Attachment 1

College Of Business and Accountancy
Department Of Hospitality and Tourism Management

ATTACHMENT NO. 1
Test Your Skills
Throughout this book, all Test Your Skills exercises are available in Excel spreadsheets
on your student disk. Although you will be able to calculate your answers by hand, the
authors recommend that you use the spreadsheets for two main reasons: (1) you will be
able to practice using the spreadsheets that you may use as a manager, and (2) you will
be able to “play” with the numbers and create your own scenarios. These applications
can be used with a variety of spreadsheet software packages; the authors chose Excel
because it is widely available. It is assumed that you have basic knowledge of
spreadsheets when using these applications. The dark bold outlined spaces in all of the
Test Your Skills exercises indicate that answers are required in those spaces. Appendix A
shows the kinds of Excel formulas you will need to solve the Test Your Skills exercises.
1. At the conclusion of her first month of operating Val’s Donut Shop, Valcomputed the
following revenue and expense figures:
Week Revenue Expense Profit/Loss

1 $ 894.50 $ 761.80
2 1,147.60 522.46
3 1,261.80 879.14
4 1,345.11 1,486.20
Month
To Receive $1,200.00 Profit for the Month
Month
Prepare both weekly and monthly profit formulas so that Val has a good idea about her
current profit situation. Also, given her sales for the month, tell her how much her
expenses should have been to realize the $1,200 profit she had hoped for.
2. Su Chan manages a Chinese restaurant called the Bungalow. Her P&Lfor the month of
March is as follows.
The Bungalow’s March P&L

Revenue $100,000.0 100.0%
0
F&B Expense 34,000.00 34.0%
Labor Expense 40,000.00 40.0%
Other Expense 21,000.00 21.0%
Total Expense 95,000.00 95.0%
Profit 5,000.00 5.0%
Su has a meeting with the owner of the Bungalow next week, so she decided to create
a pie chart showing the percentage of her costs in relation to her total sales (see the
following diagram).
Profit Food and

5.0 % Beverage
Other Expense
Expense 34%
21.0 %
Labor
Expense
40.0 %
At the meeting with the owner, Su is asked to change the information on the pie chart
to reflect next month’s projections. The owner suggests that April revenues and costs
should be as follows:
April revenues $120,000.
Food and beverage costs $44,000.
Labor and other expenses remain constant.
Using these numbers, is the owner’s profit percentage going to be higher or lower than
that in March? By how much?
After looking at the owner’s projections, she thinks it might be too difficult (and not
so good for her guests) if she cannot increase labor Test Your Skills
costs along with sales. She proposes a compromise and tells the owner that if he will
agree to increased labor costs, she will try to decrease other expenses. So, Su
proposes the following:
April revenues $120,000.
Food and beverage costs $44,000.
Labor costs $50,000.
Other expenses $19,000.
Using these numbers, is the owner’s profit percentage going to be higher or lower than
that in March? By how much?
Which set of projections has more reasonable goals?
Note: If you use the Excel spreadsheets on your student disk, the changes you
make to the numbers should be reflected on the pie charts as well.
3. The dining room at the Roadrock Inn is extremely popular. Terry Ray,the food and
beverage director, is pleased to see that his revenue is higher than last year. Of
course, expenses are higher also. Express Terry’s expenses and profit as a
percentage of total revenue, both this year and last year (fill in all empty blanks).
This Year % Last Year %
Revenue $965,971.00 $875,421.00
F&B Expense 367,069.00 350,168.00
Labor Expense 338,090.00 315,151.00
Other Expense 144,896.00 140,068.00
Total
Expense
Profit
How is Terry doing in managing his expenses when comparing this year to last year?
How do changes in revenue affect his performance?
4. Pamela Cantu operates a school foodservice department in a small, rural community.
She feeds approximately 1,000 students per day in three different locations. She
receives an average of $1.20 in revenues per meal. Her budget, set at the beginning of
the school year by the superintendent, is developed in such a way that a small amount
is to be reserved for future equipment purchases and dining room renovation. These
funds are available, however, only if Pamela meets her budget.
She hopes to use this year’s reserve to buy a $5,000 refrigerated salad bar for the high
school. Since it is the midpoint of her school year, help her determine her “performance
to budget” (fill in all empty blanks).
Item Budget Actual % of

Budget
Meals Served 300,000 149,800
Revenue
Food $170,000 $84,961

Expense
Labor Expense 125,000 63,752
Other Expense 60,000 31,460
Total 355,000
Expense
Reserve 5,000
Assuming that the year is 50% completed and Pamela continues doing what she is doing, is she
likely to meet the reserve requirement and, thus, be able to purchase the salad bar by the end of the
year? If not, what changes should she make over the next six months to ensure that she will have
the $5,000 in reserve?

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College Of Business and Accountancy

Department Of Hospitality and Tourism Management

Week Revenue Expense Profit/Loss

To Receive $1,200.00 Profit for the Month

The Bungalow’s March P&L

Profit Food and

This Year % Last Year %

Revenue $965,971.00 $875,421.00

F&B Expense 367,069.00 350,168.00

Labor Expense 338,090.00 315,151.00

Other Expense 144,896.00 140,068.00

Item Budget Actual % of

Food $170,000 $84,961

Other Expense 60,000 31,460

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