Chapter 2

b. labor hours per day

1. which of the following is a labor cost forecasting method a. sales forecast b. labor hours per day c. percentage of sales d. break-even point

c. operating budget

2. which of the following is a long-term budget? a. monthly labor budget b. weekly food cost budget c. operating budget d. monthly marketing budget

a. prime cost

3. generally, what is the highest expense in restaurant and foodservice operations? a. prime cost b. beverage cost c. linen cost d. wage cost

d. $36.05

4. calculate the average check per customer if an operation has weekly sales of $9,300 and a weekly customer count of 258. a. $25.80 b. $35.75 c. $27.74 d. $36.05

b. $20.39

5. at a local bistro, total fixed costs for June were $176,432. in that month, 8,652 covers were served. what was the fixed cost per cover for June? a. $17.64 b. $20.39 c. $23.90 d. $26.38

b. 35%

Revenues- $800,000; 100% food and bev- $300,000; 37.5% labor- $350,000; 43.7% other- $50,000; 6.25 total expense- $700,000; 87.5% profit- $100,000; 12.5% 10. if the budget for food and bev cost drops to $280,000 and the budget for the total revenue remains at $800,000, what is the new food and bev cost as percentage of sales a. 32% b. 35% c. 37% d. 39%

c. $650,000

Revenues- $800,000; 100% food and bev- $300,000; 37.5% labor- $350,000; 43.7% other- $50,000; 6.25 total expense- $700,000; 87.5% profit- $100,000; 12.5% 6. how much is the prime cost? a. $300,000 b. $400,000 c. $650,000 d. $750,000

c. $80,000

Revenues- $800,000; 100% food and bev- $300,000; 37.5% labor- $350,000; 43.7% other- $50,000; 6.25 total expense- $700,000; 87.5% profit- $100,000; 12.5% 7. if the other cost category increases by 40%, how much would profits be, assuming that all other items do no change? a. $60,000 b. $70,000 c. $80,000 d. $140,000

c. $680,000

Revenues- $800,000; 100% food and bev- $300,000; 37.5% labor- $350,000; 43.7% other- $50,000; 6.25 total expense- $700,000; 87.5% profit- $100,000; 12.5% 8. if the desired profit is 15%, what is the ideal total expense? a. $100,000 b. $120,000 c. $680,000 d. $700,000

d. $106,500

Revenues- $800,000; 100% food and bev- $300,000; 37.5% labor- $350,000; 43.7% other- $50,000; 6.25 total expense- $700,000; 87.5% profit- $100,000; 12.5% 9. if revenues are expected to increase by 3% and total expenses by 2.5%, what is the budgeted profit for the next year? a. $75,500 b. $97,500 c. $103,000 d. $106,500

long-term budget

a budget from one year to five years in the future

short-term budget

a budget planned for a week, a month, or a quarter

capital expenditure budget

a budget that allows an establishment to plan for the replacement of high cost equipment that wears out, and to purchase new types of equipment that may come on the market

fixed budget

a budget that is based on a certain level of sales revenue; expense estimates for food, labor, and other costs are then calculated based on that level of sales

flexible budget

a budget that is based on several possible levels of sales activity, also known as a variable budget

income statement

a document that reports an operation's sales, expenses, and profits or losses for a period of time, such as a month, a quarter, or a year

operating budget

a formal one-year operating plan to achieve the financial goals of an organization

simple markup method

a markup method based on expenses being increased by a predetermined amount, normally a percentage of the previous year's expense

percentage of sales method

a method that involves estimating expenses for a future period as a percentage of the sales forecast

budget

a plan that indicates an operation's financial objectives or financial standards

shrinkage

decrease in the weight of purchased meat because of cooking or trimming

forecasting

making future predictions about the budget based on current situations and trends

return of investment (ROI)

profit resulting from specific investments made in an operation

cost of sales

the cost of food and beverage products to a given operation

variance

the difference between actual results (i.e. sales) and targeted or budgeted results

break-even point

the minimum amount of sales an establishment must generate to cover all costs

utilization factor

the percentage of an amount of food item served to a guest

sales forecast

the process of using historical information and knowledge of external factors to predict future sales

controllable profit

the profit amount that reflects only those line items over which a manager has influence or control

budgeting process

the way managers go about developing a budget, which is a process of both planning and control