Deck 10: Control: Analysis, Corrective Action,and Evaluation

Question 1

Which of the following sources of information is the least reliable basis for developing cost standards for a food and beverage operation?

A) industry averages
B) past financial statements
C) operating budgets
D) in­house standard costs

Answer 1

A

Question 2

Computer technology helps managers in their control efforts by:

A) enabling them to produce timely computer­generated reports.
B) taking over decision­making responsibilities from them.
C) helping them "crunch the numbers."
D) enabling them to produce timely computer­generated reports and helping them "crunch the numbers."

Answer 2

D

Question 3

When evaluating the effectiveness of actions taken to correct a cost control problem, it is important that managers:

A) do not evaluate too soon after taking corrective action.
B) choose an appropriate time frame for the evaluation.
C) determine whether another part of the control system has been negatively affected by the corrective action taken.
D) all of the above

Answer 3

D

Question 4

Managers at the ABC Restaurant have uncovered a problem: food costs have been too high for two months in a row. The restaurant's managers are trying to decide who should be given the responsibility for taking corrective action. One question the managers should ask themselves before assigning responsibility is:

A) How important is the problem?
B) How specialized is the problem?
C) Who is responsible for the area of concern?
D) All of the above

Question 5

For the previous month, actual food costs exceeded standard food costs at Buddy's Bar & Grill. Which of the following could have caused the variance?

A) a significant change in the sales mix, with guests ordering menu items having high contribution margins
B) smaller portion sizes prepared by food production staff
C) food production staff using higher quality ingredients than called for by standard recipes
D) price cuts by suppliers during the month that weren't reflected in the selling prices of affected menu items

Question 6

Last month at Emil's Italian Restaurant, actual food costs fell below standard food costs. Which of the following could be the reason?

A) failure to collect all revenue due
B) food production staff substituting lower quality ingredients than called for by standard recipes
C) larger portion sizes prepared by food production staff
D) higher prices charged by suppliers during the month that weren't reflected in the selling prices of affected menu items

Question 7

Year after year, the As­You­Like­It Bistro handles a large volume of business at lunch. The manager attributes the operation's success to radical menu changes every three months. Many of the new menu items result from suggestions made by guests. Which of the following sources of information offers the manager the most reliable basis for developing cost standards?

A) industry averages
B) past financial statements
C) operating budgets
D) in­house standard costs

Question 8

The easiest­to­use source of information for standard (expected) food and beverage costs is:

A) industry averages.
B) past financial statements.
C) operating budgets.
D) in­house standard costs.

Question 9

When actual costs vary from standard costs, corrective action:

A) may be necessary.
B) is always necessary.
C) is necessary only if the variance exceeds 5 percent.
D) is necessary only if the variance exceeds $3,000.

Question 10

The management team at the Four Corners Restaurant has agreed that only cost variances in excess of $1,000 a month would be analyzed and corrected. Given the following information, which segment of the operation signals the need for analysis and corrective action? $$\begin{array}{ l c c } &\text { July Revenue}&\text { Cost Variance }\\\text { Breakfast } & \$ 12,000 & 7 \% \\\text { Lunch } & \$ 35,000 & 4 \% \\\text { Dinner } & \$ 85,000 & 1 \% \\\text { Beverage Operation } & \$ 45,000 & 2 \%\end{array}$$

A) breakfast
B) lunch
C) dinner
D) beverage operation