2. The purpose of a profit and loss
account
• It summarises all the sales revenue for the financial
period (month or year).
• It summarises all the payments or expenses for the
same period (month or year).
• The difference between the two totals is the profit
or loss made in that period (month or year).
3. Why produce a profit and loss
account?
• It is a legal requirement.Tax is paid on
the profit.
• It summarises all the year’s transactions – as
recorded in documents such as invoices.
• It shows the financial ‘health’ of the business.
• It is studied by managers and shareholders.
4. Profit and Loss Definition
• A profit and loss statement (P&L) is a financial statement
that summarizes the revenues, costs and expenses
incurred during a specific period of time, usually a fiscal
quarter or year (www.investopedia.com).
• Gross Profit (Loss) = Net Sales – Cost of Sales
• Net Profit (Loss) = Net Sales – All Costs (COS, Labour &
Expenses)
6. OTHER SALES
• Expense recoveries -These charges such as taxis for staff,
linen, kitchen buyout fee etc. billed to clients who request
extra staff on their events
• Labour recoveries -These are staff charges billed to
clients who request extra staff on their events
• These charges are split into internal and external sales
depending on the category of the client and are reported
on a weekly basis on the P&L
7. COST OF SALES
• Food and beverage products purchased during a
particular period which have a direct impact on the
business.
• Invoices are processed on a weekly basis on the F102.
• Opening stock+ Purchases – Closing stock= COS
8. TOTAL
COSTS
FOOD
COSTS
DRINK
COSTS
EXTERNAL
FOOD
COSTS
SALE
TRANSFERS
AT MARGIN
EXTERNAL
DRINK
COSTS
SALE
TRANSFERS
AT MARGIN
OTHER
COSTS
** Sale transfers include all food and drink transfers from other units.Sale transfers include all food and drink transfers from other units.
These transfers are processed on a weekly basis and at the end of eachThese transfers are processed on a weekly basis and at the end of each
month populated into a single spread sheet to get a weekly and monthmonth populated into a single spread sheet to get a weekly and month
total.total.
9. OTHER COSTS OF SALE (recorded on the F102)
• Linen -These will consists of all linen and laundry invoices
sent through in a month.
• Disposables FOH -This will consist of all FOH disposables
ordered throughout the month.These will include
napkins, plastic cups
• Disposables BOH -These will consist of all BOH
disposables ordered throughout the month.These will
include chemicals, gloves, detergent etc.
• Other -This is made up of all other items which affect
costs of sale which cannot be classified into any particular
category.
10. LABOUR COSTS
• Monthly paid (Full-time) -This is the costs of all monthly
employed personnel in the HAC (Fare staff only). All Fare of
London sites are notified of their costs by the Group
Administrator
• Weekly paid (Staff) -This is the weekly costs of all part-time or
zero-hour Fare of London staff in the HAC. Costs are obtained
from the Group Administrator
• Staff Agency costs -These are extra staff requested from a
Fare of London nominated agency as and when required.
• Transfers (Staff) - These are staff costs which are as a result of
sending staff to other Fare of London sites and vice versa.
12. EXPENSES/OVERHEADS(recorded on the F102)
These compose of fixed and variable overheads costs in the daily
running of the business.These will include, third party agency
costs, training, marketing, equipment purchase, site cost etc.
* Fixed Expenses - Fixed costs are a standard expenses which
the unit incurs whether production takes place or not.These
amounts are calculated by top management and sent to
individual units respectively or set in their yearly budget.
•Management Fee -This is a set amount the site pays to the head
office on a monthly basis for their daily and continuous support.
•Capital Recharge - This is a set amount the site pays to the head
office on a monthly basis for all the equipment bought at the
beginning of the contract (01/03/14)
13. EXPENSES/OVERHEADS(recorded on the F102)
*Variable Expenses -Variable costs are a corporate expense that
varies with production output.They rise as activities with the
company increases and fall as production decreases.
•Training –This is all training from external suppliers which
requires an invoice or some payment.
•Commissions (3rd party) - These are commission invoices from
3rd party clients. A standard 8% commission is agreed on all
catering
•Commissions (HAC) -This is a 20% charge paid to the HAC on a
monthly basis for all internal & external events which are
commissionable.The restaurant is charged at 10%.
14. EXPENSES/OVERHEADS(recorded on the F102)
• Staff Uniform –These will include all costs associated
with the purchase of staff uniforms.
• Site Costs - This is made up of variable site costs incurred
by Fare of London on the HAC premises. Such costs
include refuse disposal, bottle recycling and bio-oil
collection
• Equipment replace/repair/ purchase -These will include
all costs associated with buying new equipment as well as
repairs
• Transport and travel -These are all transport costs
associated with the business from staff taxi charges to
client taxi charges
15. EXPENSES/OVERHEADS(recorded on the F102)
• Entertainment –These will include all costs associated with
client entertainment, staff welfare drinks or a professional
outing to source out better ways of delivering service.
• Telecoms- These are all the telecom charges incurred by the
business such as streamline charges and phone charges.
• Printing and stationary -These will include printer cartridges,
paper, books, pens etc. all ordered in for daily use.
• Expense recharge- Expense recharge will be any transferred
expense incurred on behalf of another unit
• OtherVariables -These are made up of all other items which
affect overhead costs which cannot be classified into any
particular category
16. Sales £312,781.00
F&B Cost of Sales £76,945.00
Direct Costs £17,354.00
Labour £97,171.00
Overheads £73,288.00
Profit/Loss £48,023.00
17. Sales £125,172.00
F&B Cost of Sales £31,942.00
Other Costs of sale £7,080.00
Labour £69,977.00
Overheads £31,667.00
Profit/Loss -£15,494.00
Editor's Notes
This presentation provides an overview of the key points in this chapter.
Note for tutors:
If you wish to print out these slides, with notes, it is recommended that, for greater clarity you select the ‘pure black and white’ option on the PowerPoint print dialogue box.
The aim of a profit and loss account is to calculate the profit or loss for the year. This is key item for those interested in the business.
The reasons for producing a profit and loss account should be understand. Students could be asked what a fall in profit would indicate – or a loss – to interested parties. Public limited companies will have their results covered by the press and even on the national news if they suddenly face serious problems.
The reasons for producing a profit and loss account should be understand. Students could be asked what a fall in profit would indicate – or a loss – to interested parties. Public limited companies will have their results covered by the press and even on the national news if they suddenly face serious problems.
The reasons for producing a profit and loss account should be understand. Students could be asked what a fall in profit would indicate – or a loss – to interested parties. Public limited companies will have their results covered by the press and even on the national news if they suddenly face serious problems.
The reasons for producing a profit and loss account should be understand. Students could be asked what a fall in profit would indicate – or a loss – to interested parties. Public limited companies will have their results covered by the press and even on the national news if they suddenly face serious problems.
The reasons for producing a profit and loss account should be understand. Students could be asked what a fall in profit would indicate – or a loss – to interested parties. Public limited companies will have their results covered by the press and even on the national news if they suddenly face serious problems.
The reasons for producing a profit and loss account should be understand. Students could be asked what a fall in profit would indicate – or a loss – to interested parties. Public limited companies will have their results covered by the press and even on the national news if they suddenly face serious problems.
The reasons for producing a profit and loss account should be understand. Students could be asked what a fall in profit would indicate – or a loss – to interested parties. Public limited companies will have their results covered by the press and even on the national news if they suddenly face serious problems.
The reasons for producing a profit and loss account should be understand. Students could be asked what a fall in profit would indicate – or a loss – to interested parties. Public limited companies will have their results covered by the press and even on the national news if they suddenly face serious problems.
The reasons for producing a profit and loss account should be understand. Students could be asked what a fall in profit would indicate – or a loss – to interested parties. Public limited companies will have their results covered by the press and even on the national news if they suddenly face serious problems.
The reasons for producing a profit and loss account should be understand. Students could be asked what a fall in profit would indicate – or a loss – to interested parties. Public limited companies will have their results covered by the press and even on the national news if they suddenly face serious problems.
The reasons for producing a profit and loss account should be understand. Students could be asked what a fall in profit would indicate – or a loss – to interested parties. Public limited companies will have their results covered by the press and even on the national news if they suddenly face serious problems.
