Inventory Management Chaptr 8 Flashcards
What is the importance of monitoring a foodservice operation?
To assess monthly performance.
How do you calculate the cost of food consumed?
By determining the value of the closing inventory and subtracting it from the value of total available. N
What is the formula for calculating food cost percentage?
food cost / food sales * 100
What is the purpose of taking physical inventory?
To determine the actual cost of the foods and beverages used during the month.
What is the difference between book inventory and actual inventory?
Book inventory is a calculated figure, while actual inventory is the real count of items on hand.
What are the methods for assigning values to inventory units?
- Actual purchase price method
- First-in, first-out method
- Weighted-average purchase price method
- Latest purchase price method
- Last-in, first-out method
What method is used to calculate the closing inventory value in the first-in, first-out method?
The last price paid for the items remaining.
What does the weighted-average purchase price method involve?
Multiplying the number of units by their specific purchase prices, summing these values, and dividing by the total number of units.
What is the latest purchase price method?
It uses the most recent price paid for goods purchased.
What is the last-in, first-out method used for?
To minimize profits on financial statements for tax purposes.
How is the monthly food cost determined?
By adding opening inventory and purchases, then subtracting closing inventory.
What adjustments must be made to the cost of food issued?
- Transfers
- Steward sales
- Gratis to bars
- Promotion expense
What should be subtracted from the cost of food consumed to determine the cost of food sold?
The total cost of employees’ meals.
How is food cost percentage calculated from cost of food sold?
cost of food sold / food sales.
What are the common criteria for evaluating cost percent reports?
- Frequency
- Timeliness
What happens if the cost percent for the current month is significantly different from recent months?
Management will want to identify the reasons for the change.
What are the two important criteria that monthly food cost reports fail to meet?
- Frequency
- Timeliness
Monthly reports are often not timely enough for effective monitoring of foodservice operations.
Why are monthly reports considered not timely for foodservice operations?
They do not become available until it is too late to determine the cause(s) of unacceptable results.
Timely information is crucial for identifying problems and taking corrective actions.
What is the frequency of reporting that many foodservice managers believe is necessary?
Daily or weekly reports
This helps in making corrections during the current period.
What problems can arise from storing excessive quantities of food?
- Excessive food costs due to spoilage
- Excessive amounts of cash tied up in inventory
- Excessive labor costs to receive and store foods
- Excessive space required for storage
- Unwarranted opportunities for theft
Proper inventory management is essential to avoid these issues.
What factors influence the amount of food to be purchased in a foodservice operation?
- Menu
- Size of the operation
- Amount of storage space
- Sales volume
- Financial health
Larger establishments typically require more storage and larger quantities of food.
What is inventory turnover?
The rate at which inventory is consumed and replenished during an accounting period.
It’s a key metric for evaluating food inventory adequacy.
How is the inventory turnover rate calculated for an establishment that orders biweekly?
12 x 2 = 24
This means the inventory would ideally turn over 24 times in a year.
What is a common practice that can distort average inventory figures?
Stopping most purchasing to bring overall inventory value down before the end of the month.
This can lead to discrepancies in inventory values.
What does software in foodservice management typically calculate?
- Cost of food issued
- Cost of food consumed
- Cost of food sold
It also produces comparative reports for different periods.
What are the two basic components of daily food cost?
- Directs received on that day
- Value of stores issued on a given day
These components are essential for accurate daily food cost calculations.
How is the daily food cost percentage calculated?
Daily sales figure divided by daily food cost.
This helps monitor food cost efficiency.
What is the definition of food cost percent to date?
Cumulative food cost percent for a period, accounting for all food costs and food sales.
This provides a broader view of food cost trends over time.
Why is it important to compare book and actual inventory values?
To assess the effectiveness of receiving, storing, and issuing procedures.
Significant differences indicate that control procedures need investigation.
Steward sales
When employees are allowed to purchase food at cost and take it from the premises for their own personal use.
Gratis to bar
This is hot and cold hors d’oeuvres that are given free to customers at the bar produced by kitchen staff.
Promotion expenses
In many large hotels managers entertain potential guests for large groups
Having too many stocks than needed can lead to those problems
• Excessive food costs due to the spoilage of food stored too long
• Excessive amounts of cash tied up in inventory
• Excessive labor costs to receive and store foods
• Excessive space required for storage
• Unwarranted opportunities for theft
Inventory turnover
Is the mean of measuring how often a food inventory has been consumed and replenished during an accounting perio
Inventory turnover
Average turnover
physical inventory
requires counting the actual number of units on hand of each item in stock and recording that number in an appro-
priate place.
Closing inventory
the total value of inventory items that have remained unsold at the end of any given accounting period
