Chapter 8

Controlling Other Expenses

Multiple Choice Exam Questions

1. What are the operating costs that are excluded from an operation’s “Other expenses” cost category?
2. Food and labor
3. Rent and insurance
4. Equipment and repairs
5. Franchisee fees and credit card fees
6. On what financial document will managers report their operations’ controllable and non-controllable other expenses?
7. Balance Sheet
8. Income Statement
9. Statement of Cash Flows
10. Statement of Financial Position
11. What is a cost that would be classified as an “Other expense” in a foodservice operation that features fried chicken on its menu?
12. Salaries
13. Electricity
14. Payroll taxes
15. Chicken quarters
16. A manager must pay a $500 annual fee to the state in order to obtain a license to serve alcohol. What type of “Other expense” is the amount paid for the license?
17. Controllable, fixed
18. Controllable, variable
19. Non-controllable, fixed
20. Non-controllable, variable
21. What is an example of a controllable fixed expense in a foodservice operation that also serves alcoholic beverages?
22. Glassware costs
23. Mortgage payments
24. Annual liquor license fees
25. Trade association membership fees
26. A foodservice manager pays $300 per month for landscaping services. What type of “Other expense” is the amount paid for the landscaping services?
27. Controllable, fixed
28. Controllable, variable
29. Non-controllable, fixed
30. Non-controllable, variable
31. A manager’s restaurant uses paper napkins. What type of “Other expense” is the amount paid for the napkins?
32. Controllable, fixed
33. Controllable, variable
34. Non-controllable, fixed
35. Non-controllable, variable
36. A manager pays a monthly mortgage on a restaurant building. What type of “Other expense” is the amount paid for the mortgage?
37. Controllable, fixed
38. Controllable, variable
39. Non-controllable, fixed
40. Non-controllable, variable
41. A cost that changes in direct relationship to changes in an operation’s sales volume is considered to be a
42. fixed expense.
43. variable expense.
44. controllable expense.
45. non-controllable expense.
46. A manager pays $5,000 per month plus 2% of total monthly sales to the owner of the building that houses the manager’s restaurant. How much will the manager have to pay to the building’s owner in a month in which the total sales for the restaurant are $80,000?
47. $1,600
48. $5,000
49. $6,600
50. $10,000
51. The total dollar amount of an operation’s fixed expenses
52. varies with volume.
53. only varies with changes in the number of guests served.
54. varies with changes in volume and changes in the number of guests served.
55. does not vary with changes in volume or changes in the number of guests served.
56. What is the effect on an operation’s mixed expense when the operation’s sales volume increases?
57. Mixed expense amount increases, mixed expense percentage decreases
58. Mixed expense amount increases, mixed expense percentage increases
59. Mixed expense amount decreases, mixed expense percentage decreases
60. Mixed expense amount decreases, mixed expense percentage increases
61. What is an example of a mixed other expense in a foodservice operation?
62. Payroll taxes
63. Insurance policy premiums
64. Expense of heating and cooling dining rooms
65. Contributions to employee 401(k) plans.
66. What is the formula a manager uses to calculate an “Other expense” cost percentage?
67. Total sales x Other expense = Other expense percentage
68. Total sales ÷ Other expense = Other expense percentage
69. Other expense + Total sales = Other expense percentage
70. Other expense ÷ Total sales = Other expense percentage
71. What will be a manager’s “Other expense” percentage for utilities if sales were $75,000 in a month and utility costs for the month were $6,000?
72. 0.8%
73. 1.25%
74. 8.0%
75. 12.5%
76. What is a manager’s “Other expense” Cost per guest for marketing, if sales in the manager’s operation in a month were $90,000, 3,000 guests were served, and marketing costs for the month were $1,500?
77. $0.30
78. $0.50
79. $3.00
80. $5.00
81. What is the formula managers use to calculate Other expense cost per guest?
82. Other expense x Number of guests served = Other expense cost per guest
83. Other expense ÷ Number of guests served = Other expense cost per guest
84. Number of guests served + Other expense = Other expense cost per guest
85. Number of guests served ÷ Other expense = Other expense cost per guest
86. Monitoring Other expense cost per guest is especially useful when an operation
87. collects revenue on a daily basis.
88. has fixed costs that exceed its variable costs.
89. has variable costs that exceed its fixed costs.
90. does not collect revenue on a daily basis.
91. What will be the effect on an operation’s fixed expense when the operation’s sales volume increases?
92. Fixed expense amount increases, fixed expense percentage increases
93. Fixed expense amount increases, fixed expense percentage decreases
94. Fixed expense amount is unchanged, fixed expense percentage increases
95. Fixed expense amount is unchanged, fixed expense percentage decreases
96. An operation has an expense that is 100% variable. If that operation’s sales volume decreases, the amount spent on this variable expense will
97. increase and the variable expense percentage will increase.
98. decrease and the variable expense percentage will decrease.
99. increase and the variable expense percentage will be unchanged.
100. decrease and the variable expense percentage will be unchanged.
101. What type of “Other expense” is an operation’s usage of kilowatt hours (kWh)?
102. Controllable, fixed
103. Controllable, variable
104. Non-controllable, fixed
105. Non-controllable, variable
106. How frequently should contracts for services such as HVAC maintenance and grounds keeping be put out for bid?
107. Weekly
108. Monthly
109. Quarterly
110. Annually
111. For a foodservice manager who is not the building’s owner, the majority of that manager’s occupancy costs will be
112. fixed and controllable.
113. variable and controllable.
114. fixed and non-controllable.
115. variable and non-controllable.
116. What is an example of an occupancy cost?
117. Cost of food
118. Cost of utilities
119. Cost of interest on debts
120. Cost of grounds maintenance
121. What is the typical range for a foodservice operation’s total “Other expense” costs?
122. Less than 5% of sales volume
123. 5% to 15% of sales volume
124. 25% to 35% of sales volume
125. 45% to 55% of sales volume

True/False Exam Questions

1. Other expenses typically equal less than five percent of a foodservice operation’s total sales volume.
   1. True
   2. False
2. The cost of utilities in a foodservice operation is a non-controllable other expense.
   1. True
   2. False
3. Occupancy costs in a foodservice operation are a non-controllable expense.
   1. True
   2. False
4. When expressed as a percentage of sales, a mixed expense will decrease as sales increases.
   1. True
   2. False
5. A fixed expense percentage in a foodservice operation will decline as sales volume declines.
   1. True
   2. False
6. A variable “Other expense” increases as sales volume increases and decreases as sales volume decreases.
   1. True
   2. False
7. As sales volume increases, an operation’s mixed-expense percentage decreases while the total dollar amount paid for the mixed expense increases.
   1. True
   2. False
8. To calculate their “Other expense” cost percentage and their “Other expense” cost per guest, managers must know their total sales, the amount of the other expense, and the number of guests they have served.
   1. True
   2. False
9. In most cases performing routine maintenance on mechanical equipment prolongs its life but increases its total operational costs.
   1. True
   2. False
10. A kilowatt hour (kWh) is a measure of natural gas usage.
    1. True
    2. False