Question 1

Indirect compensation includes free meals, life insurance, and discounts on accommodations.

Accepted Answer

Indirect compensation refers to non-monetary benefits provided to employees, such as free meals, life insurance, and discounts on accommodations, which are not directly paid out as cash but still hold value for the employee.

Question 2

Deferred compensation includes travel expenses paid one month after the travel has taken place.

Accepted Answer

Deferred compensation refers to money or benefits that an employee elects to receive at a later date, typically retirement, rather than at the time the income is earned. Travel expenses reimbursed after travel do not fall under this category; they are simply delayed reimbursements for expenses incurred.

Question 3

Labor control attempts to obtain maximum efficiency from all employees without compromising standards of labor performance.

Accepted Answer

Labor control is a management strategy aimed at achieving maximum efficiency and productivity from employees while ensuring that the standards of labor performance are maintained or improved. This involves monitoring, evaluating, and adjusting the workforce's performance to meet organizational goals without compromising the quality of work or the well-being of employees.

Question 4

Increases in sales volume tend to improve labor productivity.

Accepted Answer

Increases in sales volume often lead to higher production levels, which can spread fixed labor costs over more units, effectively improving labor productivity by reducing the cost per unit of output.

Question 5

The key to successful labor cost control is paying the lowest possible dollar wage.

Accepted Answer

Successful labor cost control involves optimizing productivity, efficient scheduling, and investing in employee training and satisfaction, rather than simply minimizing wages, which can lead to poor morale, high turnover, and decreased productivity.

Question 6

The local minimum wage is an amount set by a group of local employers.

Accepted Answer

The local minimum wage is typically set by local government authorities, not by a group of local employers.

Question 7

Included in the term wages are sick pay and employees' meals.

Accepted Answer

Wages can encompass various forms of compensation provided to employees for their services, including sick pay and the value of meals provided by the employer.

Question 8

In an establishment with 200 employees, of whom 100 depart and are replaced each year, the labor turnover rate is 50.0%.

Accepted Answer

The labor turnover rate is calculated by dividing the number of employees leaving by the average number of employees and then multiplying by 100. In this case, (100 departures / 200 employees) * 100 = 50.0%.

Question 9

From the perspective of labor cost control, it is cheaper to produce 30 portions of each of 10 different menu items that it is to produce 300 portions of just one menu item.

Accepted Answer

Producing 300 portions of just one menu item typically results in economies of scale, where the cost per unit decreases as the quantity increases, due to factors like reduced ingredient waste, streamlined labor, and efficient use of equipment. Producing multiple different items in smaller quantities usually increases complexity and costs.

Question 10

Labor costs are:

Accepted Answer

The answer of Labor costs are:
...

Question 11

If unit sales volume in a restaurant increases, one would normally expect to see labor cost per unit:

Accepted Answer

When unit sales volume in a restaurant increases, economies of scale often come into play, leading to a decrease in labor cost per unit. This is because the fixed labor costs (such as salaries for full-time employees) are spread over a larger number of units, reducing the cost per unit. Additionally, increased efficiency and productivity can also contribute to lower labor cost per unit as sales volume grows.

Question 12

The relationship between sales volume and labor cost per unit of product is normally:

Accepted Answer

The relationship between sales volume and labor cost per unit of product is normally inverse because as sales volume increases, the labor cost per unit typically decreases due to economies of scale.

Question 13

In a nearby restaurant employing 600, an average of 150 per year have departed and been replaced over the last five years. In this establishment, the rate of employee turnover is:

Accepted Answer

The rate of employee turnover is calculated by dividing the number of employees who have departed and been replaced by the total number of employees, then multiplying by 100 to get a percentage. Here, 150 employees leave out of 600 each year, so the turnover rate is (150/600) * 100 = 25.0%.

Question 14

A small food stand in a nearby mall has two employees preparing and serving hotdogs. Each is paid $6.00 per hour. During a recent two-hour period, they prepared and served 120 hotdogs. In the period cited, the labor cost per hotdog served was:

Accepted Answer

The total labor cost for the two employees over two hours is 2 employees * $6.00/hour * 2 hours = $24. Dividing this by the 120 hotdogs gives a labor cost per hotdog of $24 / 120 = $0.20.

Question 15

The owner of Snooker's Restaurant is contemplating keeping the dining room open for one additional hour each night. She has determined that this would incur additional labor costs of $220. and $20. in additional costs for heat, light, and power. The restaurant's variable rate is .4. What level of dollar sales volume will be required to break even for this additional hour?

Accepted Answer

To break even, the restaurant needs to cover the additional costs ($220 for labor and $20 for utilities, totaling $240) with the revenue from sales. Given the variable rate of .4 (or 40%), this means that 40% of the sales revenue goes towards variable costs. To find the sales volume needed to break even, divide the total additional costs by the complement of the variable rate (1 - 0.4 = 0.6). Thus, $240 / 0.6 = $400.

Question 16

Charlie Snerdly owns a restaurant that has been opening five days a week for many years. Charlie is now considering opening for a sixth day. To do so would cost an extra $1,200. for labor, and $80. for heat light and power. What dollar sales volume will be required for Charlie's restaurant to break even for this additional day?

Accepted Answer

The answer of Charlie Snerdly owns a restaurant that has...

Question 17

The income statement from a nearby restaurant reveals the following:
Sales $500,000
Fixed costs $150,000
Directly variable costs $200,000
If the restaurant is to earn a profit of $50,000, semivariable costs must be:

Accepted Answer

To achieve a profit of $50,000, the total costs (fixed, variable, and semivariable) must be subtracted from sales. The calculation is $500,000 (Sales) - $150,000 (Fixed Costs) - $200,000 (Directly Variable Costs) - Desired Profit ($50,000) = $100,000 for semivariable costs.

Question 18

The costs in a nearby restaurant, expressed as percentages of sales, are as follows:
Fixed costs 30.0%
Directly variable costs 25.0%
If the restaurant is to show an 8% profit, semivariable costs as a percentage of sales must be:

Accepted Answer

To achieve an 8% profit, the total costs must be 92% of sales. Fixed costs are 30% and directly variable costs are 25%, totaling 55%. Therefore, semivariable costs must be 37% (92% - 55%) of sales.

Question 19

Which of the following is NOT one of the determinants of labor cost discussed in the text?

Accepted Answer

Depreciation on equipment is not a determinant of labor cost; it is related to the cost of capital assets used in production, not the cost associated with employing labor.

Quiz 18: Labor Cost Considerations