chapter 4

A manager sets a profit target of $5,000 per quarter. This operational goal is the

benchmark

Managers use historical data because

knowing what has happened in the past helps them to predict future revenues

Managers sometimes use a technique where sales information from the previous two or three recent weeks or months is averaged together. This technique is known as

moving average.

An operation's food cost is forecast by

multiplying the sales forecast by the food cost percentage.

The formula for profit per guest served would be:

profit / number of guests served = profit per guest served

A budget that is prepared for one year or less is known as a(n)

short-range budget.

The key to accurate cost forecasting is

Historical data

How does the collection of historical sales data assit with cost control in the present?

Historical proportions of cost to revenue assist in assessing current expenditures

When making a forecast, where can managers find valuable historical data?

Operational records

Who reviews and approves the capital budget for an operation?

Owners

An annual budget

An annual budget

Income statements report the

actual amount of revenue, expenses, and profits for a given period of time.

The money, property, and other valuables that collectively represent the wealth of an individual or business are known as

capital

Money spent on an item that costs more than $5,000 and is expected to be useful for more than one year is known as a

capital expenditure

An example of a revenue source forecast for a large full-service restaurant would be a specific forecast for

catering sales

Sales forecasts are usually based on the number of

customers and average sales per customer.

A restaurant manager keeps careful records showing recording separate sales totals for each day for breakfast, lunch, and dinner. This is an example of

day part sales

The key to forecasting food cost is to know an operation's

desired food cost percentage.

Prime costs are defined as

food and labor costs

The first step in preparing an operating budget is to

gather prior period budget information.

Operating budgets are prepared to

help managers plan for the financial activities taking place in their facility.

To improve forecasting accuracy, effective managers should always consider

historical sales trends.

The purpose of conducting a financial history analysis is to

improve planning and forecasting of future business

A measure that indicates what a labor cost should be is known as a

labor standard

A projected financial plan for a specific period of time is known as a(n)

operating budget.