Food & Beverage Cost Control I/SAA/2012

Food & Beverage Cost Control
BIBL
 IOGRin
 Control
Control inACatering
Catering to
to Ensure
Ensure Profitability,
Profitability, 1971
1971 James
James Steel
Steel
Barrie
Barrie &
PHY Ltd,
& Jenkins,
Jenkins, Ltd, London,
London, England
England 6587/STE/C
6587/STE/C

 Food
Food Cost
Cost Control,
Control, 1973
1973 Richard
Richard Kotas,
Kotas, Bernard
Bernard Davis
Davis
Intertext
Intertext Books,
Books, Aylesbury,
Aylesbury, Bucks,
Bucks, England
England 658.155.2/KOT/f
658.155.2/KOT/f

 Planning
Planning Profits
Profits in
in the
the Food
Food and
and Lodging
Lodging Industry,
Industry, 1976
1976 Peter
Peter Dukas
Dukas
Cahners
Cahners Books,
Books, Boston,
Boston, Massachusetts,
Massachusetts, U.S.A
U.S.A 658.155.401/DUK/p
658.155.401/DUK/p

 Managerial
Managerial Accounting
Accounting for
for the
the Hospitality
Hospitality Service
Service Industries,
Industries, 197
197
Clifford
Clifford T.
T. Fay,
Fay, Richard
Richard C.C. Rhoads,
Rhoads, Robert
Robert L.
L. Rosenblatt
Rosenblatt Wm.
Wm.
Brown
Brown Company
Company Publishers,
Publishers, Dubuque,
Dubuque, Iowa,
Iowa, U.S.
U.S.
658.159.32/FAY/m
658.159.32/FAY/m

 Principles
Principles of
of Food,
Food, Beverage
Beverage and
and Labor
Labor Cost
Cost Controls
Controls for
for the
the Hotel
Hotel an
an
Restaurant
Restaurant Industry,
Industry, 1976
1976 Paul
Paul R.
R. Dittmer,
Dittmer, Gerald
Gerald R.
R. Griffin,
Griffin, Cahne
Cahne
Books,
Books, Inc,
Inc, Boston,
Boston, U.S.A
U.S.A 658/155.3/DIT/p
658/155.3/DIT/p

 Profitable
Profitable Food
Food andand Beverage
Beverage Operation,
Operation, 1962
1962 Joseph
Joseph Brodne
Brodne
Howard
Howard M. M. Carlson,
Carlson, Henry
Henry T.
T. Maschal
Maschal Aherns
Aherns Publishing
Publishing Compan
Compan
Inc.,
Inc., New
New York,
York, U.S.A
U.S.A 6413/BRO/p
6413/BRO/p
Food & Beverage Cost Control I/SAA/2010
1.0.1. DEFINITION AND OBJECTIVES
OFF & B COST CONTROL
1.Introduction
 F1.1.
& BGeneralities
Cost Control a management tool to monitor
costs which are incurred in the restaurant and
kitchen. Cost data is only of use if it available
within a short period of time after the period
observed. Costs can be differentiated by their kind,
from their dynamic point of view and by their
controllability.
1.2. Objectives
The students must be able to list 6 objectives of F &
B Cost Control; name 3 kinds of costs which appear
in a kitchen operation; identify the variability and
controllability of a determined cost; and explain the
flow of costs through the F & B operation.

OF F & B COST CONTROL
2. Development
2.1. Definition of Food and Beverage Cost Control
ost Control is the process whereby managers attempt to
gulate costs and guard against excessive costs. It is an
ngoing process and is involved in every step of the chain
purchasing, receiving, storing, issuing and preparing
od and beverages for sale.

TheObjectives
2.2. primary objectives
of Food of and anBeverage
effective FCost& BControl
cost control
the providing of useful, informative operational data
quickly as possible to the management, so that correcti
measures, if needed, can be taken in time.
F & B cost control is not designed to cut costs in
directions. It is done to ensure that costs are neither mo
nor less than they ought to be without sacrificing t
quality or quantity of the food which is to be served to t
customer. Other objectives are:
Analysis of expenditures
Pricing of food and quotations
Prevention of waste and inefficiencies
Providing data for Food &management reports
Beverage Cost Control I/SAA/2010
2.3.
The costsNature oftheCosts
involved in food and beverage operation
could be divided into three elements:
Materials
Labor Costs
Overhead
The total of materials, labor costs and overheads is
known as the total cost. The difference between the sales
and these costs is the net profit.

Example:
Material
Material (food
(food or or beverage
beverage costs)
costs) meat,
meat,
vegetables,
vegetables, fruits, groceries, etc.
fruits, groceries, etc.
40%
40%
Labor
Labor Costs
Costs
Wages,
Wages, salaries,
salaries, staff
staff meals,
meals, staff
staff
accommodation,
accommodation, social
social benefits
benefits
Total
Total Cost
Cost 80%
80%
19%
19% Sales
Sales 100%
100%
Overheads
Overheads
Rent,
Rent, gas,
gas, electricity,
electricity, water,
water, insurance,
insurance, repairs
repairs
21%
21%
NET
NET PROFIT
PROFIT 20%
20%
Variable costs, on the other hand are those that
2.3.2. Variable Costs
have a direct relationship to the volume of business,
so that every increase in volume brings a
corresponding increase or decrease in costs.
Food and beverage costs are good examples. Every
time a restaurant sells an order of roast beef, it
incurs a cost for the meat sold. Each sale of a bottle
of beer at the bar brings about a cost for the beer
sold. Directly variable costs should therefore
increase or decrease in direct proportion to sales
volume.
Costs can also be examined from a dynamic point of view;
i.e. from the point of view of their behavior vis-à-vis
changes in the volume of sales. From this point it is
possible to distinguish three kinds of costs:
2.3.1. Fixed Costs
Fixed costs are those that have little direct relationship to
the volume of business. As volume increases and decreases
these costs remain the same. Insurance premiums, real
estate taxes and depreciation on equipment are all
examples of fixed costs.

These vary with volume, but not in direct proportion to
2.3.3.
it. Semivariable
Labor Costs
costs are considered semi variable taken as a
whole. When a restaurant or bar is open and
operating, a basic staff must be maintained. As
business increases or volume increases additional
staffing may become necessary and desirable, but not
until all present employees are working to maximum
capacity at optimum efficiency. Beyond that point,
new staff will be hired in numbers and at costs related
to volume, but not in direct proportion to it only after
the fixed, directly variable and semi variable costs of
operation have been met can a business begin to
operate profitably.
Profit
Directly Variable
Sales
Semi – Variable
Fixed

responsibility of one specific individual in a particular
department. Controllable costs are any costs that an
organizational unit has the authority to incur. It is a
cost over which an individual exerts sufficient to hold
him responsible for its amount.
As an example, a cost which is controllable by one
person might not be controllable by persons who are
junior in rank in the organization.
A person’s salary, for example is only controllable at a
higher level than his own.
Non controllable costs are costs assigned to an
organizational unit not incurred and controlled from
within. The amount of rent for example paid by a
restaurant for theFoodpremises cannot
& Beverage Cost Control I/SAA/2010 be changed by its
Raw Rupiah figures for direct variable and semi variable costs
2.4.seldom,
are Cost to Sales
if ever, Ratio:
of any The Cost
particular Percentage
significance for control
purposes. Because these costs vary to some extent with
business volume they become significant only when
expressed in relation to that volume with which they vary.
Costs are calculated in Rupiahs and compared to sales
Rupiahs. This makes it possible to discuss the relationship
between costs and sales which is sometimes described as the
cost per Rupiah of sale, but more often as the cost
percentage, or the ratio of costs to sales.
The formula is:
Cost x 100 = Cost per Rupiah of sale or Cost %

Sales

Cost percentages are useful to management in at least
two ways. They provide of comparing costs relative to
sales for two or more periods of time, and they provide a
means of comparing two or more operations. They latter
comparison can only be valid if two similar operations
are compared.
2.5. Flow of Costs Through the Various Food and
The steps Beverage Activities
in the movement of merchandise from the time of
purchase to the time of sale may be broadly classified into
several steps or functions. The movement of merchandise
through each of these function is termed the “Flow of Costs”.
Food costs will be minimized by efficiently at each step in the
flow of costs. Food & Beverage Cost Control I/SAA/2010
BASIC
BASIC OPERATING
OPERATING ACTIVITIES
ACTIVITIES
PURCHASING
PURCHASING
RECEIVING
RECEIVING
STORING
STORING
ISSUING
ISSUING
PRE
PRE –– PREPARATION
PREPARATION
(Butchering,
(Butchering, Vegetable Cleaning,
Vegetable Cleaning, etc.)
etc.)
PORTIONING
PORTIONING
PREPARATION
PREPARATION
(Cooking,
(Cooking, Baking, Salad and
Baking, Salad and Sandwich
Sandwich making,
making, etc.)
etc.)
SERVICE
SERVICE
ACCOUNTING
ACCOUNTING &
& SALES
SALES
OFF & B COST CONTROL
1.Introduction
 F1.1.
& BGeneralities
Cost Control a management tool to monitor
costs which are incurred in the restaurant and
kitchen. Cost data is only of use if it available
within a short period of time after the period
observed. Costs can be differentiated by their
kind, from their dynamic point of view and by
their controllability.
2.6. Keyand
• The food Points
beverage costs control is done
to ensure that costs are neither more nor
less than they ought to be.
• The food and beverage costs can be decided
into the following
Materials
Labor costs
Overheads
• Cost % = Cost x 100
Sales
OF F & B COST CONTROL
4. Exercises
Calculate the percentage of each cost in
the example of the Income Statement
below and indicate whether they are fixed,
variable or semivariable.

RESTAURANT X %
INCOME STATEMENT
Sales 15.000.000
Cost of Materials Consumed 5’250’000
Labor Cost 2’197’500
Wages and Salaries 1’800’000
Insurance 172’500
Staff Meals 225.000
Overhead 3.601.500
Gas & Electricity 564’000
Repairs & Renewals 576’000
Rent 1’050’000
Telephone 114’000
Printing & Stationery 172’500

Depreciation 1’125’000
Chapter 2. Basic Steps in Food Control
Second Edition 1982

2.0.1. PURCHASING
1. Introduction
1.1 Generalities
The primary objective in the purchasing of food items
should be to obtain the best quality of merchandise, in
the required quantities, at the best possible price.
This can be achieved by using appropriate buying
methods and procedures such as the periodic order
method, purchasing by daily quotation sheets or the
standing order method of purchasing.
1.2 Objectives
The students must be able to set us purchasing
procedures for a medium – sized hotel for perishable and
nonperishable food items.

2.0.1. PURCHASING
2. Development
The primary objective in the purchasing of food is to
obtain the best quality of merchandise, based on
established specifications, at the lowest possible price.
There are three major requisites which are essential to
the effective execution of the purchasing procedures:
 A qualified food purchaser

 A sound set of standard purchase specifications
 Effective buying methods and procedures

2.1. The Food
Responsibility Purchaser
for purchasing can be delegated to any one
of a number of persons in a hotel or restaurant operation,
depending on organizational structure and management
policies.
Purchases can be made by a professional food purchaser
who, in his turn, can delegate part of his duties to e.g.;
- Executive Chef - Meat, vegetables, fruit
- Cellar man - daily purchases of mineral
waters, beers, soft drinks
- Storekeeper- bread, milk, etc.
- Chief Engineer - fuel, etc.Cost Control I/SAA/2010
Food & Beverage
2.1.1. Character Qualifications
The following
of a are qualifications
Food Purchaser of a food purchaser:
 Honesty and integrity
 Sobriety
 discretation
He should possess the following knowledge:
 Basic knowledge of materials and their uses in
different forms of catering
 Experience in the survey of the supply market to
find cheaper and better sources of supply as well as
His activities would consist the following:
2.1.2. Activities
•The purchasing of all goods for the establishment, and
the ensurance of continuity of supply.
•Visits to markets and frequents contacts with
suppliers.
•Establishing purchase specifications.
•Concluding purchase contracts.
The purchaser has to have enough time at his disposal
to accomplish all his work. Contacts with
representatives or price and quality comparisons
cannot be made in a few hours. He should not be
attached to his desk but should make frequent contacts
2.2. Kind of Food to be Purchased
The types of foods to be purchased for any operation may be divided
roughly into two categories; perishables and non – perishables.
Techniques andare
 Perishables procedures for the
those items, purchase
typically of goods,
fresh them are somewhat
that have a
different.
comparatively short useful life after they have been received.
They should be purchased for immediate use in order to make
advantage of the quality required at the same time of purchase.
 Non perishables are those food items that have a longer “shelf
life”. They are mostly purchased and stored in jars, bottles,
cans and boxes. They may be stored on shelves and at room
temperatures for weeks or even months. Because these foods
do not deteriorate quickly, it is possible to keep a reasonable
supply of each on hand, for use as needed. Price fluctuations
can affect the amount to be bought and the buying time.
Hotel National
Bandung No.
PRICE QUOTATION SHEET Date of request :
Date required :
Department
Purveyors’ Quotations
Consumption per Last price paid and
On Hand Description Unit Wanted Comments
month supplier
Purchase Order written

2.4. Special Procedures and Controls for
In many operations, all large pieces of meat such as
Receiving Meat
ribs, sirloin, strips, rounds, etc, are tagged at the
time of receipt by the receiving clerk before they are
put in storage.
These two sectional tags usually name the items,
the grade and the weight of the item. All information
is filled in by the receiving clerk except the date of
issue. The bottom section which is perforated for
convenient division is sent to the food controller,
while the top part stays on the piece of meat.

The food controller enters the tag on a control sheet (one for each
group of articles). This helps to show instantly the amount of meat
in stock. As meats are issued, the tag is detached from each piece,
and the Rupiah value recorded on the requisition. If one listing
requires the issuing of several pieces of meat, the tag values are
totaled before entering. When meat tag values are entered on the
requisition, the tags are attached to the requisitions.
In the Food Cost Controller’s office the date of issue is entered on
the meat tag control sheet. In addition a “cross out” list is kept to
maintain a control of all the tags returned. Due to the distribution
of meat tags to several meat groups a chronological record on the
meat tag control sheet is not possible. To repeat, a meat tag is
used because:
•It facilitates checking the accuracy of the receiving clerk.
•It prevent disputes over the weight when the meat is issued to the
kitchen. Food & Beverage Cost Control I/SAA/2010
Hotel National
Jl. Dr. Setiabudhi 186
No. :
Bandung
REQUEST FOR CREDIT MEMO

To : Date:
Gentlemen : Please send us a Credit Memo for the following goods

returned/not delivered.
Delivery Note
Item No. Value Comments

1.2. Standard Purchase Specification
A purchase specification is a concise description of
the quality, size, and weight or count factors
desired for a particular item. The specified factors
should be described in sufficient detail to properly
guide the company’s purveyors and receiving
personnel in the delivery and receipt of the desired
merchandise. These specifications are established
by management based upon thorough study of the
menu needs and their merchandising and pricing
policies. Food & Beverage Cost Control I/SAA/2010
Standard purchase specifications, if carefully prepared,
 They force the management team to determine exact
are useful in several ways, e.g.;
requirements, in advance, for any commodity.
 They eliminate misunderstandings between the
purchaser and purveyors if they are circulated.
 Circulation of specifications for one commodity to
several purveyors makes competitive bidding
possible.
 They eliminate the need for detailed verbal
descriptions each time a commodity is ordered.
 They facilitate checking food when it is received.
The following are examples of standard purchase

Whole, dressed, fresh day of delivery
2.3.1. Flounder (grey
minimum 0.9 kg, maximum 1.8 kg.
sole)
Fish should be twice as long as is broad with oval
body. Fish should be firm and elastic, the meat should
be white and slightly translucent, color should be
bright and clear. Gills should be free from slime and
reddish – pink in color, and the scales should adhere
tightly to the skin.
No stale odors of ammonia
Yield of 40% to the fillet
Delivery to follow day of order
2.3.2. Grapefruit
Medium to large, 9.50 to 10.20 cm. in diameter.
Light yellow in color, approximately 12 to 14
sections, oval to round. Thin – skinned, tender,
delicate flesh. No visible spotting or bruising on
skins. Medium acidity and sweetness, faint
bitterness. Packed 36 to a crate.

Several suppliers must be available to be able to do a competitive
2.4. Effective Buying Methods and Procedures
buying. The form ‘Price Quotation Sheet’ illustrates the types of
form which facilitates competitive buying and building in
conformance with established standard specifications. It is not
necessary to split up orders between several suppliers but it is
wise to have the possibility of changing them whenever
necessary.
There is no appointed supplier who has the exclusive right of
supplying a certain article. Prices and deliveries can be re –
examined at any time negligence has been noted.
If the supplier’s services have slackened off, a ten day change of
supplier could be done as a warning. He should be informed by
letter as to why this change was initiated.
2.4.1. Periodic Order Method
The head store man, or other person responsible, would check
the level of(mainly forstores
all items in the nonperishable)
on a regular basis. This may be
once every two weeks, or even once each month, depending on
the policies of management as to the amounts of money to be
tied up in inventory, the capacity of storerooms available and the
volume of business conducted. The amount ordered is based on
the quantity needed to bring the stock back up to par plus an
estimate of the quantity to be used between the moment of
putting down the order and the time of delivery.
Park stock is the normal quantity required during a given
operating period, plus a safety factor for delay and for
unanticipated requirements such as for extra business.
Date received
The receiving clerk stamps each delivery note or
………………………………………………………
invoice with a receiving or invoice stamp. It is a way
Received by
of consolidating all approval signatures and dates in
…………………………………………………………
a uniform manner.
Price Checked by
………………………………………………….
Extensions Checked by
………………………………………….
Purchasing Dept. Approval
……………………………………..
Payment approval
…………………………………………………
Date of
Food & Beverage Cost Control I/SAA/2010 payment
Besides returning the improper goods, quantities can be
2.3. Returning
changed Unsatisfactory
on delivery notes or invoices Merchandise
by getting the
delivery man to initial both copies.
Instead of correcting the delivery slip or invoice in case the
delivered goods do not Delivered good not comply with was
ordered request for credit memorandum should be
prepared. It is a written statement prepared by the
receiving clerk and signed by the purveyor’s deliveryman
attesting to the fact that the delivered merchandised did
not conform with that ordered in one or more of the
following ways: quality, quantity, specification or price.
Triplicate copies are forwarded to the accounting
department for further processing. The department from
which the order originated should be notified so that plans
may be changed andFoodsubstitutions made in the menu if
& Beverage Cost Control I/SAA/2010
Hotel National
Bandung
No. :
MERCHANDISE RECEIVED WITHOUT DOCUMENT
From :
Date :
Description Unit Quantity Price Value

The
2.5.useTheof properly
Purchase written orderpurchase orders prevents
the following:
 Acceptance of items not ordered
 Acceptance of wrong sizes or weight
 Acceptance of substitutes
 Acceptance of goods at higher prices than those
quoted
 Acceptance of more than the proper amount
 Duplication of orders
 The receiver overlooking delivery delays or any
shortages is delivery amounts.
The purchase order is written in triplicate, each copy
 The original goes to the supplier
being color coded to aid correct distribution:
 One copy is retained by the purchasing office and
filled with other purchase orders directed
previously to the same supplier. It is kept for
future reference as to prices, past dates of
purchases, amount ordered, etc.
 One copy is sent to the receiving clerk who uses it
as daily follow up.

The initiation of a request to purchase goods by an authorized
member
The variousof stages
the staff
in the(head of department,
purchasing supervisor)
procedure are: to the
stores.
If the desired item is not in stock or not in sufficient quantity the
order is sent to the purchasing office.
The determining of the source of supply from which the goods
are to be purchased, and the price to be paid (on price quotation
list).
Entering into a contract with the firm selected. This may be by
telephone for perishable items purchased daily (daily market list)
or in writing on a detailed contract form (purchase order).
Obtaining a satisfactory delivery performance from the supplier
with regard to time, date and place of delivery. This is important
to time – schedule deliveries so that the receiving staff can
operate efficiently and suppliers are not kept waiting to unload
for long periods.
The acceptance of goods ordered
Food & Beverage and
Cost Control the transfer to the ordering
I/SAA/2010
2.6. Control Activities Related to Purchasing
It is not sufficient just to see that a qualified buyer is
hired and that standard purchase specifications are
established, but effective purchasing methods and
procedures must be set up as well. There must be
constant follow – up and evaluation of all aspects of
the purchasing procedure in order to ensure
continuous adherence to established policies and
procedures.
 Make spot checks of quotation sheets.
 Compare prices with friendly competitors buying similar
merchandise.
 Analyze the distribution of the purchases to different
suppliers.
 Examine merchandise on hand.
 Make a forecast of price trends for future trading periods.
This is in case of contracts with suppliers. All contract
prices should periodically be reviewed and renegotiated.
The more information there is on future trends the easier
the negotiations with suppliers will be. Moreover, if a menu
remains in force for a longer period the trend of prices for
food supplies should be determined and the menu prices
fixed accordingly. Food & Beverage Cost Control I/SAA/2010
2.7 Key Points
 The purchase of food items should be aimed to
obtain the best quality merchandise at the lowest
possible price .
• Periodic Order
 The 3 methods of purchasing are the following:
• Purchasing by daily market list
• Standing order
 The purchase of food items should be based on
the purchase orders.

2.0.2. Receiving
1. Introduction
1.1. Generalities
Without proper receiving, the previous efforts of
purchasing are worthless. For the receiving job, a
trustworthy employee has to be chosen who knows
all procedures concerning receiving.
1.2. Objectives
The students must be able to describe points to
consider while receiving goods and name all
documents used by a receiving clerk.

2.0.2. RECEIVING
2. Development
Depending on the size of the operation, food deliveries are
2.1. The Receiving Clerk
received by manager or chef or by full time receiving clerk. The
person assigned by management to have full responsibility for
receiving food deliveries and carrying out the control
procedures set up by the food controller has to have
specialized training. He must have a detailed knowledge of
receiving procedures and documents as well as an indepth
knowledge of all types of food and beverages.
For the receiving of non – food products he may call in the
assistance as an example of the chief engineer or other persons
responsible for goods arriving. If a receiving clerk accepts
improper items he Foodrenders useless all the efforts of the
2.2 Receiving Procedures
Receiving procedures vary widely from hotel to hotel, depending of
the size of it and staff at disposal.
The three following points should be observed:
 Quantities delivered should be the same as those listed on the
delivery slip or invoice and should be the same quantities listed
on the purchase order or market list.
 Quality of the food delivered should conform to the standard
purchase specification for each item delivered.
 Prices on the delivery slip (if they are quoted) or on the invoice
Each delivery
should has same
be the to be accompanied by aon
as those circled delivery note orlist
the market invoice.
or the
If itone
happens
on thethat a delivery
purchase has not supporting document a
order.
special receiving ticket has to be used which takes the place of the
missing document.
Hotel National
Jl. Dr. Setiabudhi 186
No. :
Bandung
REQUEST FOR CREDIT MEMO
Date:
To :
Gentlemen : Please send us a Credit Memo for the following goods

returned/not delivered.
Item Delivery Note No. Value Comments

2.4 Special
In many Procedures
operations, all largeand Controls
pieces of meat such as ribs,
sirloin, strips,
for rounds, etc,
Receiving Meat are tagged at the time of receipt by
the receiving clerk before they are put in storage.
These two sectional tags usually name the items, the grade
and the weight of the item. All information is filled in by the
receiving clerk except the date of issue. The bottom section
which is perforated for convenient division is sent to the food
controller, while the top part stays on the piece of meat.
The food controller enters the tag on a control sheet (one for
each group of articles). This helps to show instantly the
amount of meat in stock. As meats are issued, the tag is
detached from each piece, and the Rupiah value recorded on
the requisition. If one listing requires the issuing of several
pieces of meat, the tag values are totaled before entering.
In the Food Cost Controller’s office the date of issue
is entered on the meat tag control sheet. In addition
a “cross out” list is kept to maintain a control of all
the tags returned. Due to the distribution of meat
tags to several meat groups a chronological record
on the meat tag control sheet is not possible. To
repeat, a meat tag is used because:
•It facilitates checking the accuracy of the receiving
clerk.
•It prevent disputes over the weight when the meat
is issued to the kitchen.
•No need to weight meat again at the time of issue.
•Helps with taking of inventory
•Rotation of stock
No.
Date rec’d
Dealer
Cut
Grade
Weight Unit Price
Extension
Date Issued
No.
Date rec’d
Hotel National
Bandung
MEAT TAG CONTROL SHEET
Cut : Month :
Date in No. Meat tag Description Weight Unit price Value Date Out

A daily record should be kept of all food, beverages and other
items accepted by Clerk’s
2.5. Receiving the receiving Daily clerk. When all deliveries for the
Report
day are in, the receiving notes are entered on the receiving sheet
(one original, one copy).
In addition to listing the Rupiah values of each of the items
received, the form provides for the division of costs into four
categories:
 Direct (mainly perishables)
 Store (groceries)
 Beverage (groceries)
 Sundries (non – food items)
These figures of Food Direct and Food Stores will be needed later
on to compute the daily cost of food sold.
The receiving sheet with the invoices and/or delivery notes
attached should then be sent to the food cost controller who will
check the arithmetical of each invoice and the total of the
receiving sheet and invoices will
Food & Beverage Cost be sent
Control to accounting department
I/SAA/2010
• 3 points to be observed when receiving food items
2.6. Key Points
are:
 Quantity
 Quality
 Price
• A request for a credit memo is used when the
delivered goods do not comply with what was
ordered.
• The figure of food directs and food stores listing on
the receiving sheet will be used to compute the daily
cost of food sold.

Hotel National

Bandung
Page : of
RECEIVING SHEET
Day : Date :
Invoice Amount
Purchase Delivery Note Purveyor and Quantit Unit

Unit Extensi Total Food Food Beverag Sundries
Order No. No. invoice detail y Price
on Direct Stores es

2.0.3. STORING
1. Introduction
1.1. Generalities
By maintaining Bin Cards in the storeroom, and
perpetual inventory cards in the F&B Cost Control
Office, a tight control over stock movement can be
made.
1.2. Objectives
The students must be able to keep bin cards and
perpetual inventory cards and the term and use of
par stock and reorder point

2.0.3. STORING
2. Development
The primary objective in storing is to maintain an adequate
supply of food for the immediate needs of the business with
minimum loss through spoilage and pilferage.
Assuming that good quality merchandise is purchased and
2.1 Condition
received, of Facilities
the storekeeper in chargeand Equipment
of the storage areas has the
following duties to avoid food spoilage :
•Keep the storage area clean and dry
•Avoid excessive storage periods
•Ensure proper temperatures are maintained
Fresh meats 1o – 3o C
Fresh vegetables, fruits 4o – 6o C
Fresh dairy products 2o – 4o C
Fresh fish 0o – 4o C
Frozen foods - 18o C
Definite locations should be allocated for all goods. New
2.2 Arrangement of Food
deliveries should be placed always in the same location.
All too often, one commodity can be found in several
locations at one time. This increases the chances for over
purchasing, spoilage and theft, not to mention loss of
time locating articles. In addition. It makes the monthly
process of taking a physical inventory difficult.
Separate locations should be provided for nonperishable
and the few nonperishable which will not be immediately.
The storage area should be fitted with mobile adjustable
shelving racks. This would allow for ease in changing the
layout of the storeroom and adapting the shelves to the
items stored on them.
Listed below are examples of typical layouts of stores :
• Arranged in alphabetical sequence.
• Items frequently used are stored near to the door and
the remainder of items arranged in alphabetical
sequence.
• Group commodities together, e.g. all canned items
arranged in sections for fruit, vegetables, fish, etc.
In arranging the incoming foodstuff and issuing, steps
should be taken that older quantities of any items are used
before any new deliveries. This is known as the “First – In –
First – Out” (FIFO) method of stock rotation.
The storekeeper and his staff are responsible for storing
new deliveries of an item behind the quantities already on
hand, thus ensuring that older items will be used first.
This is particularly important for perishables but it should
not be neglected withFoodnonperishable.
First, food has to be removed from the receiving area as
2.3 Prevention of Pilferage and Theft
quickly as possible. Once in storage, attention must be
given to maintaining appropriate security at all time.
Basic points are :
• Adequate locks
• Effective control of keys
• Never leave storeroom unattended
• No unauthorized person should be permitted in
storage areas
• Maintenance of stock records
To have anOver
2.4 Control efficient
Stock control over
Movement the stock of
nonperishable, Bin Cards are kept in the storeroom. For
each item a separate card is kept with entries being made
of the units issued to the departments. With this system it
is at any time possible to determine the number of units on
hand. This way cards can be checked against items on the
shelves at any time to determine if any goods are missing.
Two additional figures are on the Bin Card :

 The first, the par stock is established by
2.4.1 Par Stock
determining the appropriate quantities for each
commodity. It could be defined as the normal
quantity required during a given operating period,
plus a safety factor for delay in delivery and for
unanticipated requirements such as extra
business. Stock is seldom, if ever, at par, since
each issue of a unit reduces the count and each
purchase of an additional number increases it.
Par stock is the predetermined number of a
certain item we would like to have on hand.

 The reorder point is the level where reordering should
2.4.2 Reorder Point
be made. It covers the period during the time of order
and delivery of goods.
By keeping all these records on cards, it is possible to
determine quantities to order without making constant
reference to the shelves, and actually counting units.
The keeping of bin cards with the amounts of par stock
and reorder points helps to guard against over
purchasing – the purchasing of unneeded quantities,
which would increase the possibilities of theft.
Moreover, it ties up unwarranted amounts of money in
inventory.
 Bin cards are used to control the stock of
2.5 Key Point
nonperishable items.
 Par stock = normal quantity required during an
operating period plus safety factor for delay and
extra business.
 The arrangement of storing food items:
 Alphabetical sequence
 Perishables and non perishables should be
stored separately
Hotel National
Bandung
Card No. :
BIN CARD
Description :
Unit :
Par Stock : Reorder point :
Date Ref. In Out Bal. Date Ref. In Out Bal.

2.0.4. ISSUING
1. Introduction
1.1 items
No Generalities
should leave a storeroom without a written
requisition, signed by an authorized person. Only this
procedure helps to prevent theft and improper use of
food and beverage items. Spoilage and breakage reports
as well as transfer memos supplement the requisition
procedures.
1.2 Objectives
The students must be able to set up an issuing
procedure and handle the requisitions in a F & B
Cost Control Office.

2.0.4. ISSUING
The main concern of controlling issues is that no,
2. Development
goods are removed from the storeroom without
proper authorization and that only the quantity of
foodstuff required for preparation should be
obtained. A requisition system is usually used to
provide these control elements.
The requisitions sent to the storekeeper should
indicate the amount, the unit, and a complete
description of each item desired. The writing should
be legible and the information complete. It should
be signed by a duly authorized person.
A sample of approved signatures should be posted
in the storeroom to facilitate the verification of
The requisition forms are in triplicate. One copy
remains with the ordering department, the original
and one copy go to the stores. The original is sent
on to the Food Cost Controller. Whenever practical,
it is advisable to require that these requisitions be
submitted in advance to the stores to enable the
storekeeper to prepare the order without haste.
Definite times for the issuing of food by the
storekeeper should be fixed, who after all has a
number of other duties to perform. After having
completed the issuance of items required in the
requisitions, the issues have to be entered under
“out” on the bin cards.
2.1meats
As Issuing
areofissued,
Taggedthe
Meat
tag is detached from each
piece and the Rupiah value recorded on the
requisition. If one listing requires the issuing of
several pieces of meat, the tag value are totaled
before entering. When meat tag values are entered,
the tags are attached to the requisition.


2.2 Requisition
All the Handling
requisitions are in the
entered into Food Cost
the “perpetual inventory card”
in theControl
respective “out” column. At the same time the unit cost of
Office
each item listed must be entered on the requisition form and
multiplied by the number of units issued in each case. This is
called extending the requisitions. The unit cost will come from the
perpetual inventory card for each item, on which the most recent
average price is indicated. Afterwards each requisition is totaled.
The requisitions for tagged meat items are extended and totaled
too. At this point the food cost controller has already available the
figure for the principal component of a daily food cost.
 Cost of direct food supplied from the receiving sheets
 Cost of store issues from the requisitions
The procedure of calculating the food cost will be explained in a
later lesson.
2.3 Pricing of Issues of Goods from the Storeroom
This method
2.3.1 is applied
Weighted for Pricing
Average items which have a fluctuating
Method
market price. When a new purchase is made a new average
price is calculated. The quantities are taken into account as
well as the price.
The formula is as follows :

Old stock x Unit price/Old stock
New+ stock x Unit price/New stock
Amount of old stock + New stock

2.3.2 FIFO (First – in – First – out)
This method assumes that issues will be from the
earliest purchase still in stock and the original
purchase price paid for this items will be used.

Hotel National
Bandung No. :
FOOD STORES REQUISITION
Issued to Dept. : Date :
Cost
Code No. Ordered Unit Description Issued
Unit Amount
Approved by : Issued
Food & Beverage Cost by : I/SAA/2010
Control
The “perpetual inventory card” is similar too, but
independent
2.4 Perpetual of the inventoryCard
Inventory record (Bin Cards) maintained
in the stores. It is kept in the Food Cost Controller’s office.
It should indicate the following additional information :
 Number of requisition or purchase order
 Name of supplier
 Department to which issued
 Price paid for each item
 (Average price)
 Value of inventory
The perpetual inventory cards are maintained with data
obtained from approved invoices, signed requisitions and
credits for breakage or spoilage. The cards are kept as a
control over the store keeper to be sure he is doing his job
honestly. As well as doing spot-checks the perpetual
Hotel National Code No. :
Bandung
PERPETUAL INVENTORY CARD

Description :
Unit :
Par Stock : Reorder point :
Supplier :
Purchase Order/Supplier Out Aver-age price

Requisition/Department
Date In Bal-ance Unit price Value

2.5 Breakdown of Issues
Some managers like to see a presentation of total
issues from stores for the day on analysed sheet. Thus
it is possible to see what is being drawn from the
stores. Information is available from the requisitions.

Hotel National
Bandung
Month : …………………………….
FOOD STOCK INVENTORY CONTROL
Total
Today To Date
Day Meat Poultry Fist Vegetables Fruit Groceries Direct Beverages Adjustments
1
2
3
4
5
6
7
8
9
10
11
30
31
Amount
%

This is an informal type of requisition note which is
2.6 Food
issued whenanda Beverage
department Transfers
requisitions something from
another department and not from the stores. For
example, the kitchen may make out a transfer note to
the dispense bar for small quantities of items like
liquors, etc. (Whole bottles would be requisitioned from
the beverage stores).
The dispense bar may make out a transfer note the
kitchen for oranges and lemons. Transfer notes may be
used as well for food transfer between different
kitchens in large establishments if separate food cost
figures are established for each kitchen. This applies
as well for food transferred from a kitchen to staff
Hotel National
Bandung
FOOD /BEVERAGE TRANSFER MEMO
From : Date :
To :
Cost
Code
Quantity Unit Description
No.
Unit Amount
Sent by :
When, in the normal
2.7 Spoilage day working
and Breakage of the stores, items are
Report
broken or pilfered, etc., these items must be recorded on a
spoilage and breakage report. The purpose is to record the
quantity of damage goods, to restrict unexplained
differences in the actual stock (as counted on the shelves)
with the book stock.
Items recorded can be taken out of the Bin Cards and
perpetual inventory cards and then be officially written off
with the approval of the Food Cost Controller. This report
makes the storekeeper and other staff aware that
management is concerned with any loss of goods.

Hotel National
Bandung
SPOILAGE AND BREAKAGE REPORT
Department : Date :
Cost
Code No. Quantity Unit Description
Unit Amount
Explanation :
Requested by Approved by F & B Controller :

2.8 AKey
 Points system is used to control the issuing
Requisition
of items.
 The following are pricing methods:
 Weighted Average
 FIFO
 Perpetual inventory cards are also used for stock
control.

2.04 ISSUING
3. Question
• Describe in Review
your own words the
Questions Answer
proper control system of issuing
merchandise from a storeroom
• From where does the cost

controller take the unit cost
figures or merchandise issued ?
• Name the two principal

components needed to calculate
a daily food cost
• What is the use in establishing

the breakdown of issues report
Food & Beverage ? I/SAA/2010
Cost Control
 Explain Questions
the two pricing Answer
methods for goods issued
form the storeroom and give
an example of each

 Why should the spirits
taken by the kitchen from
the bar noted in F&B
Transfer memo although we
know that these items will
also be sold to the
customers ?
2.0.5. INVENTORIES
1. Introduction
1.1control
To Generalities
the movement of goods, a regular taking of an
inventory is performed in the storeroom. The data
obtained is compared with the perpetual inventory cards
and a book closing inventory which is calculated in the
cost control office.
With the calculation of the inventory turnover, the
ordering procedures can be controlled.
1.2 Objectives
The students must be able to take a monthly inventory
in a storeroom; establish an inventory control to
determine the daily book inventory; prepare a store room
reconciliation; calculate an inventory turnover and set
up am empty bottles and cases control.
2.0.5. INVENTORIES
2. Development
It
2.1isPhysical
practiceInventory
in most operations to determine
monthly the value of physical inventory. This
determination is made at the close of an accounting
period, typically after the close of business on the
last day a calender month.
The physical stock taking should be done by the
food cost controller assisted by another person. An
accurate way to take stock is to start at one area
and gradually work round the entire storeroom in
one uninterrupted movement. By using this
method, nothing is missed.
The figures are prefarably written on a preprinted
stocktaking sheet. It is good practice to list the
items on the sheet in the same order in which they
are physically stored. Once in the stocktaking has
been completed and all discrepancies with the bin
cards investigated, the stock records (bin card)
should be adjusted to show the actual quantity of
each item on hand.
The stocktaking of perishables can cause
complications if the amount of partially processed
food is very high. The executive chef should be
asked to keep the amount of perishables as low as
possible at the end of an accounting period. This
would facilitate the stocktaking.
After having finished the stocktaking, the food cost
controller enters the average price for each item on
the inventory list, which is then multiplied by the
number of units of each, as the last step, these
totals are added together to determine the total
Rupiah value of the inventory. This is known as the
book opening inventory for the next period.
2.2 Book Inventory
The physical closing stock can be compared to a
closing stock which is the determined purely by
calculation. This so called book inventory is
determined by the following formula :
(Physical closing inventory
for the preceding month).
Opening Inventory (Total value of the
purchases for the period as
+ Purchases
listed on the receiving
= Total Available clerk’s receiving sheet).
(Total value of goods
- Issues available for sale during the
period).
(Total value of foods issued
= Closing Inventory or listed on requisitions for
(Book Inventory) the period).
(What the closing inventory
should be, based on
records of purchase and
issues).
Hotel National
Bandung
Page ……………of ……….…….
INVENTORY
Code No. Description Unit Quantity Price Amount

It is advisable for the food cost controller to
2.3 Food aStock
maintain Inventory
perpetual book inventoryControl in the form of
a “food stock inventory control”.
In this type of record the total value of each day’s
purchases are added to the opening inventory and
the day’s issues are deducted.
At the end of every day the new book inventory can
be determined.
Under ideal conditions, the value of the book
inventory and the physical inventory as taken in the
storerooms should be the same at the end of a
month. However this is seldom, if ever, true for a
number of reasons would be occasional human
errors in costingFoodout.
& BeverageUnacceptable
Cost Control I/SAA/2010 reasons would
To do a proper comparison between the values of
2.4 Storeroom
the Reconciliation
physical storeroom inventory (from inventory
sheets) and book inventory (from “Food Stock
Inventory Control”), the cost controlled has to set up
a storeroom reconciliation which will point out all
discrepancies between the two.
Discrepancies between book inventory and physical
inventory exceeding 1% of the total issues should be
regarded as worthly of trough investigation and
steps should be taken that the variance is reduced
significantly in the future periods. Variation below 1
% should not be accepted without comment. They
should be pointed out to the employees whose
errors have caused Foodthem.
Staff should be aware that management is alert to every
variation from standards.
The following points should be checked if there is a
difference :
 The unit cost marked on the perpetual inventory
card.
 The extensions and totals of the inventory sheets.
 Any abnormal quantity of meat or vegetables in the
inventory of the actual months, comparing it with
the previous months.
 The physical inventory would have to be rechecked.
 Any invoice for the last month or for a future month,
which have been entered in the “food stock control”
but not in the physical inventory or vice versa.
 Review costs marked on requisitions.
Book Inventory
- Physical inventory
= Over or short of Physical Inventory
% of difference
Over or short last month
% of difference
In general it is possible to say that with regular stocktaking the
food cost controller can measure the effectiveness of receiving,
storing and issuing procedures.
Management should receive sufficient information to effectively
evaluate the storeroom operation’s efficiency. For example, a
refrigerator temperature report indicating the thermometer reading
is useful to determine whether the equipment is functioning
properly and that the temperatures are being checked so that
there is a minimum risk of spoilage.
Physical inspection of the storeroom area will reveal any
deficiencies in sanitation or improper storage practices. Formal
Inventory turnover ratios are calculated to relate the value
2.5inventory
of Inventory Turnover
at cost price to the sales volume at cost. The
rate of inventory turnover is calculated by the formula :
Cost of food issued

Average inventory at cost

Average inventory is calculated with the formula
Opening inventory + Closing inventory
2
Management should establish guidelines as to the value
inventory which is to be held at any period and the rate of
inventory turnover required. The rate will vary with
different types of establishments and the sizes of store and
the location of the establishment relative to the suppliers.
The problems of low inventory turnover are:
 Capital is tied up and cannot be used elsewhere in the
business
 Increased risk of spoilage
An inventory turnover rate which is too high might indicate:
 Inventory on hand too small
 Establishment might run out of items which are on the
menu.
2.6 Keyphysical
 The Points closing stock should be compared to
the book closing inventory.
 Inventory turnover ratio is calculated to relate the
value of inventory at cost price to the sales value at
cost.
Hotel National
Bandung
Month : …………………………….
FOOD STOCK INVENTORY CONTROL

PURCHASE ISSUES
Direct Stores To Day To Date Steward Sales Spoilage To Day To Date
Kitchen Bars
Breakage
Opening Closing
Date
Inventory Inventory
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

Food & Beverage Cost Control I/SAA/2012

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Food & Beverage Cost Control I/SAA/2012

Uploaded by

Copyright:

Available Formats

Food & Beverage Cost Control

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

The formula is:

Cost x 100 = Cost per Rupiah of sale or Cost %

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

Cost of Materials Consumed 5’250’000

Labor Cost 2’197’500

Wages and Salaries 1’800’000

Staff Meals 225.000

Gas & Electricity 564’000

Repairs & Renewals 576’000

Printing & Stationery 172’500

Food & Beverage Cost Control I/SAA/2010

Second Edition 1982

Food & Beverage Cost Control I/SAA/2010

 A qualified food purchaser

Food & Beverage Cost Control I/SAA/2010

PRICE QUOTATION SHEET Date of request :

Purchase Order written

Food & Beverage Cost Control I/SAA/2010

REQUEST FOR CREDIT MEMO

Gentlemen : Please send us a Credit Memo for the following goods

Food & Beverage Cost Control I/SAA/2010

The following are examples of standard purchase

Food & Beverage Cost Control I/SAA/2010

MERCHANDISE RECEIVED WITHOUT DOCUMENT

Description Unit Quantity Price Value

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

REQUEST FOR CREDIT MEMO

Gentlemen : Please send us a Credit Memo for the following goods

Item Delivery Note No. Value Comments

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

Purchase Delivery Note Purveyor and Quantit Unit

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

Date Ref. In Out Bal. Date Ref. In Out Bal.

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

Amount of old stock + New stock

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010

FOOD STORES REQUISITION

Issued to Dept. : Date :

PERPETUAL INVENTORY CARD

Par Stock : Reorder point :

Purchase Order/Supplier Out Aver-age price

Date In Bal-ance Unit price Value

Food & Beverage Cost Control I/SAA/2010

Food & Beverage Cost Control I/SAA/2010