Chapter 8 Monthly Inventory and Monthly Food Cost

1. Chapter 8Monthly Inventory and Monthly Food Cost Principles of Food, Beverage, and Labor Cost Controls, Ninth Edition

2. Important Chapter Terms • Closing inventory: Physical inventory at the end of a period, expressed in terms of units, value, or both • Intraunit transfer: Food or beverage transfer between departments in a single hotel, restaurant, or similar establishment • Interunit transfer: Food or beverage transfer between units in a chain • Grease sales: Dollar value of fats and oils sold to rendering companies

3. Five Methods of Valuing Physical Inventory • Actual purchase price • First-in, first-out (latest prices) • Weighted average purchase price • Latest purchase price (most recent prices) • Last-in, first-out (earliest prices)

4. Important Chapter Formulas • Cost ÷ Sales = Cost % • Cost of food sold ÷ Food sales = Food cost % • Total inventory = Opening inventory + Closing inventory • Average inventory = Total inventory ÷ 2 • Inventory turnover = Food cost ÷ Average inventory

5. Techniques for Determining Cost of Employee Meals • Cost of separate issues • Prescribed amount per meal per employee • Prescribed amount per period • Sales value multiplied by cost percent

6. Determining Cost of Food Sold – Food to bar (directs) – Transfers to other units – Grease sales – Steward sales – Gratis to bar(s) – Promotion expense = Cost of food consumed – Cost of employees’ meals = Cost of food sold Opening inventory + Purchases = Total available for sale – Closing inventory = Cost of food issued + Cooking liquor + Transfers from other units = Subtotal © John Wiley & Sons, Inc. 2009