Certified Dietary Manager (CDM) Practice Exam

What are the key components of a food service operation's budget?

1. Marketing expenses, advertising costs, and entertainment expenses

2. Food costs, labor costs, overhead, and equipment maintenance

3. Only food and labor costs

4. Utility bills and insurance only

The correct answer is: Food costs, labor costs, overhead, and equipment maintenance

The key components of a food service operation's budget encompass various essential expenses necessary for the smooth functioning of the operation. Food costs, which include all purchases related to ingredients and supplies, represent a significant portion of the budget, as they directly impact menu planning and profitability. Labor costs account for wages, benefits, and taxes associated with staff, making them another major expense that affects operational efficiency and service quality. Overhead expenses include costs necessary to maintain the facility, such as rent, property taxes, and general supplies. Equipment maintenance is crucial to ensure that kitchen and dining equipment operates efficiently and does not incur unexpected repair costs that could disrupt service or lead to larger expenses if left unaddressed. While marketing expenses and utility bills are important for the operation, they do not encapsulate the primary cost considerations that define the budget in a food service context. This structured approach helps managers effectively allocate resources and control costs to optimize operations and enhance profitability.