Foundations of cost control by daniel traster chapter01

Class NameInstructor Name Date, Semester Foundations of Cost Introduction to Cost Control chapter 1... What role does math play in cost control?. Why must we learn math as part of cost

Class Name

Instructor Name

Date, Semester

Foundations of Cost

Introduction to Cost Control

chapter 1

Opening Questions

What is “Cost Control”?

What role does math play in cost control?

Why must we learn math as part of cost control?

Math Gives Information but Not Direction

• Restaurant loses 50 pens/week to customers

signing credit card receipt

• Cost of lost pens = $5/week or $260/year

• Normal company profit only $20,000/year

• What should the manager do in this situation?

• Many possible answers!

Case Study

Revenue, Expenses, Profit

Revenue: Money collected from sales

Expenses: Money paid out for labor, products, or

services

Profit: Money left from revenue after expenses are

paid.

Loss: Balance owed if expenses exceed revenue

Managers control revenue and expenses

to generate profit

Revenu e

PROFIT

Example 1a

Profit (loss) = Revenue – Expenses

= $89,500 - $87,000

= $2,500 profit

Business has $87,000 in expenses and

$89,500 in revenue Calculate profit or loss

Example 1b

Profit (Loss) = Revenue - Expenses

=$147,000 - $150,200

= -$3,200 or ($3,200)

Negatives often written in parentheses

Business has $147,000 in revenue and

$150,200 in expenses Calculate profit or loss

Types of Revenue

Food Sales

Beverage Sales

Other

―room rental charges

―merchandise sales

―etc.

Types of Expenses

• Food Cost

• Beverage Cost

• Labor Cost

• Direct Operating

Cost

• Marketing,

Advertising,

Promotion

• Music and

Entertainment

• Utilities

• Repair and

Maintenance

• Equipment

Purchases

• Administrative and

General Costs

• Occupation Costs

• Interest

Types of Loss

Loss

Theft

Spoilage Waste via

Production

Control through the Flow of Food

Recipe Production

Recipe Production

Presentation

And Portion Control

Presentation

And Portion Control

Sales Control

Sales Control

Issuing

Purchasing Receiving And

Storage

Receiving And Storage

Other Key Control Points

Employee

Scheduling & Forecastin g

Closing Questions

A point-of-sales system can calculate many

of the formulas that will be covered in the

book

So why is it important to study the math behind

cost control?

What role should a computer play and what role(s) can it not play?