Domain III: Management of Food and Nutrition Programs and Services: Financial Management Flashcards
The purpose of the budgeting process and fiscal periods is to give managers a basis for _____ in the estimate of future needs
Control
The budget must be ____ and adjustable according to change; usually reviewed monthly
Flexible
An _____ budget is a forecast of revenues, expenses, and profit for a specific period of time
Operating
The first step of developing an operating budget is to create a forecast of ____ or ____ portion
Sales or revenue
The second step of developing an operating budget is to budget ____ (labor, food, operating expenses) related to the projected level of revenue
Expenditures
A ____ budget projects revenue and expenses, showing inflow and output of cash
Cash
The purpose of a cash budget is to determine if ____ will be available when needed
Funds
A _____ budget is used in plant facilities, for equipment, cost of improvements and repairs, expansions, replacements, etc
Capital
The capital budget includes expenditures whose returns are expected to last beyond ___ year
One
A ___ ___ statement (hypothetical) projects expected income, expenditures, and profit
Pro forma
A ____ (incremental, baseline) method to establish line items in a budget uses the existing budget as a base and projects changes for the ensuing year in relation to the current budget
Traditional
A traditional budget usually begins with this year’s expenses plus an ____ factor
Inflation
A traditional budget is ___-oriented
Control
A traditional budget is prepared at one level of ____ or ____
Sales or revenue
A ____ ____ budget begins at 0 and must justify each expense (more planning required)
Zero-based
One example of a zero-based budget is a ___, ___ budgeting system
Planning, programming
With a Planning, Programming Budgeting System, past dollar ____ are NOT the basis of projections
Allocations
A zero-based budget is ____-oriented
Planning
A ____ budget is prepared at one level of sales or revenue (no expected major change in patient or customer count during the year)
Fixed
A ____ budget is adjusted to various levels of operation with varying levels of sales or revenue throughout the year (changes in patient or customer count)
Flexible
A flexible budget might account for something like…
-Closing a floor for renovation
A flexible budget gives a dollar range for ____ to ____ levels of predicted activity
Low to high
A _____ budget details what it costs to perform an activity (how much to supervise the trayline)
Performance
____ (fixed) costs are not affected by sales volume (number of people served) and is not directly evident in day-to-day activities
Indirect
Indirect costs are required for a business to exist even if it produces ____; cannot be readily changed
Nothing
Examples of indirect costs:
-Rent
-Taxes
-Interest on debt
-Insurance
-Depreciation
Indirect costs stay ____ within a range of sales volume
Fixed
_____ is the cost associated with the acquisition and installation of a fixed asset and how they are allocated over the estimated useful life of the asset
Depreciation
____ ____ depreciation gives annual depreciation
Straight line
Formula to calculate straight-line depreciation:
(Value of the equipment (cost) - salvage value) / (# of years of useful life)
______ depreciation is the total depreciation up to a given date, subtracted from the original cost of the item
Accumulated
Accumulated depreciation is included in the ____ assets
Fixed
Direct, variable, and flexible costs vary directly with changes in ____ (revenue); directly involved in service to the customer
Sales
Examples of direct, variable, and flexible costs:
-China
-Silver
-Food
-Uniforms
-Laundry
-Repairs
-Benefits
___-__ costs have both a fixed and a variable component
Semi-variable
With sem-variable costs, a portion of the cost will remain fixed regardless of changes in ___ ___
Sales volume
Examples of semi-variable costs:
-Labor
-Maintenance
-Utilities
Semi-variable costs are divided into fixed and variable components before doing ___-___ analysis
Break-even
_____ costs are already incurred and cannot be recouped by a new decision or alternative
Sunk
An example of a sunk cost is:
The cost involved in studying the merits of a new computer
_____ costs are the amount of increase or decrease in cost when you compare alternative choices
Differential
An example of a differential cost is…
The difference in cost between two meal delivery systems
____ ____ is the efficient allocation of people, materials, and equipment to meet the needs of the operating system (can lead to cost savings)
Resource allocation
The ___ ___ ____ helps plan and control an operation; it identifies the most critical activities in order to best allocate limited resources
Critical Path Method
Food costs are the most readily controlled item, and are subject to the greatest ____ in cost
Fluctuation
____ planning is the most important part of controlling food costs
Menu
The type of service also impact food costs; a ____ menu reduces waste and costs
Selective
____ buying of food reduces food costs
Group
To reduce food costs, there must be receiving control; weight-in and check items against the ____
Invoice
____ and ____ of food should also be tightly controlled in order to reduce food costs
Storage and production
____ portions can be used to control costs and for customer satisfaction; keep records of employee meals
Standard
Labor costs are less ____ than food costs
Controllable
Operating costs usually make up ___-___% of the budget; they include things like utilities, laundry, etc
12-18
____ ____ accounting recognizes a transaction at the time the cash is taken in or released
Cash basis
____ ____ accounting recognizes revenues when earned and expenses when incurred (regardless of when the actual cash is received or dispersed)
Accrual basis
A ____ ____ records and reports transactions categorized by account numbers; includes a summary of all expenses and revenues for the month by category (meat, fruit, dairy)
General ledger
An income statement, profit and loss statement, and revenue and expense statement show ____ results over a period of time (dynamic)
Operating
Income statements, profit and loss statements, and revenue and expense statements present the income (revenue), expenses, and profit over the course of the ____ ____
Budget period
Income statements, profit and loss statements, and revenue and expense statements analyze operational _____
Effectiveness
A ____ ____ shows the financial condition as of a particular date (static); it lists assets and liabilities
Balance sheet
Examples of assets:
-Cash
-Inventory
-Accounts receivable
Accounts receivable is money ____ to you
Owed
Liabilities are moneys you ___ to someone
Owe
Assets are equal to ____ + ____
Liabilities plus capital (equity, owner’s interest)
A balance sheet analyzes operational ____; it is a quick way to view financial condition
Effectiveness
Financial ____ use formulas to analyze an organization’s financial position
Ratios
Formulas use data from ____ ____
Financial statements
Financial formulas compare the ____ with similar ones
Organization
Financial formulas also compare ratios with those ____ or with ____ ratios
Projected; preceding
_____ ratios assess the ability to meet short-term debt (pay bills when due)
Liquidity
Liquidity ratios assess current ____ with current ____ (current: within 12 months)
Assets; liabilities
____ ____ ratios assess the ability to meet long-term debt (solvency)
Net worth
Next worth ratios assess ____ assets and ____ liabilities (debt to asset ratio)
Total; total
_____ ratios (asset management) show current effectiveness of inventory control (answers the question of whether you are efficiently using the assets to produce more income?)
Turnover
The inventory turnover rate is equal to the…
Cost of sales (food cost) / average inventory cost
Cost of goods sold is a measure of how often inventory is ____ and ____
Consumed and replenished
A turnover rate of ____-____ times per month is often desireable
2-4
A high turnover rate indicates a ____ inventory is being kept
Limited
A low turnover rate indicates that large amounts of money are tied up in ____
Stock
The daily food cost report (food cost percentage) indicates what percentage of the income was spent on ____ sold
Food
The food cost percentage is equal to…
Daily food cost / daily income
The food cost per meal is equal to…
Food cost per month / # meals per month
Food cost is equal to food ____ plus foods removed from ____
Purchased; inventory
To determine food cost, you need to know…
-# meals served
-Food purchases
-Foods removed from inventory
The ____ ____ is the most commonly used assessment of overall financial efficiency
Profit margin
The profit margin reflects the portion of ____ ____ remaining after paying all expenses
Sales volume
Formula for determining the profit margin:
Net profit (profit after all expenses have been paid) / sales dollars (revenue)
____ includes income from patients, cafeteria sales, and catering sales
Revenue
The cost of ____ is the cost of raw food and beverages sold
Sales
The ____ profit is the profit shown after deducting raw food and beverage costs (cost of sales) from sales (revenue)
Gross
The ____ profit is the profit shown after ALL expenses have been deducted from sales
Net
A ____ ____ determines the length of time it will take for the cash inflows from a project to equal the initial cash outlay (how much time it will take for an investment to pay back the organization for the investment)
Payback period
To determine the payback period…
-Add up the costs of the service
-Add up the costs saved by using the new service
-Divide the costs of the service by dollars saved
