a. The 4C Company restaurant has 84 seats, which is not large. For this reason, it does not have a large number of people on the payroll. Charlie has been handling the general manager’s responsibilities and has a good friend working half a day, five days a week, to take care of such matters as bank deposits, preparing accounts payable and payroll checks, and all other routine office and bookkeeping work

                  Charlie is not concerned about the honesty of the person, but he has learned from courses that he has taken that there is a need for any company, however small, to have some internal controls. Write a short report to Charlie pointing out three specific areas where you believe controls might need to be implemented. For each of the three areas, advise Charlie what might happen if a dishonest bookkeeper were hired and how internal control can be implemented to prevent dishonesty.

b. From his experience in the mobile catering company, Charlie had learned the value of standard cost control. In that business he purchased most of his food items proportioned and wrapped, and portion sizes were always the same. Food cost was easy to control, because each day an inventory count of each item he carried, plus the quantity purchased of that item that day, less the quantity still in inventory at the day’s end, gave him a figure that, when multiplied by the selling price of the item, produced the standard sales revenue that he should have. When this was done for all food items, he could then compare his total standard food revenue each day with the actual revenue to make sure there were no differences. In this situation he was in complete control of the entire operation.

                              In the 4C Company’s restaurant, because food dishes are produced in its own kitchen, it is not feasible to operate and control costs and sales revenue as with the 3C Company. The restaurant operates with eight main entree items on its menu, plus three soups and four desserts. These are changed seasonally. Coffee is free if an entree is ordered; otherwise, there is a charge. Explain as briefly as possible to Charlie the steps that could be implemented to have a system of standard food cost and sales revenue control. What about the problem that some people have free coffee while others pay, and the fact that customers have to pay for items such as milk and soft drinks?

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