Question

Terri Settles is a registered dietitian (RD). She supervises five hospitals for Maramark Dining Services, the management company the hospitals have selected to operate their foodservice operations. Her company produces a monthly and annual income statement for each hospital.

1. Discuss five ways in which income statements can help Terri do her job better.

2. What would a hospital do with “profits” or surpluses made in the foodservice area?

3. What effect will “profit” or “loss” have on the ability of Terri’s company to continue to manage the food service operations for these hospitals?

Answer 1

Answer:

1.   Discuss five ways in which income statements can help Terri do her job better.

The income statement of the companies in which Terri will have to perform the services can be very helpful in the following ways:

-         Analysing sales volume: the income statement of the companies will help Terri to study the sales volume of the companies. This way, Terry will be able to know what is she expected to maintain with her services.

-         Labor expense: labor expense also plays a vital role in the foodservice operation. By analysing the labor expenses of the month and the year, she can plan her activities and control the labor expenses.

-         Food expenses: she is expected to prepare a diet plan with proper nutrition. With the food expenses shown in the income statement she must have an idea how much expenses related to food the company is incurring. She can set a range of food expense within which she needs to prepare the diet plan with all the required nutrition.

-         Beverage expense: similarly, she can set a range for beverage expenses within which she needs to prepare a diet plan.

-         Other expenses: income statement can help her in identifying other controllable and non-controllable expenses. The controllable expenses can be avoided and reduced while preparing the dial plan.

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2.   What would a hospital do with "profits" or surpluses made in the foodservice area?

Foodservice operation and environment are related to each other. As a business, the focus of the business should be on profit but at the same time environment should not be avoided completely. Both are equally important to sustain in the long run.

Therefore, if a company is having surpluses or additional profits in the foodservice area, it must focus on the adopting the planet friendly management like purchasing better equipment, purchasing raw material from local support, etc. All these small steps will provide a return back to the company in one form or the other.

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3.   What effect will "profit" or "loss" have on the ability of Terri's company to continue to manage the foodservice operations for these hospitals?

The profit or loss of the foodservice operation have direct effect on the ability of Terri's company to continue to manage the operation for the client hospitals. The profit of the company will encourage the Terri to perform her services without much thinking about the cost of the food and beverages. On the other hand, the loss of the company will indirectly force the Terri to consider the cost of the food and beverage and try to minimize them. This may affect the quality of the services provided by Terri.