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Class Name Instructor Name Date, Semester Foundations of Cost Control Daniel Traster Receiving, Storage, and Issuing Control chapter 9.

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Presentation on theme: "Class Name Instructor Name Date, Semester Foundations of Cost Control Daniel Traster Receiving, Storage, and Issuing Control chapter 9."— Presentation transcript:

1 Class Name Instructor Name Date, Semester Foundations of Cost Control Daniel Traster Receiving, Storage, and Issuing Control chapter 9

2 Opening Questions Describe a foodservice receiving area that you have seen. What goes on there (specifically)? What equipment is present and used there? 2

3 Required Resources for Receiving Well-trained Employee Space to receive Scales Thermometer Knife Ruler Hand Truck Dollies Cleaning Supplies Pens, Paper Clipboards Calculators Desk Computer File Cabinets 3

4 Needed from Purchaser Order Sheets Bid Sheets Product Specifications Daily List of Deliveries 4

5 Checking Products and Invoices 5 Check math on extensions Confirm Price and Quantity (including pack size) on Invoice match Order and Bid Sheets Confirm Product Quantity matches Invoice Confirm Product Quality matches Chefs Standards

6 Invoice Adjustments and Approvals 6 notify driver request credit memo make note on invoice have driver initial For poor quality or quantity: notify purchaser to speak with the purveyor do not sign invoice until issue is resolved For incorrect pricing: notify purchaser and chef For shorted items:

7 Approving the Invoice 7 May use invoice stamp to confirm invoice checked, extensions checked, and invoice paid One copy for receiver, one for driver Once invoice is accurate, receiver signs it

8 Receiving Clerks 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 8

9 Food Storage Done quickly after receiving to prevent spoilage and theft Store frozen and refrigerated products first 9

10 Coolers 10 Guidelines Keep shelving 6 inches from wall and floor Do not place anything in front of the fan Store- cooked food above raw Fridge at 33-40 F, freezer below 0 F Should have locking capability

11 Dry Storage 11 Guidelines Shelving 6 inches from floor and walls Keep 60 – 70 F and low humidity Should have lockable doors

12 Chemical and Cleaning Supplies 12 Guidelines Store after foods are stored Keep separate from food to avoid cross- contamination Store in original, well- labeled containers

13 Storage Guidelines Rotate stock using FIFO to reduce the risk of product spoilage in storage; place new products behind old ones. Keep identical products in the same location. Organize inventory sheets to align with product location on shelves. Spoilage Report – lists products that spoiled in storage. 13

14 Requisitions and Issuing 14 employees gather products themselves Open Storeroom employees make written request for products; request filled by storeroom clerk or manager Closed Storeroom the written request (on paper or electronically) for products from storeroom Requisition the process of releasing requested products from storage to an employee Issuing

15 Closed vs. Open Storerooms 15 Closed Storerooms Pro : More control Con : More costly, requiring high labor costs for a storeroom manager or clerk. vs. Open Storerooms Pro : Less costly Con : Less secure

16 Storeroom Controls Open Storeroom controls: Keep storeroom open only briefly and watch employees closely during that time. Only managers access storeroom when not actively open. Keep expensive products locked up; only manager can access them. General Controls: Conduct regular inventories to catch high food cost problems early. Install security cameras. 16

17 Requisition and Issuing Process 17 Physical inventory is conducted periodically and reconciled against prior inventory, deliveries, and requisitions Employee picks up filled order and signs requisition Clerk records per unit and extended costs, date, and department on requisition Storeroom clerk fills requisition orders. Employee writes requisition; manager signs.

18 Transfers Transfer form looks like requisition form but lists departments issuing and receiving Sent to cost control manager with requisitions 18 A transfer is issuing or receiving food from another department or business unit.

19 Conducting Inventory 1 person counts and 1 person records Use blank sheets or printed inventory lists Can use handheld scanners Completed sheet includes name, quantity, unit, and extended price for each item Do when restaurant is closed and no deliveries are scheduled 19

20 Valuing Inventory 20 NOTE: Price per unit is not always obvious, since prices may change with each order. Extension Number of Units Price per Unit

21 Valuing Inventory 21 Techniques to Value Inventory FIFOLIFO Weighted Average Actual Cost Most Recent Price

22 FIFO (First In, First Out) Method 22 Assumes cost is based on most recent invoice and only progresses back in time if there is more inventory than can be accounted for with the latest invoice.

23 Example 9a A restaurant has 140# of flour in inventory on Aug. 20 th. It purchased: 50# on Aug. 3 rd for $23/50# 50# on Aug 10 th for $24/50# 100# on Aug. 17 th at $23.50/50#. 23 Using the FIFO Method, What is the value of the flour in inventory?

24 Example 9a (cont.) 100# @ $23.50/50# = 100 X 23.50 ÷ 50 = $47 40# @ $24/50# = 40 X 24 ÷ 50 = $19.20 Total for 140# = $47 + $19.20 = $66.20 24

25 LIFO (Last In, First Out) Method 25 Cost based on the first invoice for the period and only progresses forward once the entire inventory for that invoice has been accounted for.

26 Example 9b 50# @ $23/50# = 50 X 23 ÷ 50 = $23 50# @ $24/50# = 50 X 24 ÷ 50 = $24 40# @ $23.50/50# = 40 X 23.50 ÷ 50 = $18.80 Total for 140# = $23 + $24 + $18.80 = $65.80 26 From data in example 9a, calculate the value of 140# of flour using the LIFO method.

27 Weighted Average Method 27 Price per unit total amount spent on an ingredient over the inventory period total number of units of that ingredient purchased during the same period =

28 Example 9c 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 From data in Example 9a, calculate value of 140# of flour using Weighted Average.

29 Actual Cost Method 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 The Actual Cost Method uses the price written on each unit at the time of storage.

30 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

31 Total Inventory Value Total inventory value = sum of all inventory item extensions 31 The inventory value is both the closing inventory value for the prior period and the opening inventory value for the upcoming period.

32 Preventing Inventory Theft 32 only put honest, trustworthy people in positions of power People lock up expensive items; only give keys to managers. use security cameras Locks and Cameras create a paper trail with employee signed requisitions Paper minimize amount of inventory kept on hand Inventory Quantity

33 Inventory Turnover Rate Formula 33 Average Inventory Opening Inv + Closing Inv 2 = Inventory Turnover Cost of Food Sold Average Inventory =

34 Inventory Turnover Rate Ideal rate is for inventory to turnover every 1-2 weeks. To convert monthly inventory turnover rate to days to turnover the inventory… 34 Days to turnover inventory # of days in the month Inventory turnover =

35 Example 9d 35 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 restaurants inventory turnover?

36 Example 9d (cont.) Average Inv. = (Opening + Closing) ÷ 2 = ($12,300 + $12,900) ÷ 2 = $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

37 Benefits of Quick Turnover 37 Helps control theft, as stolen items are noticed quickly Ties up less money in inventory Reduces chance of spoilage Reduces space needed to house inventory

38 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

39 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

40 Special Concerns for Beverages: Storage 40 Storing Wine low light controlled humidity 55 degrees for red 45 degrees for white Storing Beer in original cases once chilled, keep refrigerated store kegs at 40 – 50 degrees

41 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

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