Your SlideShare is downloading. ×
Monitoring food service operations 1
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Saving this for later?

Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime - even offline.

Text the download link to your phone

Standard text messaging rates apply

Monitoring food service operations 1

2,765
views

Published on

Published in: Business, Travel

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
2,765
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
225
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Monitoring Food Service Operations-1Monthly Inventory and Monthly Food Cost BAC-4131 Food and Beverage Management Cost Control: Monitoring Food ServiceWednesday, April 06, 2011 Slide 1 / 27 Operations -1
  • 2. Recap of the Previous session• Explain As Purchased weight, As purchased cost.• Describe Edible portion cost raw processed food item.• What is Yield percentage.• How do you calculate cost per usable pound and Ounce.• How does one calculate cost factor per pound and per ounce. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 2 / 27 Operations -1
  • 3. KCM of Monitoring Food Service Operations-1 S i O i 1• Describe the procedure of taking a physical inventory.• State formula for calculate cost of food consumed.• List and explain adjustments made to cost of the food sold and the monthly income statement.• E l i the effects of on cost of each of the 5 Explain th ff t f t f h f th acceptable methods of assigning unit costs to a closing inventory inventory. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 3 / 27 Operations -1
  • 4. Features of a Monthly Inventory1. Require physical counting of each item.2. Usually done at a close of a said accounting period.3. A separate book has to be maintained for this purpose which is permanent.4. Usually requires two persons.5.5 The closing inventory is also known as the closing stock and becomes opening stock for the next accounting period. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 4 / 27 Operations -1
  • 5. Monthly Inventory6.6 Exercise dexterity in assigning unit values to each item.7.7 Requires organized stores stores.8. Requires date marking and a keen eye to identify: id tifa. Expiry dates of products:b. Damaged products:c.c Slow moving products products. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 5 / 27 Operations -1
  • 6. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food ServiceWednesday, April 06, 2011 Slide 6 / 27 Operations -1
  • 7. Valuing the Physical Inventory• In chain restaurants one of the major problems faced by the purveyors is assigning units to various purchases in the inventory.1. Actual purchase price method2. First - in, first - out method.3. Weighted - average purchase price method.4. Latest purchase price method5. Last - in, first - out method BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 7 / 27 Operations -1
  • 8. Opening inventory on the 1st of the month: 10 cans @ $9.98 = $ 99.80Purchased on the 7th of the month: 24 cans @ $9.70 = $232.80Purchased on the 15th of the month: 24 cans @ $9.60 = $230.40Purchased on the 26th of the month: 12 cans @ $9.45 = $113.40Total value of purchases $576.60Value of opening inventory $ 99 80 99.80Total value of purchases + $576.60Value of total number of units available $676.40 Sample Inventory for Cans of Crushed tomatoes p y BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 8 / 27 Operations -1
  • 9. Sample Inventory for Cans of Crushed C h d tomatoes Opening inventory 10 cans+ Purchases during the month 60 cans ———————————————————— = Total available 70 cans — Closing inventory 20 cans (number of units still available) ( b f it till il bl ) ———————————————————— = Units consumed 50 cans (number of units no longer available) BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 9 / 27 Operations -1
  • 10. Using the Actual Purchase Price Method Pi M h d• Using the actual purchase price on the cans considering that 4 are from opening balance 4 from 2nd purchase and 12 from balance, the final purchase. 4@$ $9.98 = $ 39.92 4 @ $9.60 = $ 38.40 12 @ $9 45 = $113 40 $9.45 $113.40 20 Cans = $191.72 BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 10 / 27 Operations -1
  • 11. Using the First in First out method• First- In First Out Method (Latest Prices) First In, First-• It is necessary to know that the latest purchase on the 26th of the month was for 12 cans and that the next previous purchase on the 15th was for 24 cans cans. 12 @ $9.45 = $113.40 8 @ $9.60 = $ 76.80 20 = $190.20 BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 11 / 27 Operations -1
  • 12. Weighted average Purchase price method i h d• Usually used when the stock rotation is high, the Procedure requires detailed records, records Computerized accounting methods are recommended.10 Cans @ $ 9 98 = $ 99 80 9.98 99.80 $ 676 40/70 Cans 676.40/7024 cans @ $ 9.70 = $ 232.80 = $ 9.66 per can24 cans @ $ 9 60 =$ 230 40 9.60 $ 230.40 20 Cans x $ 9 66 9.6612 cans @ $ 9.45 = $ 113.40 = $ 193.20________________________70 cans @ $ 676.40 BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 12 / 27 Operations -1
  • 13. Latest Purchase Price Method (Most R (M Recent P i ) Price)• A simpler faster and more widely used simpler, faster, approach is to use the latest purchase price method for valuing the closing inventory.• Takes the immediate last ( latest) price into consideration. 20 @ $9.45 = $ 189.00 BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 13 / 27 Operations -1
  • 14. Last- In, First- Out Method (Earliest P i (E li Prices) )• Usually applied where the Tax rates and inflation is high.• Managements try to minimize the value of the inventory. 10 @ $9 98 = $ 99 80 $9.98 99.80 10 @ $9.70 = $ 97.00 20 = $196 80 $196.80 BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 14 / 27 Operations -1
  • 15. Comparison of methods1. Value based on actual purchase p p price method: $191.72.2. Value based on first - in, first - out method: $190.20. $190 203. Value based on weighted - average method: $193.20.4. Value based on latest purchase price method: $189.00.5. Value based on last - in, first - out method: $196.80. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 15 / 27 Operations -1
  • 16. Comparison of methods• The difference between the last - in first - in, out method and actual purchase price methods is calculated as follows:• $ 189.00 and $ 196.80 difference is $ 7.08. 7 08• Which is 4.126 % rounded up to 4.13 %. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 16 / 27 Operations -1
  • 17. Monthly Food Cost Determination • These figures do not These figures do not  include directs. • These also may not  y Opening inventory O i i t include in and out + Purchase transfers.= Total available— Closing inventory= Cost of food issued BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 17 / 27 Operations -1
  • 18. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food ServiceWednesday, April 06, 2011 Slide 18 / 27 Operations -1
  • 19. Example •Opening inventory $ 9 010 00 9,010.00Food purchases $23,570.00Closing inventory g y $ 9,356.00 ,Food sales $65,420.00Opening inventory $ 9,010.00+ Food purchases $ 23,570.00 Total available $ 32,580.00— Closing inventory $ 9,356.00= Cost of food Consumed $ 23,224.00 BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 19 / 27 Operations -1
  • 20. Calculating Food Cost in Inventory• Cost / Sales = Cost % $23,224 $65,420 355 $23 224 / $65 420 = .355 x 100 = 35.5% BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 20 / 27 Operations -1
  • 21. Adjustments to Cost of Food consumed d• Intra Unit transfers. transfers• Inter Unit transfers.• Transfers of alcoholic beverages from bar to kitchen, used in food preparation.• Th term cooking liquor i commonly used t The t ki li is l d to refer to these items. The cost of the cooking liquor is subtracted from the beverage department and added to the cost of food issued BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 21 / 27 Operations -1
  • 22. Adjustments to Cost of Food consumed d• Transfers of directs from kitchen to bar, where they will be used in drink p p preparation.• The term food to bar (directs) is often used for these items.• Food to Bar (directs) are subtracted from the cost of food issued and added to the beverage department ’ s cost. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 22 / 27 Operations -1
  • 23. Adjustments to Cost of Food consumed d• Steward Sales:• In some large establishments employees are allowed to purchase food at subsidized rates.• It may be raw or cooked food. b k df d• Gratis to Bars:• Transfers of food material like Amuse-bouche or Hors dœuvres to the bar for promotion. p BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 23 / 27 Operations -1
  • 24. Adjustments to Cost of Food consumed d• Promotion Expense:• P t ti l customers providing B lk f d Potential t idi Bulk food sales business, Banquet business and rooms di i i sales are entertained and division l t t i d d the cost is adjusted against. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 24 / 27 Operations -1
  • 25. Determining Cost of Food Consumed C dOpening inventory Opening inventory $ 9,010+ P h Purchases + F d purchases 23 570 Food h 23,570= Total available for sale = Total available $32,580— Closing inventory — Closing inventory 9,356= Cost of food issued = Cost of food issue $23,224+ Cooking liquor + Cooking liquor 200+ Transfers from other units = Subtotal $23,424— Food to bar (directs) — Food to bar (directs) 170— Transfers to other units — Steward sales 80— Steward sales — Gratis to bar(s) 290— Gratis to bars — Promotion expense 250— Promotion expense Total subtractions 790is equal to the cost of the food consumed = Cost of food consumed $22,634 — Cost of employees ’ meals 1,050 p y = Cost of food sold $21,584 BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 25 / 27 Operations -1
  • 26. Finding food cost percentage• Using the sales figure of $65 420 identified $65,420 earlier in this article, it is now possible to use this new and more accurate figure for cost of g food sold to determine food cost percent for the period: p• Cost of food sold / Food sales = Food cost % $21,584 / $65,420 = .3299 x 100 = 32.99 % BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Wednesday, April 06, 2011 Slide 26 / 27 Operations -1
  • 27. Questions Q ti & Comments C t BAC-4131 Food and Beverage Management Cost Control: Monitoring Food ServiceWednesday, April 06, 2011 Slide 27 / 27 Operations -1