of two to five years into the future and provide a long-term view about the direction of a business.

Goal value menu analysis is performed using a 2x2 matrix to indicate menu item characteristics that are above and below the overall menu's average values.

In most food service operations, when actual revenue is lower than budgeted revenue, the operations' fixed cost percentages

The purpose of menu analysis is to determine the

An operation had sales of $39,000 in an accounting period. The operation's food cost for the period was 38 percent. The operation spent $6,000 on meat in the period. What was the operation's meat cost percentage for the period?

The primary purpose of Cost/Volume/Profit (CVP) analysis is to

A manager budgeted $6,000 for kitchen equipment repairs this year. So far this year, the manager has spent $1,830 on these repairs. What percentage of the kitchen equipment repair budget has now been spent by the manager?

Cost/Volume/Profit (CVP) analysis is also referred to as break-even analysis.

A manager utilizes contribution margin matrix analysis to evaluate a menu. What would be a good marketing strategy to use on an item the manger finds is very popular but has a low contribution margin?

Popularity is a factor utilized when performing both food cost percentage and contribution margin matrix analysis.

Managers who forecast decreases in revenue should also forecast decreases in their fixed cost percentages.

What type of menu item should be featured prominently on the menu if managers use matrix analysis to evaluate their menus based on item popularity and contribution margin?

Managing Revenue and Expense

Creating Sales Forecasts

Purchasing and Receiving

Managing Inventory and Production

Monitoring Food and Beverage Product Costs

Managing Food and Beverage Pricing

Managing the Cost of Labor

Controlling Other Expenses

Analyzing Results Using the Income Statement

Maintaining and Improving the Revenue Control System

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Exam 10: Planning for Profit

A menu item sells for $11.95 and has a 40 percent food cost. Variable costs for the item are 25 percent and 250 servings are sold. What is the item's goal value?

Experienced food service managers know that their budgets

A loss leader is a menu item that is priced very low, and sometimes even below its total cost, for the purpose of

Which type of menu item should be removed from the menu if managers use matrix analysis to evaluate their menus based on item popularity and contribution margin?

Managers who forecast increases in revenue should also forecast increases in their variable cost percentages.

What is the area of least concern for managers who are carefully monitoring their budgets?

A primary purpose of budgets is to help managers estimate future operating results.

Achievement budgets are typically prepared for a period of two to five years into the future and provide a long-term view about the direction of a business.

Goal value menu analysis is performed using a 2x2 matrix to indicate menu item characteristics that are above and below the overall menu's average values.

In most food service operations, when actual revenue is lower than budgeted revenue, the operations' fixed cost percentages

The purpose of menu analysis is to determine the

An operation had sales of $39,000 in an accounting period. The operation's food cost for the period was 38 percent. The operation spent $6,000 on meat in the period. What was the operation's meat cost percentage for the period?

The primary purpose of Cost/Volume/Profit (CVP) analysis is to

A manager budgeted $6,000 for kitchen equipment repairs this year. So far this year, the manager has spent $1,830 on these repairs. What percentage of the kitchen equipment repair budget has now been spent by the manager?

Cost/Volume/Profit (CVP) analysis is also referred to as break-even analysis.

A manager utilizes contribution margin matrix analysis to evaluate a menu. What would be a good marketing strategy to use on an item the manger finds is very popular but has a low contribution margin?

Popularity is a factor utilized when performing both food cost percentage and contribution margin matrix analysis.

Managers who forecast decreases in revenue should also forecast decreases in their fixed cost percentages.

What type of menu item should be featured prominently on the menu if managers use matrix analysis to evaluate their menus based on item popularity and contribution margin?

Managing Revenue and Expense

Creating Sales Forecasts

Purchasing and Receiving

Managing Inventory and Production

Monitoring Food and Beverage Product Costs

Managing Food and Beverage Pricing

Managing the Cost of Labor

Controlling Other Expenses

Analyzing Results Using the Income Statement

Maintaining and Improving the Revenue Control System

Filters