Chapter 3 The Operating Budget as A Control Tool

The operating budget, budget standards 


 .Operating budgets are completed in advance of the accounting period, which is why they require estimated expenses and revenues. Normally prepared using historical information from previous budgets and other financial records. Together with anticipated changes in sales and costs, provide basic data needed to prepare an operating budget for an upcoming period. Can be prepared for any time of period-a day, a week, a month, six months or full year.

Example:
Number of meals daily, 3
Length of campers’ stay, 7 days
180 campers x 3 meals x 7days = 3780 meals
The foodservice director given amount to the meal served cost = RM1.85
So for 3780 meals, 3780 x RM1.85 = RM6993.00



Forecasting sales income 


Sales forecasting is a process in which managers use data and intuition to predict what is likely to occur in the future. If sales volume can be predicted accurately then plans can be made for purchasing appropriate quantities of food to prepare for anticipated sales.

TOTAL SALES = refers to total volume of sales expressed in dollar terms. 

Category: Total food/ beverage sales, such as total steak sales/ total seafood sales  

Server: Total dollar volume of sales in a given period (day/ week/ meal period)  

Seat: By the number of seats in the restaurant. Usually by one year.  



Monetary Terms 
1. Sales price = amount charged each customer purchasing one unit of item 

2. Average sale = Total sale / Total number of covers (customer) = RM3413.80 /135 = RM25.29 

3. Average sale per server = Total sale for Celina / Number of customers for Celina = RM565 / 30 = RM18.83 
 

Non-Monetary Terms 

1. Total number sold – total number of steaks, shrimp cocktails or any item sold. 

2. Cover – to describe one diner (quantity of food he or she consume) 

3. Total covers – total number of customers served in a given period (hour/ meal period/day/ week) 
Covers per hour = Total covers / Number of hours operation 
Covers per day = Total covers / Number of days of operation 
Covers per server = Total covers / Number of servers 

4. Seat turnover – number of seats occupied during a given period   = Number of customers served / number of seats   = 135 / 75   = 1.80 turns. 


Allocating costs and profit requirements 
Each dollar of sales, then, may be divided imaginatively into two portions:  
1. That which must be used to cover variable costs associated with the  item sold 

2. That which remains to cover fixed costs and to provide profit 

Given the following figures: 

Variable Cost = RM2 per unit 
Fixed Cost = RM12,000 per month 
Targeted profit = RM4,500 
Units produced = 3,000 units 
What is the sales amount? 
 
The dollar amount remaining after variable costs have been subtracted from the sales dollar is defined as the contribution margin, abbreviated as CM. 
 
 

Comments

Post a Comment

Popular posts from this blog

Chapter 2 Determining Food And Beverage Standards

Standards cost and cost tools  .In performing an excellent cost control, it is crucial for us to understand all the elements of costs used in hospitality organization • COST – expense to a foodservice establishments for goods or services when the goods are consumed or service are rendered. • The cost of labor (people on duty)- value per hour or value per week • The cost of any item (meat) – value per piece, per gm or per individual portion. • The cost of drinks (liquor) – value per bottle, per drink, or per ounce.  Material cost is the cost of purchase/plus all costs incurred in getting the raw materials to the restaurant example, rice, vegetables and other food costs Formula: Opening stock + Cost of purchases      - Closing stock  -Cost of staff meals  = Material cost A labour cost is the cost of labour that can be traced directly to the manufactured goods. Fixed costs  • Unaffected by changes in sales volume  • Rent, rates, insurance, repair maintenance
Read more

Chapter 1 Introduction to Food And Beverage Control

Image
Food and beverage managers in control 3 main objective managers - Delight guest feels welcome  - Facilities work for guest  - Operation continue to provide service while also gain a profit  Management resources and objectives  .Planning: Set objectives, Decision and formulating policies   .Organizing: Analysing tasks and assigning them to individuals   .Motivating:  Helping individuals to form and develop to group “team spirit”.  Encourage staff management committee meetings   .Controlling: By observing, analys accounting records & reports  Profit and cost centers  . A cost center is a subunit of a company that is responsible only for its costs.  A profit center is a subunit of a company that is responsible for revenues and costs.   Definition and importance of control  Controlling is the process of monitoring and adjusting organizational activities to ensure they are being accomplished as planned.  Steps in the c
Read more