Foundations of cost control by daniel traster chapter01

chapter Introduction to Cost Control Class Name Instructor Name Date, Semester Foundations of Cost Control Daniel Traster 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 Case Study • 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 in this situation? • Many possible answers! Revenue, Expenses, Profit Managers control revenue and expenses to generate 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 Formula PROFIT (or loss) = Revenu- Expenses e Example 1a Business has $87,000 in expenses and $89,500 in revenue Calculate profit or loss Profit (loss) = Revenue – Expenses = $89,500 - $87,000 = $2,500 profit Example 1b Business has $147,000 in revenue and $150,200 in expenses Calculate profit or loss Profit (Loss) = Revenue - Expenses =$147,000 - $150,200 = -$3,200 or ($3,200) Negatives often written in parentheses Types of Revenue Food Sales Beverage Sales Other ―room rental charges ―merchandise sales ―etc Types of Expenses • Food Cost • Utilities • Beverage Cost • • Labor Cost Repair and Maintenance • Direct Operating Cost • Equipment Purchases • Marketing, Advertising, Promotion • Administrative and General Costs • Occupation Costs • Interest • Music and Entertainment Types of Loss Loss Theft Waste via Production Spoilage 10 Control through the Flow of Food Purchasing Receiving And Storage Issuing Recipe Production Presentation And Portion Control Sales Control 11 Other Key Control Points Employee Scheduling & Forecastin g 12 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? 13 ...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... • Cost of lost pens = $5/week or $260/year • Normal company profit only $20,000/year • What should the manager in this situation? • Many possible answers! Revenue, Expenses, Profit Managers control. .. parentheses Types of Revenue Food Sales Beverage Sales Other ―room rental charges ―merchandise sales ―etc Types of Expenses • Food Cost • Utilities • Beverage Cost • • Labor Cost Repair and Maintenance