Question | Answer |
Budget | A prediction of anticipated revenue and expenditures for a specific period of time |
Cost | resources expended to achieve an objective |
Types of Budgets | 1. Master
2. Operating
3. Cash Budgets
4. Capital Budgets |
Food Cost/ meals serve | Food Cost per Meal Formula |
Income/Meal equivalent | Meal Volume Formula |
Food cost
--------- x 100
Income | Food Cost percentage formula |
Mark-up factor = _______100_______
% income for food
Selling price = mark-up factor X raw food cost | Determining Selling Price formula |
Mark-up factor =___ 100______
Food cost %
Raw food cost X % hidden cost = hidden cost
Raw food cost + hidden cost = adjusted food cost
Selling price = mark-up factor X adjusted food cost | Conventional Method formula for determining selling price |
Prime cost = raw food cost + labor cost*
Mark-up factor = __100_____
(Food cost % + labor cost %)
Selling price = prime cost X mark-up factor
*Labor cost = Divide # min by 60, then multiply by $/hr. | Prime Cost Method for determining selling price |
Fixed cost/1-(variable costs/sales) | Break even point formula |
Multiply the # of employees by the # of hours worked per wk
Add up all of the hrs
Divide by 40
Example:
A foodservice has ten 40-hr employees, 3 20-hr employees,& five 16-hr employees
(10)(40)+(3)(20)+(5)(16) = 540 hrs
540/40=13.5 FT | Calculating FTE (full-time equivalent) per week |
Total number of meals served/
Total hrs of labor to produce the meals | Meals per hour formula |
Total number of meals served/
Total FTE's to produce the meals | Meals per full time equivalent formula |
Total min of labor time to produce the meals/Total number of meals served | Labor minutes per meal formula |
number of meals sold x sales average | Total revenue formula |
Labor cost/total revenue | Labor cost percentage formula |
What is a master budget? | 1. coordinates every aspect of operation
2. compilation of several small budgets (operating, cash, capital) |
What is a operating budget? | forecast of revenue (sales), expenses; profit day to day guide includes: statistics budget-estimate of volume of sales in commercial services in non-commercial operations *based on historical data
revenue budget-projection of the expected income |
What is a cash budget? | 1. projects receipt of revenue & expenditure of funds
2. determine if funds are available when needed *identify cash availability at any given time |
What is a capital budget? | long term plan, estimates/predicts cost of capital expenditures |
Fixed Budget | Set dollar amount based on predetermined activity
Based on past sales & cost, considers future change
Rigid |
Flexible Budget | Dollar range for levels of activity
Takes into account variability in activities |
Zero-based | Start with “blank piece of paper” each year
Evaluate all activities, justify every request for funds |
What are the five phases of budget planning continued? | Evaluation Phase:
Dissects past performance, identifies factors influencing future activities
Preparation or planning phase:
Uses info from evaluation phase to forecast and prepare for 1st draft of budget |
What are the five phases of budget planning? | 1. Evaluation phase
2. Preparation or planning phase
3. Justification phase
4. Implementation or execution phase
5. Control phase |
What are the five phases of budget planning continued | Justification phase:
Review, revise, give final approval on budget
Implementation or execution phase:
Translate budget expenditures into operation function
Control phase:
Ongoing monitoring process |
Budget Write up | List sources of expected income
Classify & list expenses w/ cost
Food, labor, overhead, operating costs
Other data
# meals, labor hours, expected changes, new totals
Justification for request of new funds
Review, make changes
Final form w/ justific |
Records for Control | Purchasing & receiving, storage & storeroom control, production & service of food, cash transactions, operating & maintenance, and personnel |
Service and Income and Expense Records | Service records:
number served
Used to collect and track demand
Help to control & monitor cost to forecast future budget
Income/Expense:
Daily transactions
Sources & amounts of income and where it goes |
Ssles/Cash receipts Records | Sales/Cash receipts
Cash registers, POS,
Number of sales, total sales, tax, servings of types of foods |
Daily food-cost Report | Prepared from 4 records
Cash receipts record of total income
Census record
Storeroom issues
Invoices of perishable foods
Most valuable report - Info about sales, food cost, # served
% income for food: food-cost percentage |
Profit and loss Statement | Summary comparison of income to determine profit and loss for a given period
Includes all expenses
Prepared at end of calendar month
Income (sales)
Less: cost of food
Equals: gross profit
Less: labor, overhead, operating
Equals: net profit, loss |
Food-Cost % | Divide cost of food for the day by income of the day
Food Cost: $530/Income: $1,280 = .414 X 100 = 41.4%
Varies depending on type of organization, goals, characteristics and expenses
Use cumulative figures for the month to determine average |
Cost Control | Food Cost: most readily controlled item, subject to greatest fluctuation
Menus: 1st & most important step in controlling food cost
Determine what and how much food to purchase & prepare |
Labor cost control | 50-70% of total food service expenses |