CRM Financial Management 2

Question 1

A restaurant's prime cost ratio is 68%. If total sales are $50,000, what is the prime cost?

Accepted Answer

$34,000

Answer

Prime cost = 68% × $50,000 = $34,000.

Question 2

Which financial document shows a restaurant's revenue, costs, and profit over a specific time period?

Accepted Answer

Profit and loss statement

Answer

The profit and loss (P&L) statement summarizes revenues and expenses over a defined period.

Question 3

What does a restaurant's 'contribution margin' represent?

Accepted Answer

Revenue minus variable costs

Answer

Contribution margin equals revenue minus variable costs, showing how much covers fixed costs and profit.

Question 4

A restaurant has fixed costs of $20,000/month and a contribution margin ratio of 40%. What is the break-even sales volume?

Accepted Answer

$50,000

Answer

Break-even = Fixed costs ÷ Contribution margin ratio = $20,000 ÷ 0.40 = $50,000.

Question 5

Which metric measures how efficiently a restaurant converts revenue into actual cash?

Accepted Answer

Operating cash flow

Answer

Operating cash flow measures actual cash generated from restaurant operations, separate from accounting profit.

(CRM) Certified Restaurant Manager Practice Test