Chapter 1

Managing Revenue and Expense

Multiple Choice Exam Questions

1. When significant variations from planned results occur foodservice managers must
2. determine the cause, identify the problem, and take corrective action.
3. take corrective action, determine the cause, and identify the problem.
4. identify the problem, take corrective action, and determine the cause.
5. identify the problem, determine the cause, and take corrective action.
6. Professional foodservice managers are different from many other managers who manufacture products because foodservice managers
7. supervise staff.
8. purchase raw ingredients.
9. have contact with the ultimate consumer.
10. are responsible for achieving organizational goals.
11. An operation’s expenses are the
12. number of guests it serves.
13. sales dollars generated by the business.
14. dollars that remain after all costs have been paid.
15. costs of the items required to operate the business.
16. Management’s view of the proper amount of expense required to generate a given level of sales is referred to as
17. total cost.
18. prime cost.
19. ideal expense.
20. cost of goods sold.
21. Complete the formula: Revenue - Desired Profit =
22. Food Cost
23. Cost of Sales
24. Ideal Expense
25. Other Expense
26. What is the first step in the Five-step management process?
27. Controlling
28. Planning
29. Directing
30. Organizing
31. Which is a major foodservice expense category all managers must learn to control?
32. Taxes
33. Revenue
34. Labor costs
35. Union costs
36. What is an expense that would be included in an operation’s cost of food?
37. Linen
38. Coffee
39. Gas for a range
40. Refrigerator repair

Questions 9, 10, 11, 12, and 13 utilize the following information:

A simplified income statement for The Tampopo Noodle House is shown below:

1. What is the food and beverage cost percentage achieved by The Tampopo Noodle House?
2. 22.9%
3. 27.5%
4. 37.5%
5. 42.9%
6. What is the Total Expense amount for The Tampopo Noodle House?
7. $600,000
8. $650,000
9. $700,000
10. $750,000
11. What is the Profit achieved by The Tampopo Noodle House?
12. $50,000
13. $75,000
14. $100,000
15. $125,000
16. What is the profit percentage achieved by The Tampopo Noodle House?
17. 6.25%
18. 12.50%
19. 37.50%
20. 50.25%
21. If the desired profit for The Tampopo Noodle House was 15% of sales, what amount of profit should it have achieved on revenue of $800,000?
22. $100,000
23. $120,000
24. $140,000
25. $160,000
26. A manager generated a food and beverage cost of $1,575 in one week, and achieved a 28% food and beverage cost percentage in that week. What is the amount of food and beverage revenue the manager achieved in the week?
27. $5,080
28. $5,430
29. $5,625
30. $6,055
31. What is a term that means the same thing as a foodservice operation’s revenues?
32. The sales dollars the operation achieves
33. The amount of profit the operation achieves
34. The cost of all the items required to operate the business
35. The dollars that remain after all the operation’s expenses have been paid
36. In what cost category do managers record nonalcoholic beverage expenses?
37. Revenue
38. Food cost
39. Beverage cost
40. Other expenses
41. What is the formula managers use to calculate a foodservice operation’s profits?
42. Revenue – Expense = Profits
43. Revenue + Expenses = Profits
44. Sales + Food cost - Labor cost = Profits
45. Sales + Food cost + Labor cost = Profits
46. What is the formula managers used to calculate a foodservice operation’s Total Expense Percentage?
47. Labor Cost ÷ Revenue = Total Expense %
48. Total Expense ÷ Profit = Total Expense %
49. Total Expense ÷ Revenue = Total Expense %
50. Total Expense ÷ Other expenses = Total Expense %
51. Last month a manager’s food expense equaled $30,000. Labor expense for the month equaled $26,000, and other expenses equaled $12,000. Revenue for the month was $85,000. What was this manager’s total expense percentage?
    1. 40%
    2. 45%
    3. 80%
    4. 85%
52. A manager creates a 6-month staff salary budget. How much of the salary budget can this manager spend each month and still stay within the budget?
53. 15.50%
54. 16.67%
55. 17.50%
56. 18.67%
57. What is the effect on an operation if its manager is able to increase the number of guests served or increase the amount each guest buys?
58. Revenue will decrease and expenses will decrease
59. Revenue will decrease and expenses will increase
60. Revenue will increase and expenses will decrease
61. Revenue will increase and expenses will increase
62. What is the name for a forecast or estimate of future operating revenue, expense and profit?
63. P&L
64. Budget
65. Income statement
66. Expense category
67. What is the formula used to calculate a Food Cost Percentage?
68. Profit ÷ Revenue = Food Cost %
69. Food Cost ÷ Food Sales = Food Cost %
70. Total Expense ÷ Revenue = Food Cost %
71. Labor Expense ÷ Food Sales = Food Cost %
72. To make all of their budget periods equal, some foodservice managers create budgets consisting of
73. 7 days.
74. 21 days.
75. 28 days.
76. 30 days.
77. What is the purpose of the Uniform System of Accounts for Restaurants (USAR)?
78. To reduce expenses
79. To improve revenue
80. To increase operational profits
81. To report financial results clearly

True/False Exam Questions

1. Ideal expense in a foodservice operation is management’s view of the proper amount of expense needed to produce a specific amount of sales.
2. True
3. False
4. A foodservice operation’s revenue will vary with both the number of guests visiting the business and the amount of money spent by each guest.
5. True
6. False
7. The budget shows the actual revenue, expense, and profit of an operation.
8. True
9. False
10. The sign of a good foodservice manager is that his or her actual costs are consistently lower than the amounts indicated in their budgets.
11. True
12. False
13. The three ways to write a percent are: common, fraction, and decimal.
14. True
15. False
16. A manager has food sales of $40,000 and food expenses of $10,000 in an accounting period. This manager achieved a food cost of 40% for the period.
17. True
18. False
19. If a budget was accurate, and the foodservice operator is within reasonable limits of the budget he or she is said to be “in line” with the budget.
20. True
21. False
22. The use of the Uniform System of Accounts for Restaurants (USAR) is mandatory when reporting the financial results of a food service operation.
23. True
24. False
25. When calculating a fraction form percentage, the “whole” is the numerator and the “part” is the denominator.
26. True
27. False
28. Foodservice managers most often face a fewer variety of challenges in their jobs than do managers of manufacturing operations.
29. True
30. False