CFSP Purchasing and Inventory 3 — Questions and Answers
Question 1: Which inventory valuation method assumes the most recently purchased items are sold first?
- FIFO
- LIFO (Correct answer)
- Weighted average
- Specific identification
Correct answer: LIFO
LIFO (Last In, First Out) assumes the newest inventory is used first, which affects reported cost of goods sold.
Question 2: An operation's average inventory is $12,000 and annual COGS is $144,000. What is the inventory turnover rate?
- 6 times per year
- 8 times per year
- 12 times per year (Correct answer)
- 18 times per year
Correct answer: 12 times per year
Inventory turnover = COGS ÷ Average inventory = $144,000 ÷ $12,000 = 12 times per year.
Question 3: Which of the following is a key advantage of using a group purchasing organization (GPO)?
- Greater flexibility to change product specifications
- Lower prices through combined buying volume (Correct answer)
- Faster delivery times from local distributors
- Elimination of the need for purchase orders
Correct answer: Lower prices through combined buying volume
GPOs leverage the collective purchasing power of many members to negotiate lower prices from suppliers.
Question 4: Fresh whole chickens delivered to a foodservice operation should be received at or below which internal temperature?
- 32°F (0°C)
- 40°F (4°C) (Correct answer)
- 41°F (5°C)
- 45°F (7°C)
Correct answer: 40°F (4°C)
Poultry must be received at 40°F (4°C) or below per FDA Food Code requirements to prevent pathogen growth.
Question 5: What does 'economic order quantity' (EOQ) help a foodservice manager determine?
- The ideal selling price for menu items
- The optimal order size that minimizes total ordering and holding costs (Correct answer)
- The maximum number of vendors to use for a single product
- The correct receiving temperature for perishable goods
Correct answer: The optimal order size that minimizes total ordering and holding costs
EOQ calculates the order size that balances ordering costs against inventory carrying costs to minimize total expense.
Question 6: Which practice helps prevent theft during the receiving process?
- Allowing the delivery driver to place items directly into storage
- Having the same employee both order and receive all products
- Using a blind receiving system where the receiver counts items independently (Correct answer)
- Accepting deliveries only during closing hours
Correct answer: Using a blind receiving system where the receiver counts items independently
Blind receiving requires the receiver to count and weigh items independently without seeing the invoice, reducing collusion and theft.
Question 7: A foodservice manager discovers that actual food cost is consistently higher than the standard food cost percentage. This variance MOST likely indicates:
- Menu prices are set too high
- Purchasing prices are below market average
- Excessive waste, over-portioning, or theft (Correct answer)
- Inventory counts are being performed too frequently
Correct answer: Excessive waste, over-portioning, or theft
A positive variance between actual and standard food cost typically signals waste, portioning errors, spoilage, or theft.
CFSP Purchasing and Inventory 3
Which inventory valuation method assumes the most recently purchased items are sold first?