Inventory Management Chaptr 8

Question 1

What is the importance of monitoring a foodservice operation?

Answer 1

To assess monthly performance.

Question 2

How do you calculate the cost of food consumed?

Answer 2

By determining the value of the closing inventory and subtracting it from the value of total available. N

Question 3

What is the formula for calculating food cost percentage?

Answer 3

food cost / food sales * 100

Question 4

What is the purpose of taking physical inventory?

Answer 4

To determine the actual cost of the foods and beverages used during the month.

Question 5

What is the difference between book inventory and actual inventory?

Answer 5

Book inventory is a calculated figure, while actual inventory is the real count of items on hand.

Question 6

What are the methods for assigning values to inventory units?

Answer 6

• Actual purchase price method
• First-in, first-out method
• Weighted-average purchase price method
• Latest purchase price method
• Last-in, first-out method

Question 7

What does the weighted-average purchase price method involve?

Answer 7

Multiplying the number of units by their specific purchase prices, summing these values, and dividing by the total number of units.

Question 8

What is the latest purchase price method?

Answer 8

It uses the most recent price paid for goods purchased.

Question 9

What is the last-in, first-out method used for?

Answer 9

To minimize profits on financial statements for tax purposes.

Question 10

How is the monthly food cost determined?

Answer 10

By adding opening inventory and purchases, then subtracting closing inventory.

Question 11

What adjustments must be made to the cost of food issued?

Answer 11

• Transfers
• Steward sales
• Gratis to bars
• Promotion expense

Question 12

What should be subtracted from the cost of food consumed to determine the cost of food sold?

Answer 12

The total cost of employees’ meals.

Question 13

What happens if the cost percent for the current month is significantly different from recent months?

Answer 13

Management will want to identify the reasons for the change.

Question 14

What are the two important criteria that monthly food cost reports fail to meet?

Answer 14

• Frequency
• Timeliness

Monthly reports are often not timely enough for effective monitoring of foodservice operations.

Question 15

Why are monthly reports considered not timely for foodservice operations?

Answer 15

They do not become available until it is too late to determine the cause(s) of unacceptable results.

Timely information is crucial for identifying problems and taking corrective actions.

Question 16

What is the frequency of reporting that many foodservice managers believe is necessary?

Answer 16

Daily or weekly reports

This helps in making corrections during the current period.

Question 17

What problems can arise from storing excessive quantities of food?

Answer 17

• Excessive food costs due to spoilage
• Excessive amounts of cash tied up in inventory
• Excessive labor costs to receive and store foods
• Excessive space required for storage
• Unwarranted opportunities for theft

Proper inventory management is essential to avoid these issues.

Question 18

What factors influence the amount of food to be purchased in a foodservice operation?

Answer 18

• Menu
• Size of the operation
• Amount of storage space
• Sales volume
• Financial health

Larger establishments typically require more storage and larger quantities of food.

Question 19

What is inventory turnover?

Answer 19

The rate at which inventory is consumed and replenished during an accounting period.

It’s a key metric for evaluating food inventory adequacy.

Question 20

How is the inventory turnover rate calculated for an establishment that orders biweekly?

Answer 20

12 x 2 = 24

This means the inventory would ideally turn over 24 times in a year.

Question 21

What is a common practice that can distort average inventory figures?

Answer 21

Stopping most purchasing to bring overall inventory value down before the end of the month.

This can lead to discrepancies in inventory values.

Question 22

What does software in foodservice management typically calculate?

Answer 22

• Cost of food issued
• Cost of food consumed
• Cost of food sold

It also produces comparative reports for different periods.

Question 23

What are the two basic components of daily food cost?

Answer 23

• Directs received on that day
• Value of stores issued on a given day

These components are essential for accurate daily food cost calculations.

Question 24

How is the daily food cost percentage calculated?

Answer 24

Daily sales figure divided by daily food cost.

This helps monitor food cost efficiency.

Question 25

Why is it important to compare book and actual inventory values?

Answer 25

To assess the effectiveness of receiving, storing, and issuing procedures. ## Footnote Significant differences indicate that control procedures need investigation.

Question 26

Steward sales

Answer 26

When employees are allowed to purchase food at cost and take it from the premises for their own personal use.

Question 27

Gratis to bar

Answer 27

This is hot and cold hors d’oeuvres that are given free to customers at the bar produced by kitchen staff.

Question 28

Promotion expenses

Answer 28

In many large hotels managers entertain potential guests for large groups

Question 29

Inventory turnover Average turnover

Answer 29

Question 30

physical inventory

Answer 30

requires counting the actual number of units on hand of each item in stock and recording that number in an appropriate place.

Question 31

Closing inventory

Answer 31

the total value of inventory items that have remained unsold at the end of any given accounting period

Question 32

The average sales value method

Answer 32

The average sales value method eliminates daily sales analysis and calculations.