CDM CDM Inventory, Costing & Business Operations 2 — Questions and Answers
Question 1: Which factor most directly affects the shelf life of finished doughnuts in a retail display case?
- Humidity and temperature of the display environment (Correct answer)
- The color of the display case lighting
- The number of doughnuts displayed at once
- The brand of frying oil used
Correct answer: Humidity and temperature of the display environment
High humidity causes glazes to dissolve and dough to become soggy, while improper temperature accelerates staling and microbial growth.
Question 2: What is 'contribution margin' in the context of doughnut pricing?
- Selling price minus variable ingredient and production costs (Correct answer)
- Total sales minus total overhead
- The profit earned on bulk wholesale orders
- The discount offered to loyalty customers
Correct answer: Selling price minus variable ingredient and production costs
Contribution margin is the amount each unit sale contributes toward fixed costs and profit after subtracting variable costs.
Question 3: When ordering ingredients for a busy holiday weekend, which approach best minimizes waste while preventing stockouts?
- Order based on sales history from the same period in prior years plus a safety buffer (Correct answer)
- Order the same amount as the previous week
- Order the maximum storage capacity allows
- Order only what is currently in stock
Correct answer: Order based on sales history from the same period in prior years plus a safety buffer
Historical sales data provides the most reliable forecast for seasonal demand, and a safety buffer accounts for unexpected demand spikes.
Question 4: What is the main reason bakeries track 'waste' separately from 'usage' in inventory records?
- To identify inefficiencies and reduce unnecessary ingredient loss (Correct answer)
- To satisfy tax reporting requirements
- To calculate employee bonuses
- To determine marketing spend
Correct answer: To identify inefficiencies and reduce unnecessary ingredient loss
Tracking waste separately allows management to pinpoint where ingredients are being lost unnecessarily and implement corrective measures to improve profitability.
Question 5: In bakery cost accounting, what does 'overhead' typically include?
- Rent, utilities, equipment depreciation, and insurance (Correct answer)
- Flour, eggs, oil, and sugar costs
- Employee wages only
- Packaging and delivery costs only
Correct answer: Rent, utilities, equipment depreciation, and insurance
Overhead comprises all fixed and semi-fixed indirect costs—such as rent, utilities, and depreciation—that are not directly tied to a specific product batch.
Question 6: Why is it important for a doughnut shop to track sell-through rates for each variety?
- To identify slow-selling items and adjust production quantities to reduce end-of-day waste (Correct answer)
- To determine how many employees are needed each shift
- To set the temperature of the fryer
- To calculate frying oil usage
Correct answer: To identify slow-selling items and adjust production quantities to reduce end-of-day waste
Sell-through rate data shows which varieties sell out quickly and which are left over, allowing production planning to align output with actual demand.
CDM CDM Inventory, Costing & Business Operations 2
Which factor most directly affects the shelf life of finished doughnuts in a retail display case?