Question

A restaurant food chain has over 680 restaurants. All food orders for each restaurant are required to be input into an electronic device which records all food orders by food servers and transmits the order to the kitchen for preparation. All food servers are responsible for collecting cash for all their orders and must turn in cash at the end of their shift equal to the sales value of food ordered for their I.D. number. The manager then reconciles the cash received for the day with the computerized record of food orders generated. All differences are investigated immediately by the restaurant. Corporate headquarters has established monitoring controls to determine when an individual restaurant might not be recording all its revenue and transmitting the applicable cash to the corporate headquarters. Which one of the following would be the best example of a monitoring control?
A. All food orders must be entered on the computer, and segregation of duties is maintained between the food servers and the cooks.
B. Management prepares a detailed analysis of gross margin per store and investigates any store that shows a significantly lower gross margin.
C. Cash is transmitted to corporate headquarters on a daily basis.
D. The restaurant manager reconciles the cash received with the food orders recorded on the computer.

Answer 1

Answer: Management prepares a detailed analysis of gross margin per store and investigates any store that shows a significantly lower gross margin.

Explanation:

The best example of a monitoring control will be that the management prepares a detailed analysis of gross margin per store and investigates any store that shows a significantly lower gross margin.

The gross margin is regarded as the net sales revenue after the cost of goods sold has been deducted. In a situation where there's variation between the value, then it calls for check to ascertain if any fraudulent activity took place.