Unit 4 – Monitoring Operations

 

Unit 4 – Monitoring Operations

 

Assignment 4 – Question 1

 

Using the following information complete the questions below:

 

Month	January	February	March	Total
Sales	194,960	194,023	194,897	603,880
Beginning Inventory	25,476	25,433	25,497
Purchases	65,567	65,889	66,129	197,585
Ending Inventory	25,433	25,497	25,578

 

1. Calculate Actual Food Costs and Food Cost Percentage for the fullthree months ending March 31 (2 marks)

 

1. Calculate the Average Inventory Turn Over for the month of February (1 mark)

 

 

1. Calculate the Days Supply of Inventory for the month of January (1 mark)

 

1. Calculate the Average Inventory Turn Over for the three month period ending March 31 (1 mark)

 

Assignment 4 – Question 2 (6 marks)

 

Pat needs your help reconciling in monthly inventory.  Use the information given to find the dollar difference between standard food costs and actual food costs for the month of July.  Provide at least two potential explanations for the difference.

Closing inventory on June 30, 2015                            $140,000

Food Purchased in July                                                $275,000

Total July Food Sales:                                                 $1,200,000

Standard Food Cost Percentage                                       23%

Alcohol transferred to Kitchen from Bar             $1,900

Food transferred to the Bar from Kitchen                       $1,200

Value of Inventory Counted on July 31                       $138,000

 

 

 

Assignment 4 – Question 3  (9 marks)

 

19. On February 15, Kelly incorrectly entered 20 bags of flour instead of 10 bags of flour she actually received into the inventory tracking system. Each bag of flour costs $19.95.  Connie’s inventory is counted and adjusted to actual monthly. Connie does not find the error until March 5^th. Will this error impact the February net income? If so, is net income higher or lower than expected and by how much? (2 marks)

 

 

1. Kelly’s daughter Kit helped her value her January inventory of decorating supplies. Kit used the last price inventory method, when she should have used the FIFO valuation method.   The following transactions took place during the month. Will this error impact the value of the January’s inventory? If so, is the value of the inventory higher or lower?  Will it impact the January’s net income? If so, is net income higher or lower than expected and by how much? (5 marks)

• 1/1 Opening Inventory 2 boxes @ $15 each
• 1/5 Purchased 10 boxes @ $11
• 1/19 Purchased 12 boxes @ $10
• 1/26 Purchased 2 boxes @ $15
• 1/31 Closing Inventory 5 boxes (actual inventory counted)

 

 

400. You have discovered that Kelly’s daughtercounted the suppliesin the supply room twice. As a result the January inventory is over valued by $400.Kelly’sdoes not make the same error in February when she counts inventory.  Will the count error impact February net income? If so, is net income lower or higher than expected? How much? (2 marks)

 

 

Assignment 4 – Question 4  (6 marks)

 

Given the following figures from Connie’s Kitchen, determine the cost of food sold.

 

Purchases                                                      $69,543.36

Closing Inventory                                            20,963.71

Gratis to the bar                                                      78.73

Promotion Expense                                              181.17

Transfers from Kitchen to Other Units              637.38

Opening Inventory                                        20,687.40

Transfers to Kitchen from Other Units                         986.45

Cooking Liquor                                                     543.18

Employee’s Meals:

Executives: $2,033.75 sales value; recent average food cost percent: 21%

Other staff      1,422 lunches @ $3.80

1208 dinners @ $4.60