CEH Budgeting and Inventory Control 2 — Questions and Answers
Question 1: Which budgeting method requires every expense to be justified from zero each budget period?
- Incremental budgeting
- Zero-based budgeting (Correct answer)
- Rolling budget
- Capital budgeting
Correct answer: Zero-based budgeting
Zero-based budgeting starts from zero and requires justification for every line item rather than basing it on prior-year spending.
Question 2: A hotel's housekeeping department spends $12,000 on linens annually. If the property has 200 rooms, what is the annual linen cost per room?
- $50
- $60 (Correct answer)
- $70
- $80
Correct answer: $60
$12,000 divided by 200 rooms equals $60 per room annually.
Question 3: What does the term 'par stock' refer to in housekeeping inventory management?
- The maximum stock level before ordering stops
- The minimum quantity needed to meet operational needs between deliveries (Correct answer)
- The amount discarded due to wear and tear
- The stock held in off-site storage
Correct answer: The minimum quantity needed to meet operational needs between deliveries
Par stock is the standard quantity of items needed to support daily operations until the next scheduled delivery.
Question 4: Which cost is BEST classified as a fixed cost in a housekeeping department budget?
- Guest amenity supplies
- Overtime labor
- Department supervisor salary (Correct answer)
- Cleaning chemical usage
Correct answer: Department supervisor salary
A supervisor's salary remains constant regardless of occupancy levels, making it a fixed cost.
Question 5: An executive housekeeper notices actual supply costs are 15% above budget. What is the FIRST step to take?
- Immediately cut all supply orders
- Analyze the variance to identify the root cause (Correct answer)
- Request an emergency budget increase
- Switch to a cheaper supplier without review
Correct answer: Analyze the variance to identify the root cause
Variance analysis identifies whether the overage is due to price increases, waste, theft, or inaccurate forecasting before corrective action is taken.
Question 6: What is the purpose of conducting a physical inventory count in housekeeping?
- To determine housekeeping staff schedules
- To verify actual stock levels against recorded quantities (Correct answer)
- To calculate guest satisfaction scores
- To assess linen quality for disposal
Correct answer: To verify actual stock levels against recorded quantities
A physical inventory count reconciles what is actually on hand with what inventory records show, identifying discrepancies.
Question 7: Which formula is used to calculate the inventory turnover rate for housekeeping supplies?
- Ending inventory ÷ Cost of goods sold
- Cost of goods sold ÷ Average inventory (Correct answer)
- Total purchases ÷ Ending inventory
- Average inventory × Total purchases
Correct answer: Cost of goods sold ÷ Average inventory
Inventory turnover rate equals cost of goods sold divided by average inventory, showing how frequently stock is used and replenished.
CEH Budgeting and Inventory Control 2
Which budgeting method requires every expense to be justified from zero each budget period?