Foundations of cost control by daniel traster chapter09

chapter Receiving, Storage, and Issuing Control Class Name Instructor Name Date, Semester Foundations of Cost Control Daniel Traster Opening Questions • Describe a foodservice receiving area that you have seen • What goes on there (specifically)? • What equipment is present and used there? Required Resources for Receiving Well-trained Employee Cleaning Supplies Space to receive Clipboards Scales Calculators Thermometer Desk Knife Computer Ruler File Cabinets Pens, Paper Hand Truck Dollies Needed from Purchaser • Order Sheets • Bid Sheets • Product Specifications • Daily List of Deliveries Checking Products and Invoices Invoice Adjustments and Approvals Approving the Invoice Receiving Clerk’s Daily Report • List of all items received on a given day • Includes quantities and prices • Sorts items as ―Directs (go to kitchen) ―Stores (go to storeroom) ―Sundries (non-food or –drink) • Easier to track daily food and beverage costs • Send with invoices and credit memos to accounting Food Storage • Done quickly after receiving to prevent spoilage and theft • Store frozen and refrigerated products first Coolers 10 Weighted Average Method total amount spent on an ingredient over the inventory period Price per unit = total number of units of that ingredient purchased during the same period 27 Example 9c From data in Example 9a, calculate value of 140# of flour using Weighted Average 50# X $23/50# = $23 50# X $24/50# = $24 100# X $23.50/50# = $47 Total Flour expense = $23 + $24 + $47 = $94 Total weight = 50# + 50# + 100# = 200# Price per unit = $94 ÷ 200# = $0.47/# Value of 140# = 140# X $0.47/# = $65.80 28 Actual Cost Method The Actual Cost Method uses the price written on each unit at the time of storage • Inventory sheet must have multiple lines per product as identical products with different unit costs must be counted separately • If inventory is properly rotated, this method is the same as the FIFO method 29 Most Recent Price Method • Uses the most recent invoice price as the price per unit for all units of that item in inventory • Referring to example 9a, all 140# of flour would be valued at $23.50/50# for this method 30 Total Inventory Value The inventory value is both the closing inventory value for the prior period and the opening inventory value for the upcoming period Total inventory value = sum of all inventory item extensions 31 Preventing Inventory Theft 32 Inventory Turnover Rate Formula Opening Inv + Closing Inv Average Inventory = Inventory Turnover = Cost of Food Sold Average Inventory 33 Inventory Turnover Rate • Ideal rate is for inventory to turnover every 12 weeks • To convert monthly inventory turnover rate to days to turnover the inventory… Days to turnover = inventory # of days in the month Inventory turnover 34 Example 9d For January, cost of food sold in restaurant is $37,500 Opening inventory for January is $12,300 and closing inventory is $12,900 How often (in number of days) does this restaurant’s inventory turnover? 35 Example 9d (cont.) Average Inv = (Opening + Closing) ÷ = ($12,300 + $12,900) ÷ = $12,600 Inv Turnover = Cost of Food Sold ÷ Avg Inv = $37,500 ÷ $12,600 = 2.98 Days to Turnover = Days in Mo ÷ Inv Turnover = 31 ÷ 2.98 = 10.4 days 36 Benefits of Quick Turnover 37 Special Concerns for Beverages: Receiving • Alcohol picked up at ABC store checked by person picking it up and checked again by someone else at the business • Never leave delivered alcohol unattended until it is secured in storage • Schedule alcohol deliveries when no other deliveries are scheduled • Check labels and fill levels carefully 38 Special Concerns for Beverages: Storage • Lock up alcohol and limit the number of managers with key access • Store each type of bottle in its own bin • Use bin numbers and order bins numerically for easy location 39 Special Concerns for Beverages: Storage 40 Special Concerns for Beverages: Issuing • Use a bottle exchange program • Use written requisitions (even if storeroom is otherwise open) • Ideally, only one manager has the key and the right to issue alcohol • Managers must check paperwork against inventories and verify control procedures are being implemented properly 41 ... Storerooms Pro: More control Con: More costly, requiring high labor costs for a storeroom manager or clerk vs Pro: Less costly Con: Less secure 15 Storeroom Controls Open Storeroom controls: • Keep... period Price per unit = total number of units of that ingredient purchased during the same period 27 Example 9c From data in Example 9a, calculate value of 140# of flour using Weighted Average 50#... unit = $94 ÷ 200# = $0.47/# Value of 140# = 140# X $0.47/# = $65.80 28 Actual Cost Method The Actual Cost Method uses the price written on each unit at the time of storage • Inventory sheet must