CCA CCA Financial Management & Budgeting 2 — Questions and Answers
Question 1: Labor cost percentage is typically expressed as a percentage of:
- Total food cost
- Total revenue (Correct answer)
- Number of employees
- Payroll tax liabilities
Correct answer: Total revenue
Labor cost percentage is calculated by dividing total labor costs by total revenue and multiplying by 100.
Question 2: Which financial document summarizes assets, liabilities, and equity at a specific point in time?
- Income statement
- Cash flow statement
- Balance sheet (Correct answer)
- Budget variance report
Correct answer: Balance sheet
The balance sheet presents a snapshot of assets, liabilities, and owner's equity at a specific date.
Question 3: What is the primary purpose of a food cost variance report?
- To schedule employee shifts
- To compare actual food cost to budgeted food cost (Correct answer)
- To track customer satisfaction scores
- To project next quarter's revenue
Correct answer: To compare actual food cost to budgeted food cost
A food cost variance report identifies the difference between actual and budgeted food costs so management can investigate discrepancies.
Question 4: A CCA wants to reduce prime cost. Prime cost is the sum of:
- Food cost plus beverage cost
- Food cost plus labor cost (Correct answer)
- Labor cost plus overhead
- Food cost plus utilities
Correct answer: Food cost plus labor cost
Prime cost equals total food cost plus total labor cost and is typically the largest controllable expense in foodservice.
Question 5: An accounts payable aging report helps a culinary administrator:
- Track overdue payments owed to vendors (Correct answer)
- Monitor employee overtime hours
- Calculate daily food cost
- Schedule equipment maintenance
Correct answer: Track overdue payments owed to vendors
Accounts payable aging categorizes outstanding vendor invoices by how long they have been unpaid, helping prioritize payments.
Question 6: Depreciation of kitchen equipment is recorded because:
- It reduces taxable income and reflects asset value decline over time (Correct answer)
- It represents cash paid to vendors for repairs
- It increases the value of fixed assets on the balance sheet
- It tracks employee training costs
Correct answer: It reduces taxable income and reflects asset value decline over time
Depreciation allocates the cost of an asset over its useful life and reduces taxable income while reflecting the asset's declining value.
CCA CCA Financial Management & Budgeting 2
Labor cost percentage is typically expressed as a percentage of: