Deck 9: Analyzing Results Using the Income Statement

Question 1

What is the name of the activity that describes the recording and summarizing of a business's financial data?

A) Analysis
B) Bookkeeping
C) Cost accounting
D) Managerial accounting

Answer 1

B

Question 2

What is the primary purpose of a uniform system of accounts?

A) To record business revenue
B) To minimize business expenses
C) To ensure a business pays all of its applicable taxes
D) To present financial data usefully and consistently

Answer 2

D

Question 3

What is the financial information that is listed first on a P&L prepared using the USAR?

A) Sales
B) Profits
C) Prime costs
D) Other expenses

Answer 3

A

Question 4

What is the financial information that is listed last on a P&L prepared using the USAR?

A) Sales
B) Profits
C) Prime costs
D) Non-controllable expenses

Question 5

The two expenses that are included in the Prime Costs section of a P&L prepared using the USAR are food and

A) labor.
B) beverages.
C) controllable costs.
D) non-controllable costs.

Question 6

Under what expense category is "Depreciation" listed when a P&L is prepared using the USAR?

A) Prime Cost
B) Direct Operating Expense
C) Non-controllable Expense
D) Other Controllable Expense

Question 7

In what section of a P&L prepared using the USAR are an operation's occupancy costs recorded?

A) Prime costs
B) Controllable expenses
C) Non-controllable expenses
D) General and administrative costs

Question 8

Last month a manager's operation achieved $60,000 in food sales and $40,000 in beverage sales. The manager's cost of sales for food was $15,000 and cost of sales for beverages was $8,000. What was the manager's cost of sales percentage for food last month?

A) 20%
B) 25%
C) 30%
D) 35%

Question 9

What is the formula managers use to calculate a sales variance percentage?

A) (Last period sales - This period sales) ÷ Last period sales = Sales variance %
B) (Last period sales - This period sales) x Last period sales = Sales variance %
C) (This period sales - Last period sales) ÷ Last period sales = Sales variance %
D) (This period sales - Last period sales) x Last period sales = Sales variance %

Question 10

In the last accounting period, an operation achieved total sales of $120,000. The operation's manager then budgeted a 4.5 percent sales increase for the next accounting period. What will be the manager's budgeted sales amount for the next accounting period?

A) $124,800
B) $125,400
C) $126,000
D) $126,600

Question 11

An operation had sales this period of $89,775. Last period sales were $85,500. What was the operation's percentage sales increase for this period when compared to last period?

A) 0.05%
B) 0.5%
C) 5.0%
D) 50%

Question 12

Last month an operation generated $100,000 in food sales and $40,000 in beverage sales. The operation had a cost of sales for food of $35,000. What was the operation's food cost percentage last month?

A) 25%
B) 30%
C) 35%
D) 40%

Question 13

"Total sales - Total cost of sales" is the formula a manager uses to calculate an operation's

A) prime cost.
B) gross profit.
C) profit margin.
D) cost of sales percentage.

Question 14

An operation had a beginning beverage inventory of $15,000 for an accounting period and an ending beverage inventory of $19,000 for the period. What was the operation's average beverage inventory value for the period?

A) $16,000
B) $16,500
C) $17,000
D) $17,500

Question 15

For what food category should inventory turnover in a food service operation be highest?

A) Dried foods
B) Baked goods
C) Frozen foods
D) Canned goods

Question 16

Last year an operation had a cost of food consumed for meats of $310,000. In that year the operation had a beginning meat inventory of $15,000 and ending meat inventory of $16,000. What was the operation's inventory turnover for meat last year?

A) 20
B) 21
C) 22
D) 23

Question 17

Last month an operation generated $200,000 in food sales and $50,000 in beverage sales. The operation had a cost of sales for beverages of $10,000. What was the operation's beverage cost percentage last month?

A) 2%
B) 4%
C) 20%
D) 40%

Question 18

When an operation increases it sales, its cost of variable labor

A) increases and its variable labor cost percentage increases.
B) decreases and its variable labor cost percentage increases.
C) decreases and its variable labor cost percentage is unchanged.
D) increases and its variable labor cost percentage is unchanged.

Question 19

When an operation increases it sales, its cost of fixed labor

A) increases and its fixed labor cost percentage increases.
B) increases and its fixed labor cost percentage decreases.
C) is unchanged and its and fixed labor cost percentage increases.
D) is unchanged and its fixed labor cost percentage decreases.

Question 20

A manager calculates labor cost percentages for both fixed and variable labor costs. If there are no staff pay raises, and the manager's sales increase by five percent, the fixed labor cost percentage should

A) increase and the variable labor cost percentage should decrease.
B) increase and the variable labor cost percentage should be unchanged.
C) decrease and the variable labor cost percentage should increase.
D) decrease and the variable labor cost percentage should be unchanged.

Question 21

In the last quarter an operation had management labor costs of $20,000, staff labor costs of $80,000 and employee benefits costs of $30,000. The operation achieved a 25 percent total labor cost in the last quarter. How much revenue did the operation generate in the last quarter?

A) $325,000
B) $520,000
C) $715,000
D) $905,000

Question 22

What is a cost that would be classified as a controllable other expense if a manager created a P&L using the USAR format?

A) Leases
B) Utilities
C) Debt repayments
D) Mortgage payments

Question 23

What is the formula foodservice managers use to calculate a profit margin?

A) Total sales ÷ Net income = Profit margin
B) Prime cost ÷ Net income = Profit margin
C) Net income ÷ Total sales = Profit margin
D) Prime costs ÷ Total sales = Profit margin

Question 24

What is the formula managers use to calculate a percentage variance when comparing last year's profits to this year's profits?

A) (Profits This Year − Profits Last Year) ÷ Profits Last Year = % Variance
B) (Profits Last Year − Profits This Year) ÷ Profits This Year = % Variance
C) (Profits This Year − Profits Last Year) x Profits Last Year = % Variance
D) (Profits Last Year − Profits This Year) x Profits This Year = % Variance

Question 25

Last year an operation had sales of $800,000 and generated a net income of $88,000. What was the operation's profit margin last year?

A) 8%
B) 11%
C) 13%
D) 15%

Question 26

Managerial accounting is the process used to document and analyze the sales, expenses, and profits of a business.

Question 27

A Uniform Systems of Accounts describes the legally required format managers must use when preparing the financial statements of a business.

Question 28

Cost of Sales is the first numerical entry on a P&L prepared using the USAR.

Question 29

Prime costs in a restaurant include its food, beverage and labor costs.

Question 30

The four sections of the USAR are arranged in order on the income statement from most controllable to least controllable.

Question 31

An operation's total revenue minus its cost of sales equals the operation's gross profit.

Question 32

High beverage inventory turnover rates accompanied by frequent product outages may indicate beverage inventory levels are too small.

Question 33

Increases in an operation's revenue should result in an increase in the operation's variable labor cost percentage.

Question 34

When using the USAR, occupancy costs in a food service operation are recorded as a Controllable other expense.

Question 35

An operation's return on sales (ROS) is also referred to as its profit margin.