Refer to Scenario 9

question 245

Multiple Choice

Refer to Scenario 9.3 below to answer the question(s) that follow.
SCENARIO 9.3: Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 per cent on their investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly) . Included in the fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $5 on average per meal.
-Refer to Scenario 9.3. The normal return to the investors on a weekly basis is

Calculate variances from standard costs, including material, labour, and direct labour rate variances.

Identify responsibility centers and analyze their performance through variance analysis.

Understand the concepts of standard costing and its application in managerial decision-making.

Recognize the significance of management by exception in performance management.

Definitions:

Residential Lease

A legally-binding agreement between a landlord and tenant outlining terms and conditions for inhabiting residential property.

Toyo Tire

A globally recognized tire manufacturing company known for its high-quality automotive tires.

Past Discomfort

Refers to physical or emotional distress experienced in the past as a result of specific events or circumstances.

Diminution

Diminution refers to the reduction in the size, value, or importance of something. In legal and financial contexts, it often involves the loss of property value or asset worth.