Chapter 5 - Monitoring food and beverage product costs. This chapter presents the following content: Cost of sales, computing cost of food sold, computing cost of beverage sold, utilizing the cost of sales formula, reducing the cost of sales percentage, technology tools. | Chapter 5 Monitoring Food and Beverage Product Costs 1 Main Ideas Cost of Sales Computing Cost of Food Sold Computing Cost of Beverage Sold Utilizing the Cost of Sales Formula Reducing the Cost of Sales Percentage Technology Tools 2 Cost of Sales When the amounts of an operation’s individual food and beverage costs are combined they are referred to as the operation’s total cost of sales. The ability to accurately calculate and report an operation's cost of sales is an important management skill. In nearly all food service operations a manager's ability to control cost of sales will be used as a primary measure of that manager’s competence. 3 Computing Cost of Food Sales It is important to recognize that the cost of sales incurred by an operation in an accounting period is most often not equal to the amount of food purchases in that same accounting period. Because that is true, managers must use a very specific process to accurately calculate their cost of sales and cost of sales percentages. 4 Computing Cost of Food Sales 5 Cost of Food Sold Beginning inventory is the dollar value of all food on hand at the beginning of an accounting period. It is determined by completing a physical inventory; the actual count and valuation of all foods in storage and/or in production areas. Purchases are the sum cost of all food bought during the accounting period. The purchases amount is determined by adding and properly summing the value of all delivery invoices and other bills for products purchased in the accounting period. 6 Cost of Food Sold Food available for sale is the sum of the beginning inventory added to the purchases made during a specific accounting period. Some managers refer to food available for sale as goods available for sale because this term was commonly used prior to the publication of the most recent edition of the USAR. Ending inventory refers to the dollar value of all food on hand at the end of the accounting period. It must be determined by completing . | Chapter 5 Monitoring Food and Beverage Product Costs 1 Main Ideas Cost of Sales Computing Cost of Food Sold Computing Cost of Beverage Sold Utilizing the Cost of Sales Formula Reducing the Cost of Sales Percentage Technology Tools 2 Cost of Sales When the amounts of an operation’s individual food and beverage costs are combined they are referred to as the operation’s total cost of sales. The ability to accurately calculate and report an operation's cost of sales is an important management skill. In nearly all food service operations a manager's ability to control cost of sales will be used as a primary measure of that manager’s competence. 3 Computing Cost of Food Sales It is important to recognize that the cost of sales incurred by an operation in an accounting period is most often not equal to the amount of food purchases in that same accounting period. Because that is true, managers must use a very specific process to accurately calculate their cost of sales and cost of sales .
