Deck 18: Labor Cost Considerations

Question 1

Indirect compensation includes free meals, life insurance, and discounts on accommodations.

Answer 1

True

Question 2

Deferred compensation includes travel expenses paid one month after the travel has taken place.

Answer 2

False

Question 3

Labor control attempts to obtain maximum efficiency from all employees without compromising standards of labor performance.

Answer 3

True

Question 4

Increases in sales volume tend to improve labor productivity.

Question 5

The key to successful labor cost control is paying the lowest possible dollar wage.

Question 6

The local minimum wage is an amount set by a group of local employers.

Question 7

Included in the term wages are sick pay and employees' meals.

Question 8

In an establishment with 200 employees, of whom 100 depart and are replaced each year, the labor turnover rate is 50.0%.

Question 9

From the perspective of labor cost control, it is cheaper to produce 30 portions of each of 10 different menu items that it is to produce 300 portions of just one menu item.

Question 10

Labor costs are:

A) fixed;
B) variable;
C) semivariable.

Question 11

If unit sales volume in a restaurant increases, one would normally expect to see labor cost per unit:

A) increase;
B) decrease;
C) remain the same.

Question 12

The relationship between sales volume and labor cost per unit of product is normally:

A) inverse;
B) adverse;
C) perverse.

Question 13

In a nearby restaurant employing 600, an average of 150 per year have departed and been replaced over the last five years. In this establishment, the rate of employee turnover is:

A) 40.0%;
B) 25.0%;
C) the

Question 14

A small food stand in a nearby mall has two employees preparing and serving hotdogs. Each is paid $6.00 per hour. During a recent two-hour period, they prepared and served 120 hotdogs. In the period cited, the labor cost per hotdog served was:

A) $.05;
B) $.10;
C) $.20.

Question 15

The owner of Snooker's Restaurant is contemplating keeping the dining room open for one additional hour each night. She has determined that this would incur additional labor costs of $220. and $20. in additional costs for heat, light, and power. The restaurant's variable rate is .4. What level of dollar sales volume will be required to break even for this additional hour?

A) $240;
B) $400;
C) $600.

Question 16

Charlie Snerdly owns a restaurant that has been opening five days a week for many years. Charlie is now considering opening for a sixth day. To do so would cost an extra $1,200. for labor, and $80. for heat light and power. What dollar sales volume will be required for Charlie's restaurant to break even for this additional day?

A) $1,280;
B) $1,500;
C) the

Question 17

The income statement from a nearby restaurant reveals the following:
Sales $500,000
Fixed costs $150,000
Directly variable costs $200,000
If the restaurant is to earn a profit of $50,000, semivariable costs must be:

A) $150,000;
B) $100,000;
C) $50,000.

Question 18

The costs in a nearby restaurant, expressed as percentages of sales, are as follows:
Fixed costs 30.0%
Directly variable costs 25.0%
If the restaurant is to show an 8% profit, semivariable costs as a percentage of sales must be:

A) 55.0%;
B) 45.0%;
C) 37.0%.

Question 19

Which of the following is NOT one of the determinants of labor cost discussed in the text?

A) depreciation on equipment;
B) sales volume;
C) location.