Chapter17
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Transcript

  • 1. Chapter 17 Accounting, Finance, and Cost Control
  • 2. After Reading and Studying This Chapter, You Should Be Able to:
    • Describe the systems of accounting typically used by business organizations in the restaurant, lodging and club segments of the hospitality industry
    • Identify various accounting statements and outline the major components of an income statement, balance sheet and statement of cash flows
    • Review the basic role of managerial finance in hospitality operations including ratio analysis, cash management and budgeting
  • 3. After Reading and Studying This Chapter, You Should Be Able to:
    • Describe features of systems used to control major direct operating costs including food, beverages, labor and other operating costs
    • Calculate key financial ratios used to analyze the results of operations in hospitality operations
  • 4. Accounting in the Hospitality Industry
    • Financial recording of revenues and expenditures to maximize profit margin
    • Accounting department responsible for:
      • Tracking
      • Reporting
      • Communicating
    • Size of department depends on the size of the operation
  • 5. Uniform System of Accounting and Regulatory Agencies
    • Standardized accounting system for all industries
      • Lodging
      • Restaurants
      • Clubs
    • Guidelines for better decision-making
    • Industry-wide consistency
  • 6. Principles Established by Profession
    • GAAP
    • FASB
    • SEC
  • 7. Types of Accounting
    • Auditing
    • Financial
    • Managerial
    • Cost
    • Tax
  • 8. Types of Business Organizations
    • Proprietorship
    • Partnership
    • Corporation
  • 9. Finance in the Hospitality Industry
    • Cash inflows/outflows
    • Find money to run a business
    • Find money to grow a business
    • Make investments in real assets
    • Plan for companies’ financial future
    • Manage cash on hand
  • 10. Financial Statements
    • Income statement
    • Balance sheet
      • Assets
      • Liabilities
      • Owner’s equity
      • Equity
      • Liquidity
    • Statement of cash flow
  • 11. Figure 17-1 Income Statement
  • 12. Food and Beverage Cost Control
    • Greatest percentage of operating cost
    • Average food cost percentage – 25 to 35 percentage of food sales
    • Average beverage cost percentage – 16 to 26 percentage of beverage sales
    • Reporting and tracking is critical
  • 13. Cost Lowering Methods
    • Specification sheets for inventory purchases
    • Standardized recipes
    • Detailed menu costing
    • Tracking
    • Security
    • Regulating inventory
    • Highlighting seasonal items
    • Educating employees
    • Include condiments, oils, dressings, etc. in plate cost
    • Perform regular yield tests
    • Consider employee meal cost
    • Monitor overtime
    • Training
  • 14. Food Cost Percentage Cost of Foods Sold Total Food Sales x 100
  • 15. Beverage Cost Percentage Cost of Beverage Sold Total Beverage Sales x 100
  • 16. Labor Costs Control
    • One of the largest operating costs
    • Adequate training is essential
    • Lower turnover helps maintain reasonable costs
    • Job descriptions facilitate better hiring practices which control costs
  • 17. Labor Cost Percentage Total Labor Cost Total Sales Revenue
  • 18. Other Operating Costs
    • Property taxes
    • Maintenance
    • Music and entertainment
    • Business fees and licenses
    • Insurance
    • Management fees
    • Rent
    • Utilities
    • Uniforms
  • 19. Other operating Cost Percentage Total Other Operating Costs Total Sales Revenue
  • 20. Trends
    • Increased use of technology
    • Sarbanes-Oxley Act of 2002
    • Focus on increasing cost of business risk
  • 21. Figure 17-2 Balance Sheet