CFSP Financial Management 3 — Questions and Answers
Question 1: What is 'seat turnover' and why is it important in foodservice financial management?
- The number of times a seat is occupied during a meal period; it directly impacts revenue capacity (Correct answer)
- The frequency with which dining chairs are replaced due to wear
- The ratio of dining seats to kitchen staff on any given shift
- The average time guests spend waiting to be seated
Correct answer: The number of times a seat is occupied during a meal period; it directly impacts revenue capacity
Seat turnover measures how many times each seat generates a cover per service period, and higher turnover directly increases potential revenue without adding capacity.
Question 2: What is the formula for calculating RevPASH (Revenue Per Available Seat Hour)?
- Total revenue ÷ (number of seats × operating hours) (Correct answer)
- Total covers served ÷ total available seats
- Average check × seat turnover rate
- Gross profit ÷ total labor hours worked
Correct answer: Total revenue ÷ (number of seats × operating hours)
RevPASH divides total revenue by the product of available seats and hours of operation, providing a standardized measure of revenue-generating efficiency.
Question 3: In foodservice cost control, what does 'variance analysis' compare?
- Actual costs versus budgeted costs to identify deviations (Correct answer)
- The nutritional content of menu items against dietary guidelines
- Employee performance ratings between two review periods
- Current menu prices versus competitor pricing
Correct answer: Actual costs versus budgeted costs to identify deviations
Variance analysis identifies the difference between planned (budgeted) figures and actual results, helping managers pinpoint areas requiring corrective action.
Question 4: Which depreciation method allocates equal expense amounts across each year of an asset's useful life?
- Straight-line depreciation (Correct answer)
- Double-declining balance
- Units of production method
- Sum-of-years-digits method
Correct answer: Straight-line depreciation
Straight-line depreciation spreads the cost of an asset evenly over its useful life by deducting the same amount each year.
Question 5: What is the significance of 'days sales outstanding' (DSO) for a foodservice catering company?
- It measures the average number of days it takes to collect payment after a sale (Correct answer)
- It tracks how many days of inventory are held before use
- It calculates the average number of covers served per day
- It measures staff attendance relative to scheduled shifts
Correct answer: It measures the average number of days it takes to collect payment after a sale
DSO reveals how long a catering business waits on average to receive payment from clients, affecting cash flow management and working capital needs.
Question 6: What is a 'pro forma' financial statement in the context of a new restaurant opening?
- A projected financial statement based on assumptions about future performance (Correct answer)
- A statement audited and certified by a CPA
- A historical record of the previous owner's financial results
- A government-required disclosure of franchise fees
Correct answer: A projected financial statement based on assumptions about future performance
Pro forma statements are forward-looking projections that estimate future revenues, costs, and profitability based on assumptions and business plans.
Question 7: A restaurant's prime cost is $45,000 on revenues of $90,000. What is the prime cost percentage?
- 50% (Correct answer)
- 45%
- 55%
- 40%
Correct answer: 50%
Prime cost percentage = Prime Cost ÷ Total Revenue × 100 = $45,000 ÷ $90,000 × 100 = 50%.
CFSP Financial Management 3
What is 'seat turnover' and why is it important in foodservice financial management?