Certified Dietary Manager Financial Management and Budgeting Questions and Answers 1 — Questions and Answers
Question 1: A dietary department's monthly profit and loss (P&L) statement shows total revenue of $95,000. The cost of food was $35,000, labor costs were $48,000, and other operating expenses totaled $7,000. What was the department's net profit or loss for the month?
- A $12,000 loss
- A $5,000 profit (Correct answer)
- A $13,000 loss
- A $47,000 profit
Correct answer: A $5,000 profit
To determine the net profit or loss, first sum all expenses (Food: $35,000 + Labor: $48,000 + Other: $7,000 = $90,000). Then, subtract the total expenses from the total revenue ($95,000 - $90,000 = $5,000). Since the result is a positive number, it represents a net profit.
Question 2: A dietary manager is requesting funds to purchase a new blast chiller that costs $18,000 and is expected to last for 10 years. This type of large, long-term acquisition would be planned for in which type of budget?
- Operating budget
- Flexible budget
- Master budget
- Capital budget (Correct answer)
Correct answer: Capital budget
A capital budget is used for planning major, long-term investments and large equipment purchases, such as a blast chiller. An operating budget, in contrast, covers the day-to-day expenses required to run the department, like food, supplies, and labor.
Question 3: During one 40-hour work week, a long-term care facility produced 5,600 meals. The dietary staff worked a total of 700 hours during that week. What are the meals per labor hour (MPLH) for this period?
- 8.0 (Correct answer)
- 14.0
- 0.125
- 12.5
Correct answer: 8.0
Meals per labor hour (MPLH) is a key productivity metric calculated by dividing the total number of meals produced by the total number of paid labor hours. In this case: 5,600 meals / 700 labor hours = 8.0 MPLH.
Question 4: A dietary manager uses the 'First-In, First-Out' (FIFO) method for inventory management and valuation. This method assumes that when an item is used, the cost assigned to it is based on the:
- most recently purchased units.
- oldest units in inventory. (Correct answer)
- average cost of all similar units.
- units with the highest purchase price.
Correct answer: oldest units in inventory.
The FIFO method assumes that the first items purchased are the first ones to be used ('First-In, First-Out'). Therefore, the cost of goods sold is based on the cost of the oldest inventory, and the items remaining in ending inventory are valued at the cost of the most recently purchased items.
Question 5: A skilled nursing facility had a beginning food inventory of $22,000 on the first of the month. During the month, they purchased $40,000 worth of food. The ending inventory on the last day of the month was $18,000. If the total revenue for the month was $110,000, what was the food cost percentage?
- 40.0% (Correct answer)
- 36.4%
- 54.5%
- 38.2%
Correct answer: 40.0%
First, calculate the Cost of Goods Sold (COGS): Beginning Inventory ($22,000) + Purchases ($40,000) - Ending Inventory ($18,000) = $44,000. Then, calculate the food cost percentage: (COGS / Revenue) * 100 = ($44,000 / $110,000) * 100 = 40.0%.
Question 6: Which of the following is a primary strategy for effectively controlling labor costs in a foodservice department?
- Purchasing only the highest quality ingredients.
- Offering an extensive and complex menu.
- Improving efficiency through better workflow and staff training. (Correct answer)
- Scheduling all staff for 8-hour shifts regardless of workload.
Correct answer: Improving efficiency through better workflow and staff training.
Improving efficiency is a direct way to control labor costs. Proper training on tasks and portion control, combined with an efficient kitchen layout and workflow, allows staff to be more productive, reducing the number of labor hours needed to produce meals.
Certified Dietary Manager Financial Management and Budgeting Questions and Answers 1
A dietary department's monthly profit and loss (P&L) statement shows total revenue of $95,000.
The cost of food was $35,000, labor costs were $48,000, and other operating expenses totaled $7,000.
What was the department's net profit or loss for the month?