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CDR Exam > III E Financial management ($$$) > Flashcards

III E Financial management ($$$) Flashcards

0
Q

revenue = …?**

A

revenue = income = sales

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1
Q

a budget is used for what purpose?***

A

CONTROL

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2
Q

operating budget***

A
  • FIRST STEP = FORECAST the SALES/REVENUE/INCOME
  • then budget expenditures r/t the projected level of sales
    (forecast of revenues, expenses, and profit)
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3
Q

cash budget***

A
  • projects REVENUES and EXPENSES, shows INFLOW AND OUTPUT OF CASH
  • PURPOSE: if funds will be AVAILABLE WHEN NEEDED (ex: if its May, cash budget will let you know if you can get something in October)
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4
Q

capital budget***

A
  • EXPENSIVE, LONG-LASTING THINGS, >1 YEAR

- ex: EQUIPMENT, SERVICE, MAINTENANCE CONTRACTS

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5
Q

traditional (incremental) budget***

A

THIS YEAR’S EXPENSES + INFLATION FACTOR (uses existing budget as a base and projects changed in relation to the current budget)

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6
Q

zero-based budget (ZBB)***

A

NOT this year’s expenses; BEGIN AT 0, JUSTIFY EACH EXPENSE

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7
Q

a zero-based budget is ___ oriented***

A

planning

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8
Q

traditional vs. zero-based budget***

A
  • traditional = this year’s expenses + inflation factor

- zero-based = start from 0, justify each expense

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9
Q

fixed budget***

A

prepared at ONE LEVEL OF SALES/REVENUE, NO EXPECTED MAJOR CHANGE IN CUSTOMER COUNT

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10
Q

flexible budget***

A

EXPECTED CHANGE/VARYING LEVELS IN customer COUNT (ex: closing a floor for renovation)

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11
Q

fixed vs. flexible budget***

A
  • fixed = one level of sales, no major change in cust. count

- flexible = expected change in sales, varying customer count

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12
Q

performance budget***

A

details cost to PERFORM AN ACTIVITY (ex: supervising the cafeteria**)

AKA “mini-budget inside the big one”

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13
Q

indirect (fixed) costs***

A

NOT affected by sales volume (number of people served)……required for business to exist

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14
Q

examples of indirect/fixed costs

A

rent, taxes, interest on debt, insurance, depreciation

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15
Q

direct, variable, flexible costs***

A

VARIES DIRECTLY with CHANGES IN SALES/revenue; directly involved with service of customers

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16
Q

examples of direct, variable, flexible costs***

A

china, silver, FOOD, uniforms, laundry, repairs, benefits

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17
Q

semi-variable costs***

A

BOTH a fixed and a variable component; some component remains fixed, no matter the change in volume

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18
Q

example of semi-variable costs***

A

LABOR, maintenance, utilities (i.e. will always have to pay for people to staff, but how much is needed depends on the # of sales)

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19
Q

what type of a cost is food? labor?***

A 
food = direct/variable/flexible
labor = semi-variable
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20
Q

sunk costs

A

ALREADY INCURRED, cannot be recouped by a new decision or alternative (ex: cost of studying a new computer)

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21
Q

differential costs

A

amount of INCREASE or DECREASE in cost when you COMPARE ALTERNATIVE CHOICES

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22
Q

what is resource allocation?

A

placing people/materials/equipment where needed to meet the needs of the operating system

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23
Q

what is CPM?

A

(Connor :D) Critical Path Method- helps to identify the most critical activities, to best allocate limited resources

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24
Q

what is the most readily controlled item?**

A

FOOD COSTS!

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25
Q

what type of menu reduces waste and cost?

A

selective menu

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26
Q

what type of purchasing reduces costs?

A

group buying

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27
Q

EP vs AP***

A

EP = edible portion; AP = as purchased or RAW

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28
Q

EP cost/lb formula***

A

raw purchase cost (AP) / cooked edible weight

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29
Q

are labor costs easily controlled?**

A

less controllable than food costs

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30
Q

operating costs are..?***

A

utilities/ELECTRICITY, laundry, cleaning

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31
Q

cash basis (accounting method)

A

recognizes a transaction at the time the cash is taken in or released

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32
Q

accrual basis (accounting method)

A

recognizes revenues WHEN EARNED and expenses WHEN OCCURRED (regardless of when the cash is received or dispersed)

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33
Q

what is a general ledger?

A

records and reports transactions by ACCOUNT NUMBERS (summary of the month by category i.e. meat, fruit, dairy, etc.)

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34
Q

what is a profit and loss statement (income statement)?**

A

shows INCOME, EXPENSES, AND PROFIT (or loss) over A PERIOD OF TIME

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35
Q

what is a balance sheet?**

A

lists ASSETS (goods and products owned) and LIABILITIES

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36
Q

what are assets?***

A

goods and products owned- CASH, INVENTORY, ACCOUNTS RECEIVABLE (amounts OWED TO YOU)

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37
Q

what are liabilities?***

A

amounts OWED TO OTHERS

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38
Q

assets = ?

A

liabilities + capital (equity) (?????)

39
Q

liquidity ratio vs. net worth ratios

A
  • liquidity = ability to meet SHORT TERM debt

- net worth = ability to meet LONG TERM debt

40
Q

asset management, turnover ratios- what are they?***

A

shows CURRENT EFFECTIVENESS OF INVENTORY CONTROL (are you efficiently using the assets to produce more income?)

41
Q

inventory turnover rate formula***

A

= cost of sales (food cost) / average inventory cost

42
Q

what does an inventory turnover rate measure?***

A

HOW OFTEN an INVENTORY IS CONSUMED & REPLENISHED

43
Q

what is a desirable turnover rate?***

A

2-4 times per month

44
Q

high inventory turnover rate means?

A

limited inventory is on hand

45
Q

low inventory turnover rate means?

A

a lot of money is tied up in the stock

46
Q

formula for food cost**

A

beginning + purchases - ending

47
Q

formula for food cost per meal***

A

food cost per month / # meals per month

48
Q

food cost percentage formula***

A

daily food cost / daily income

49
Q

what does a food cost percentage measure?**

A

what % of the income was SPENT on THE FOOD SOLD

50
Q

meals per labor hour equation**

A

number of meals produced / number of hours worked

51
Q

what is the profit margin?***

A

reflects portion of sales volume remaining after paying ALL expenses

52
Q

profit margin equation*****

A

net profit (profit after ALL expenses have been paid) / sales dollars or revenue

53
Q

cost of sales is..?**

A

WHAT you are selling - cost of RAW FOOD AND BEVERAGE

54
Q

gross profit is..?**

A

profit AFTER deducting RAW FOOD AND BEVERAGE (or cost of sales)

55
Q

net profit is..?***

A

profit shown after ALL expenses have been deduced from sales

56
Q

what is the payback period?

A

how long it will take for an investment to pay back the organization for the investment

57
Q

how to calculate payback period**

A

costs of service / total dollars saved by using the new service = # of time to payback

58
Q

how to calculate budget projections***

A

see III p.25 for an example (makes sense on paper not in writing)

59
Q

what is value analysis?***

A

process of investigating all aspects of service with the goal of DISCOVERING AND ELIMINATING UNNECESSARY COSTS; “ARE YOU SPENDING MONEY WISELY?”

60
Q

what is marketing analysis?

A

IDENTIFYING a need, RECOGNIZING that need, FILLING the need

61
Q

marketing channel

A

exchange of ownership: producer, processor, distributor, supplier, customer

62
Q

first step in the marketing process?***

A

IDENTIFY A NEED NOT BEING FILLED (market niche)

63
Q

what is market segmentation?***

A

DIVIDE market into groups of people WITH SIMILAR PRODUCT NEEDS

64
Q

demographic variables

A

age, gender, race, education, income

65
Q

geographic variables

A

urban, suburban, climate, resources, cultural values

66
Q

psychographic variables***

A

social class, lifestyle (WHAT IS IMPORTANT to them and their mode of living), motive (reason customer makes a purchase)

67
Q

behavioristic variables

A

occasions, loyalty

68
Q

market niche

A

need you are trying to fill

69
Q

positioning statement

A

how you would like the marketplace to view your product

70
Q

what is the target market?***

A

GROUP OF PEOPLE with SIMILAR WANTS or needs w/ potential of purchasing your product

71
Q

what is the product mix?***

A

group of items you will offer

72
Q

marketing mix?*****

A

4 Ps:

1) product
2) place (where)
3) price
4) promotion/publicity (short-term)

73
Q

product mix vs. marketing mix***

A
  • product mix = GROUP OF ITEMS you will offer

- marketing mix = product, place, price, promotion

74
Q

what is a signature brand?***

A

UNIQUE items your business has developed (signature…unique)

75
Q

what is strategic marketing?

A

LONG TERM OVERALL VIEW: selected target market and marketing mix (remember: product, place, price, promotion)

76
Q

social marketing***

A

ADVANCE A SOCIAL CAUSE, IDEA, OR BEHAVIOR; CHANGE the customer (ex: Got Milk? with a famous person)

77
Q

business marketing***

A

filling CUSTOMER’S NEEDS OR DESIRES- GIVE THE CUSTOMER WHAT THEY NEED/WANT (ex: McDonald’s adding salad to the menu)

78
Q

business plan –>

A

see JI III p.27 (top) IDK

79
Q

what is the breakeven point?***

A

point at which INCOME/SALES/REVENUE EXACTLY COVERS the FIXED/VARIABLE COSTS (not losing or making any money)

80
Q

BE (units) formula***

A

fixed costs / (selling price - variable costs)

81
Q

BE (sales/$) formula***

A

fixed costs / [1 - (variable costs / sales)]

82
Q

BE point on a graph***

A

WHERE total cost line crosses REVENUE/SALES line

83
Q

BE point _____ when costs increase***

A

INCREASES

84
Q

factor pricing method is AKA***

A

traditional method, markup method

85
Q

what is mark-up?

A

difference between the cost and the selling price

86
Q

mark-up factor formula***

A

100 / FOOD COST PERCENTAGE (as a number, not decimal)

87
Q

selling price formula***

A

mark-up factor X raw food cost

88
Q

hidden cost for factor pricing method***

A

10% (added to raw food cost, then multiplied by the mark-up factor)

89
Q

what is the prime cost method?***

A

RAW FOOD COST + DIRECT LABOR COST

90
Q

how to calculate prime cost method?

A

1) add food cost and labor cost (=prime cost)
2) add food cost % and labor cost %, divide into 100 to get the markup factor
2) selling price = prime cost X markup factor

(III p.29 for example)

91
Q

what is promotions pricing?***

A

done for a SHORT TIME (sales to increase sales during slow period)

92
Q

what are loss leaders?***

A

items PRICED LOWER to DRAW PEOPLE in the hope that they will PURCHASE OTHER ITEMS AT NORMAL MARKUPS (ex: Payless $5 Dreams)

93
Q

what is cost of profit pricing?***

A

PRICE product to ensure a PREDETERMINED PERCENTAGE OF PROFIT

94
Q

why is cost of profit pricing beneficial?***

A

(remember: ensures a predetermined % of profit) used to GUARANTEE A CERTAIN PROFIT w/ each sale

95
Q

method of cost of profit pricing

A

1) add up all costs as %
2) 100 - all other cost % = food cost
3) selling price = total food cost in $ / desired food cost percentage as a decimal

III p.29 - example

CDR Exam (34 decks)

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