FOOD&BEVERAGE MANAGEMENT

GROUP-B
2009-10
1. What do you understand by Analysis of Income and Expenditure ?
2. What are the objectives of F & B control ? Write down the points.
(done)
3. What is unpredictability of volume of business ?
4. What is F & B Control ? Explain.
Food and beverage department in a hotel, restaurant, or any
catering establishment consists of closely linked system-the Kitchen,
restaurant, bar etc. In a hotel there may exist number of systems, all
of these are reading together with the food and beverage facilities to
form the total hotel system. The main aim of costing in a food and
beverage establishment is to satisfy both the customers‟
requirements and the financial requirements. To achieve this
objective a suitable food and beverage control system need to be
developed which must avoid excessive costs without sacrificing the
quality, quantity and competitive price of the varied product being
marketed. Since in most of the food and beverage establishment the
raw material and payroll costs, are the largest proportion of costs,
the cost system aims to control these two costs effectively, at the
same time meet the prescribed standards of profit and quality. A
series of built-in checks covering entire catering cycles are required
to have a proper control over the operating activities. The amount of
control is basically related to the size of operation. In a large sized
operation, with many selling outlets, employing a large number of
staff and producing a large turnover would require sophisticated
control system giving precise, detailed, up-to-date information as
well as daily, weekly and periodic reports. A small unit operating by a

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sole proprietor could require a simple system to personally control
each and every activity of the operation. All the departmental
managers and staff as well as manager of the hotel must be well
conversant with the system. A system should have provision for cost
and price percentage analysis of each item, group of items and sales
outlet. It is much more enlightening and important to achieve a
comparison of the actual food and beverage cost with the potential
food costs. The potential revenue and actual revenue should be
identicalA series of built-in checks covering entire catering cycles are
required to have a proper control over the operating activities. The
amount of control is basically related to the size of operation. In a
large sized operation, with many selling outlets, employing a large
number of staff and producing a large turnover would require
sophisticated control system giving precise, detailed, up-to-date
information as well as daily, weekly and periodic reports. A small unit
operating by a sole proprietor could require a simple system to
personally control each and every activity of the operation. All the
departmental managers and staff as well as manager of the hotel
must be well conversant with the system. A system should have
provision for cost and price percentage analysis of each item, group
of items and sales outlet. It is much more enlightening and important
to achieve a comparison of the actual food and beverage cost with
the potential food costs. The potential revenue and actual revenue
should be identical
6. Write a short note on receiving
Receiving is one of the most important steps in f&b control
mechanism. It refers to the inspection of a food and beverage
product, which is done along with the legal possessions of the
product ordered. The purpose of exercising control a receiving is to
ensure that the supplies delivered by the supplier match the
established quality, quantity and price standards. There are fair
chances that the suppliers may deliver incorrect quantities of foods,

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foods of lower qualities, foods with prices other than those quoted,
or all three. Therefore, the primary objective of receiving controls is
to verify that the quantities, qualities and prices of food delivered
conform to orders placed.
2012
7. What is F & B Control ? Write down the limitation of F & B Control.
Limitations of Food and Beverage Control
Food and beverage control tends to be more difficult then the
control of materials in any other industries. The main reasons for this
are:
The perishability of the food: Food, whether raw or cooked, is a
perishable commodity and has a limited life. The caterer, therefore,
has to ensure that he buys produce in the correct quality and
quantity in relation to estimated demand, and that it is correctly
stored and processed, (Beverages are normally not as perishable as
food and this contributes to their easier control.)
The unpredictability of the volume of business: Sales instability is
typical in most catering establishments. there is often a change in the
volume of business from day to day, and in many establishments,
from hour to hour. This causes basic problems with regard to the
quantities of commodities to be purchased and prepared as well as
to the staffing required.

The unpredictability of the menu mix: To add to the caterer’s

problems, is the fact that in order to be competitive and satisfy a
particular market, it is often necessary to offer a wide choice of
menu items to the customer. It is therefore necessary to be able to
predict not only the number of customers who will be using the

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facility at a particular period in time, but also what the customer’s
selection will be from the alternatives offered on the menu
The short cycle of catering operations: The speed at which catering
operations take place, relatively to many other industries, allows lille
time for many control tasks. It is not uncommon that items ordered
one day, are received, processed and sold the same or the next day.
It is, for this reason, that in larger catering establishments, cost
reporting is done daily or at least weekly.
Daily variation in food production: Unlike a hostel or an industrial
canteen, a commercial catering establishment like a restaurant or a
fast food outlet has a definite degree of high and low volume of sales
on certain days of the week and certain period in a day. The volume
of food produced in a restaurant or a fast food outlet varies
depending upon this
High degree of Departmentalization: Many catering establishments
have several production and service departments, offering different
products and operating under different policies. It is, therefore
necessary to be able to produce separate trading results for each of
the production and selling activities.
Multiplicity of low value of transaction: Unlike a manufacturing
concern a restaurant or fast food outlets have to carry out too many
number of transactions to register certain respectable volume of
sales. These transaction values are very small and the numbers of
transactions are too many. So calculations of things like food cost,
labour cost etc per dish becomes extremely difficult and to some
extent useless due to the small money value attached to the sales.
8. What is Budgetary Control ? What are the objectives of budgetary
control ?
BUDGETARY CONTROL

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 Budgetary control involves the use of budgets and budgetary reports
though out the period of budget to co-ordinate evaluate and control
day to day operations in accordance with the goals specified by the
budget.
 OBJECTIVES OF BUDGETARY CONTROL
The objectives of budgetary control are:
1. To compel planning. This is the most important feature of
budgetary control, because management is forced to look ahead,
set targets, anticipate problems and give the organization purpose
and direction,
2. To communicate Ideas and Plans.  To everyone affected by them.
It is necessary to have a formal system to make sure that each
person is aware of what he is supposed to be doing.
3. To co-ordinate the activities. Of different department or sub-units
of the organization, this concept of co-ordination implies, for
example, that the purchasing department should base its budget
on production requirements, and that the production budget
should in turn be based on sales expectations.
4. To establish a system of control by having a plan against which
actual results can be progressively compared.
5. To motivate Employees to improve their performance.
9. Explain the elements of costs.
2. ELEMENTS OF COST

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We can divide total cost in following main elements of costs:
1. Direct Cost : It is that element of cost in which we can include the
cost of direct material and direct labor. If we take its total, it will be
prime cost. 
a) Direct Material Cost : Direct material is that material which we
find in the finished product and easily measures its cost. For
example, for making furniture, woods are direct material and its cost
will be the part of the direct cost. 
b) Direct Labour Cost :Direct labor is used for producing the product.
We pay wages for making a product to laborers and this cost will be
the direct labor cost. 
c) Direct Expenses Cost: Except for direct material and direct labor,
all direct expenses will be direct expenses cost. 
2. Indirect Cost 
Overheads : When we can not charge an expense directly on the
product, we can say it is indirect expense or overhead. In overhead,
we can include indirect material cost, indirect labor cost, and other
following indirect expenses.
i) Manufacturing overheads
ii) Administrative overheads
iii) Selling overheads
iv) Research and development cost

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Factory rent and rates, insurance of plants or telephone bill are the
main examples of overheads.
10. Explain the objectives of F & B Control.(done)
11. Write a short note on reality of F & B Control.(Q no 4)
2011
12. What is Meat Tag ?
These are the tags put on the butchery items mentioning all details
of cuts, weights, price etc. when the item is issued then the issuing
date is put on it and copy is sent to two places one to f&b control
and the other to the stores.
It is required because –
i) To have control over expensive food, like prawns, mutton, etc.
ii) Assists in controlling the stock levels of the items,
iii) Helps in yield testing,
iv) It helps in efficient rotation of stock.
13. What do understand by Standard Recipe ?
A recipe can be defined as a written or a printed list of ingredients
and quantities of the ingredients with the method or procedure by
which the dish has to be prepared. A standard recipe is prepared by
each establishment so that when preparing the food, the chef
prepares the dishes with the same ingredients, quantity, and
method. It helps maintain the quality of the food, retain the taste
and appearance, and ensure customer acceptance. It may also
include the cost of ingredients, which will add up to price the cost of
the dish and its nutritional value. Nowadays, due to dietary concerns,
some guests may want to know the ingredients with their nutritional
value for a particular dish. Sometimes, even cooking time and
temperature are also mentioned and finalized on testing. A

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photograph of the final dish is also included in the form so that the
chefs preparing the dish can refer to it and present it uniformly. The
standard recipe may be in a card from displayed in preparation area
or in laminated plastic to that they are durable.
1 4. Give the format of Bin Card and explain.
Bin card This is a very systematic method of determining the usage of
any particular commodity. Bin cards are labels that are placed on the
shelf of a commodity with some additional information. The
information that must be contained in a bin card is as follows: *
Name of the item * Quantity of the item added. * Date on which the
quantity was added *Quantity of item taken *Date on which the item
was taken *Balance of the item on the shelf.
15. When and where we use LIFO Method ?
Under this method, the price of the latest available lots is considered
first and if that lot is exhausted, the price of the lot prior to that is
considered. Here also, It should be remembered that the physical
issue of material may not be made outof the said lots, though it is
presumed that it is made out of these lots as stated above.
Merits of LIFO :
• It is simple to operate.
• The cost of materials issued considers fairly recent and current
prices. The prices quoted on this cost fairly represent the real cost.
• It can be conveniently applied if transactions are not too many and
the prices of the material are fairly steady.
16. Define Operating Budget.
Operational budget: It is an intended expenditure of items of daily or
short term consumption i.e. those costs that the hotel incurs in order
to generate revenue in the normal course of doing business. In the
housekeeping department the most important and expensive
operational cost involves salaries and wages. The cost of non-

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recycled inventory items, such as cleaning and guest supplies are also
considered operational costs.
2012-13
17. What do you mean by Limitation of control ? (done)
19. Discuss the problems of F & B Management.
20. Write the definition of budget. Mention at least four points
regarding the purpose of budgeting.
A budget is a comprehensive and coordinated plan expressed in
financial terms, for the operations and resources of an enterprise,
for some specific period in future.
 PURPOSE OF BUDGETING
 To attain the management’s objectives.
 To communicate expectations to all concerned.
 To help in making detailed plans.
 To provide a basis for measuring and controlling activities.
21. What are Standardized Recipes ? Explain the method.(done)
22. How does menu act as an in-house marketing tool ?
Menu is a powerful in-house marketing tool for promoting sales in
food and beverage operation. There are a number of basic factors
that have to be considered to ensure the efficacy of menu as an in-
house effective sales tool for optimizing sales.
(1) Menu Presentation: * Menu should be attractive *Menu
should be clean * Menu should be legible* The menu should
complement the occasion* It should reflect current awareness
(2) Menu design and layout: The physical shape of a menu
will be determined by such criteria as the number of items to
be printed on the menu, the theme or style of the menu, the

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 use of graphics, typeface and the occasion. Use of colour in the
menu attracts the guest. Special menus can be designed as
mementoes for the guest in function catering and banquet
operations.
(3) Menu Content:* Language * Pricing * Printing Menu *
2009
23. Define control. What are the importances of control ?
24. What do you mean by reality of control ?(Q no 4)
25. What are the limitations of control ?( done)
26. What is yield percentage ?
27. Briefly discuss the various steps of F & B control.
2010
28. Write the definition of budget. Mention at least four points
regarding the purpose of budgeting.
(done)
29. Define Food & Beverage control. What are its limitations ?(done)
30. Discuss the problems of Food & Beverage management ?
31. Mention the problems of Food & Beverage control. (done)
32. Write a brief note on reality of control.(Q no 4)
2011-12, 2010-11
33. What are the realities of control in F & B Management ?
34. What are the techniques to be followed to get the maximum
revenue ?
35. What is F & B Management ? Discuss the social factors that
effect the F & B Management.

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36. What is master budget ? Discuss the steps to make the master
budget.
37. What is breakeven point ? Discuss with graph.
Break-Even Point is the point or state of a business at which there is
neither a profit
nor a loss. In other words it is the point at which total costs are
exactly covered by
the revenue. At the breakeven point profit is zero.
Break-even point (Sales value) = Fixed Cost
P/V Ratio
Break-even point (Units) = Fixed Cost
Contribution per unit

GROUP-C
2009-10
1. What are the problems in F & B control ? Explain.
Problems in F & B Control
Food and beverage control tends to be more difficult than the
control of materials in many other industries. The main reasons for
this are:
 Perishability of the product: Food, whether raw or cooked, is a
perishable commodity and has a limited life. The caterer, therefore,
has to ensure that she buys produce in the correct quality and
quantity in relation to estimated demand, and that it is correctly
stored and processed.
 Business Volume Unpredictability: Sales instability is typical of
most catering establishments. There is often a change in the volume
of business from day to day, and in many establishments from hour
to hour. This causes basic problems with regard to the quantities of

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commodities to be purchased and prepared as well as to the staffing
required.
 Menu mix unpredictability: In order to be competitive and satisfy a
particular market, caterers must often offer a wide choice of menu
items to the customers. Predicting menu items preference on top of
customer volume can be challenge. Effective forecasting as part of
the total food and beverage control system is therefore necessary.
 Food and beverage operation short cycle: The speed at which
catering operations take place, relative to many other industries,
allows little time for many control tasks. It is not uncommon that
items ordered one day are received, processed and sold the same or
next day. It is for this reason that in larger catering establishments
cost reporting is done daily or at least weekly basis. Perishable items
cannot be brought very much in advance of their need; and the
problem of availability at times of produce relative to the price that
can be afforded in relation to the selling price.
 Departmentalization: Many food and beverage operations have
several production and service departments, offering different
products and operating under different policies. It is, therefore,
necessary to be able to produce separate trading results for each of
the production and selling activities.
2. What are the objectives of F & B control ? Explain.
Objectives of food and beverage control
The following are the six objectives of the food and beverage control
mechanism:
1. Income and expenditure analysis: The income and expenditure
derived from the food and beverage operations are focused on the
income and expenditure analysis. Income analysis is done at the level
of an individual selling unit. It includes information on F&B sales
volume, sales mix, average spending capacity of customers for

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different times of the day and total no of customers attended in a
specified period. Cost analysis on the other hand, is done at the
departmental level foe F&B costs, cost per person and labour costs.
The performance of the individual department is expressed and
integrated in gross profit and net profit. The values resulting from
these actions communicate managers of the monitory performance
of the company, i.e., whether or not its operations are profitable.
2. Standard establishment and maintenance: The establishment
and the implementation of standards are the basic foundation of any
F&B control mechanism. The establishment of standards helps the
management to set their objectives and formulate processes that
will be followed to accomplish desired goals. Standards provide the
measures by which performance is evaluated. The standards must be
framed such that they are easily accessible to all the management
committee as well as the employees. The establishment of the
standards is not the only factor that helps in accomplishing desired
goals; their maintenance and effective implementation is of greater
significance. His can be done by conducting training programs for the
employees and getting customer feedback.
3. Pricing: Fixing a precise price of a food and beverage item largely
depends upon concurrently reliable information relating to costs,
average spending power of most customers, competitors prices and
suitable market prices.
4. Waste prevention: Prevention of waste of the available resources
results performance of high levels which is desired by all the catering
establishments. Wastage can be prevented through the
implementation of a detailed and planned F&B control mechanism.
5. Fraud prevention: The prevention of fraud is one of the most
important considerations in any catering establishments. Fraud
should not be only prevented between the managers and employees
but also between the customers and the staff. Common fraudulent

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activities on the part of customers include leaving without paying or
claiming substandard F&B ingredients and preparation, while
common fraudulent activities on the part of staff include
overcharging, undercharging, or stealing from the firm. A planned
and carefully implemented F&B control mechanism helps in
prevention of fraud.
6. Information management: Every F&B enterprise has to generate
periodic reports on activities of the business. The information should
be precise and welltimed so that they become an important source
of formulating a strategy and taking decision. Information reported is
compared with standards set for the period for evaluating the level
of conformity with budget and profit standards.
3. Write a detailed note on purchasing process.
(a) Purchase Requisition: It is the requisition made by the various
departmental heads or storekeeper for their various material
requirements. The initiation of purchase begins with the receipts of a
purchase requisition by the purchase department.
(b) Inviting Quotations: The purchase department will invite
quotations for supply of goods on the receipt of purchase requisition.
(c) Schedule of Quotations: The schedule of quotations will be
prepared by the purchase department on the basis of quotations
received.
(d) Approving the supplier: The schedule of quotations is put before
the purchase committee who selects the supplier by considering
factors like price, quality of materials, terms of payment ,delivery
schedule etc.
(e) Purchase Order: It is the last step and the purchase order is
prepared by the purchase department. Itis a written authorisation to
the supplier to supply a specified quality and quantity of
material at the specified time and place mentioned at the stipulated
terms.

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4. Write a detailed note on phases of F & B control. (done)
5. Write a detailed note on storing process.
2012
6. What is Pricing ? Discuss the different types of Pricing.
Definition: Pricing is the method of determining the value a producer
will get in the exchange of goods and services. Simply, pricing
method is used to set the price of producer’s offerings relevant to
both the producer and the customer.
Cost Percentage Method of Pricing: This method involves dividing
the portion costof any menu item by the desired food cost % to
determine the price of menu item.
Menu price = Portion cost / Food cost %
Case study: determine the price of vegetable sandwich if portion cost
is Rs.10 and
food cost 40%.
Solution: 10 / 40 % = 10 x100 / 40 = 1000 / 40 = therefore menu price
for sandwich
will be Rs.25.00.
Competition oriented pricing In this method competitor’s prices are
follows rather than company cost or demand.
Customary pricing: prices of certain goods become more or less fixed
for example price of tea at railway platform / small retail outlets, not
by deliberate action on the sellers’ part but as a result of their
prevailed for a considerable period of time. For such items, changes
in costs are usually reflected in changes in quality or quantity. Only
when the costs change significantly the customary prices of these
goods are changed.
Going Rate Pricing: In this method, the firm adjusts it own price
policy to the general pricing structure in the industry and may seem

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to be the first logical step in a rational pricing policy.
Promotional Pricing: this method involves pricing menu item below
the list price and sometimes even below cost, to increase short term
sales. For example: loss leaders, cash rebates, special event pricing,
happy hours.
Premium pricing: It is a type of pricing which involves establishing a
price higher than your competitors to achieve a
premium positioning. You can use this kind of pricing when your
product or service presents some unique features or core
advantages, or when the company has a unique competitive
advantage compared to its rivals. 
Economy pricing: This type of pricing takes a very low cost
approach. Just the bare minimum to keep prices low and attract a
specific segment of the market that is highly price sensitive.
Examples of companies focusing on this type of pricing
include Walmart, Lidl and Aldi.
Skimming price: Skimming is a type of pricing used by companies
that have a significant competitive advantage and which can gain
maximum revenue advantage before other competitors begin
offering similar products or substitutes. It can be the case for
innovative electronics entering the marketing before the products
are copied by close competitors or Chinese manufacturers
7. What is Budget Forecasting ? Discuss in brief methods of
forecasting.
8. Define Food & Beverage Management. What are the
responsibilities of Food & Beverage Management ?
F&B management refers to the utilization of various F&B resources
such as staff, raw and cooked materials, various cooking and serving
equipment, time taken for preparing and serving, and the ways of
effective operation, and quality performance.

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The main responsibilities of the food and beverage department
may be summarized as follows:
1. The provision of food and beverage products and services catering
for clearly defined markets to satisfy or exceed these customers
expectations.
2. The purchasing, receiving, storing, issuing and preparation of food
and beverages within the establishment for final provision and
service to the customer.
3. The formulation of an efficient control system within the food and
beverage department with the purpose of:
a. Monitoring food and beverage prices and achieving competitive
rates while still ensuring quality standards;
b. Pricing restaurant and special function menus to achieve desired
profit margins;
c. Compiling on a daily, weekly and monthly basis, all relevant food
and beverage information on costs and sales that may be used by
management for forecasting, planning, budgeting, etc.
4. Reconciling actual and forecast costs and sales, and initiating
corrective action if discrepancies occur, and finding out and
eliminating the causes, for example bad portion control, incorrect
pricing, etc.
5. Training, directing, motivating and monitoring of all food and
beverage department staff.
6. Co-operating with other departments to become a significant
contributor to the organization's short and longterm, profitability.
7. Obtaining in a regular, structured and systematic way, feedback
from customers, so that their comments, complaints and
compliments may be taken into account to improve the overall
standard of service.
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 These are the major responsibilities of a food and beverage
department. Other minor responsibilities are to running the
department for the day-to-day of the department operations, but
these often tend to deal with sudden crises or short term problems
and would be too numerous to mention. However, to overcome all
these responsibilities is a far from easy task when managers are
faced with the inherent complexity and variability of a food and
beverage operation.
9. Broadly discuss the three phases of Controls.
Effective control systems and procedures consist of three broad
phases: planning, operational, and management control after the
event.
1.The Planning Phase: It is difficult to run an effective catering
operation without having firstly defined the basic policies. Policies
are predetermined guidelines, laid down by the senior management
of an organization, which outline such matters as the market or
segment of the market that is being aimed at, how it is to be catered
for and the level of profitability/subsidy to be achieved. Policies in
general are particular to individual companies and establishments,
although in the public sector operations, there may well be broad
national policies, e.g. for hospital catering.
There are 3 basic policies which need to be considered:
A)The financial policy : The financial policy will determine the level
of profitability, subsidy or cost limits to be expected from the
business as a whole and the contribution to the total profit, subsidy
or cost limit that is to be expected from each unit, and then form the
departments within them. This involves the setting of targets for the
business as a whole as well as each unit and the departments within
them.

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B) The marketing policy: The marketing policy will identify the broad
market the operation is intended to serve and the particular
segment(s) of the market upon which it intends to concentrate. It
should also identify the immediate and future consumer
requirements on a continuous basis in order to maintain and
improve its business performance. It is obvious from the above that
the broad market intended to be served by a large city hotel could be
broken down into the specific segments of the various types of users
of, for example, the coffee shop, the carvery, the cocktail bar, the
banqueting rooms, etc., each having specific and different consumer
requirements.
c) The catering policy The catering policy is normally evolved from
the financial and marketing policy will define the main objectives of
operating the food and beverage facilities and describe the methods
by which such objectives are to be achieved.
2.The Operational Phase: Having defined the policies (i.e.
Predetermined guidelines), it is then necessary to outline how they
are to be interpreted into the day-to-day control activities of the
catering operation. The operational control is in five main stages of
the control cycle. These are:
Purchasing, Receiving , Storing and Issuing , Preparing , Selling
3. The ‘Management Control after the Event’ Phase
This final phase of food and beverage control is in three main
stages:
a) Food and beverage cost reporting. As mentioned earlier in this
chapter, the cycle of production is very short and the product is
perishable. These factors together with the variationsin demand for
the product necessitate up-to-date reporting at least weekly if not
daily.

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B) Assessment. There is a need for someone from the food and the
food and beverage management team in the case of a large unit, or
the proprietor or manager of a small unit, to analyse the food and
beverage reports and to compare them with the budget for the
period and against actual performance.
c) Correction. A control system does not cure or prevent problems
occurring. When the analysis of the performance of a unit or
department identifies that there is a problem, it is up to
management to take the necessary steps to correct the problem a
quickly as possible.
10. What do you mean by the Purchasing Control of Food &
Beverage Department ?
Purchasing may be defined as a procurement function concerned
with search, selection,
purpose, receipt, storage, and final use of commodity in accordance
with the catering
policy of the establishment. Food purchasing control involves the
following:-
 Developing purchase specification
 Preparing an approved supplier list
 Determining appropriate order size
 Establishment appropriate receiving and storage procedure
Food purchasing control consists of developing standards and
standard procedures for
purchasing and outlines the following:-
1. Purchasing Policy
 Corporate  Centralized or decentralized
2. Purchasing Research

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 Markets and materials  Marketing channels  Price trends
3. Product Evaluation and assessment
 Product testing  Yield testing
4. Food Purchase Specifications
5. Purchasing methods
 By contract  By Quotation  By cash and carry, etc.
6. Clerical Procedures
 Documentation  Information Processing
Once a menu is planned, a number of activities must occur to bring it
into reality. One of the first and most important stages is to purchase
and receive the materials needed to produce the menu item. Skillful
purchasing with good receiving can do much to maximize the results
of a good menu. It is important to determine yields from the range of
commodities in use, which will determine the unit costs. Yield testing
indicates the number of items or portions that can be obtained and
helps to provide the information required for producing purchasing
specifications.
2011
11. What are the different information that we get from a menu card
? How is menu card related to controls ?
12. What is cost control ? What are the stages of control ? What are
its limitations ?
Cost control is the practice of identifying and reducing business
expenses to increase profits, and it starts with the budgeting process.
A business owner compares actual results with the budgeted
expectations and if actual costs are higher than planned,
management takes action. As an example, a company can obtain
bids from other vendors that provide the same product or service,

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which can lower costs. Cost control is an important factor in
maintaining and growing profitability.
STAGES OF COST CONTROL
1. PURCHASING:  The purchase department must ensure that the
right quality of food, at competitive price and right quantity of raw
material should be procured to keep the cost control.
2.RECEIVING AND STORING OF RAW MATERIAL: The raw material
received by stores must be inspected for the quality and the quantity
desired, and in case found not up to requirement should be returned
to supplier for replacement.  All stores received must be stored at a
proper place.  It is saying that in stores there should, ‘a place for
everything and everything is place’.  The store keeper must ensure
that no food item should get spoiled and if it happens then it is
charged to store keeper.
3. ISSUING: All goods should be issued after a proper requisition. 
The store keeper must follow the rule of ‘FIRST IN FIRST OUT
(F.I.F.O.), which means the goods received first are issued first.
4.  WASTAGE: The wastage, at all levels, i.e. Portioning, Cooking,
Storing, etc. should be as minimum as possible.  The wastage of food
should be avoided.  All trimmings of vegetables, bones, and other
raw material wastes should be used to cook stock, soups, gravies,
sauces, etc.
5.  PROPER STORING OF COOKED FOOD: In case the cooked food is
left at the end of the day then it must be stored at a proper
temperature so that it can be used on the following day, if so
required.
6. SPOILAGE: The cooks must ensure that there should be as far as
possible no spoilage of food in the kitchen.

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7.  ENSURE NO FOOD IS SERVED WITHOUT BILL: In case food is
allowed to be picked up without proper bill then this will increase
the food cost.
8. PORTION CONTROL: The chef must ensure that dish is as per the
standard potion, as both the larger portion and smaller portion is
harmful to the hotel / restaurant.  A large portion will increase the
food cost and a small portion will dissatisfy the guest.
9 STANDARD RECIPE: The Chef must ensure that always standard
recipe should be followed, or otherwise, the guest may not always
find similar standard of the dish and this will dissatisfy him.
LIMATITIOJN
Reduces the flexibility and process improvement in a company.
Restriction on innovation.
Requirement of skillful personnel to set standards
13. What are the different types of budget ? What are the
advantages of budgeting ?
A budget could be of varied kinds depending on the types of
expenditure involved, the departments and various budgets.
1. Type of Expenditure: According to the type of expense and assets,
a budget is characterized into the following:
Capital Budget: It allocates the capital assets usage whose life span is
more than a year; they are the assets which are not normally used
regularly in daily operations. For example: Hotel Building, Furniture &
Fixture etc.
Operating Budget: Operating expenses are the costs made to
generate revenue while doing business. The inventory cost of all
items which cannot be recycled such as cleaning and guest supply
are also operation costs.

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Pre-opening Budget: The budget designates resources for various
opening parties and functions, advertisements, and initial generation
of goodwill for the start-up. The pre-opening budget will also include
the preliminary employee salary cost, equipment, and additional
items. Preparing a pre-opening budget for an establishment requires
the individual to have required know-how about it with current
trends and the understanding of the management.
2. Categorization into Department: Based on the departments
concerned, budget maybe categorized into the following:
Master Budget: It represents the forecasted targets set for the
whole organization and combines all income and expenditure
estimated for the organization .
Departmental Budget: Each department of the hotel prepares and
forwards a budget for its estimated expenses and revenue to the
financial manager. Example: Food & Beverage Service department
3. Various Budgets: The various budgets that comprise the budget-
making process are as follow:
Sales Budget: While preparing the sales budget, a realistic sales
forecast has to be made for food and beverages. While preparing the
sales budget, market research has to be done about sales value with
the help of various statistical methods. The establishment has to
consider various points such as pricing policy, income and taste of
customers, and competition.
Labour Budget: Financial implications & manpower requirement
have to be considered while preparing the labour budget. The
various positions or hierarchy of staff required and the salaries to be
imparted as per the destination and incentive as per the
establishment norms have to be considered. The labour budget is
directly related to sales. This will facilitate preparation of an estimate
of different grades of labour required. From this the standard hours

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 required to be worked can be prepared. The labour budget can be
divided into direct and indirect labour budget.
Purchase or Raw material Budget: Budgeting for purchase has a
major role in Food & Beverage industry as it is important to consider
the cost of raw materials required as well as the financial
implications of high or low stock levels. It also considers the storage
space required.
Cash Budget: It is a cash plan for a defined period of time. It sums up
monthly payments and receipts made. The cash budget helps an
establishment maintain flow of cash requirements. It also helps
initiate precautionary measure for any investment or loan and helps
the establishment in financial implications for change in
management policy.
Zero-based Budget: When budgeting is done from the beginning
without any reference to historical data, it is known as zero-based
budgeting. Programmes to be implemented in an establishment may
require such anapproach. The process is time-consuming as it starts
at zero level for each category of cost and then figure into the new
budgeted expense level.
ADVANTAGES OF BUDGETING
1. Compels management to plan for future.
2. Coordinates integrates and balances the effort of various
department.
3. Forms a basis of evaluation and control.
4. Forms a basis of communication.
5. Helps in optimum utilization of resources.
 
14. Draw any 5 types of formats of controlling tools used in
restaurants & bars.
15. What is pricing ? Explain different types of pricing (DONE)
2012-13

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16. Draw a diagram of importance of purchasing function and explain
it.
17. Explain the different phases of F and B Control system with a
neat diagram. (DONE)
18. Mention the steps for preparing a budget.
STEPS IN PREPARING A BUDGET
1. Establish budget centers and form a committee.
2. Prepare budget manual (budget manual is procedures to be
followed and forms to be used).
3. Form budget committee.
4. Determine the limiting or the key factor.
5. Select the budget period.
6. Select the objectives to be achieved at the end of the budget
period.
7. Prepare forecasts.
8. From forecast prepare provisional budget
9. Review and prepare final budget.
19. Why there is a necessity of control for an effective F and B
operation ?
20. Explain control Techniques
2009
21. What is pricing ? Explain different types of pricing. What is
subsidy price ? Explain with example.
22. Define and explain operating budget.
Definition: An operating budget portrays a company’s expenses,
expected costs, and estimated income, considering the quarterly or
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the annual performance. Accountants complete the operating
budget before the accounting period starts in order to include
income and cost projections.
What Does Operating Budget Mean?
The challenging part of completing an operating budget is to
properly estimate the historical data and factor in the probability of
different market variables. An operating budget must take into
account historical sales performance, current trends in the industry
or the sector, seasonality, new products expected to be launched
and competitive forces. Often, firms create more than one operating
budget aiming to anticipate a potential decline in revenues or a new
product launch that could boost profitability.
Example
An effective operating budget provides details on the price and the
expected product volume to estimate total sales. Therefore, a key
component of this budget is sales, followed by variable costs, fixed
costs, interest, and depreciation.
Costs include raw materials and finished goods ready for sale,
salaries, wages, utilities, rent or mortgage, car maintenance and
service, postage, cleaning, transportation costs, travel expenses,
office supplies, marketing/advertising expenses, insurance,
professional services and so on. Interest includes Interest on bank
loans and/or overdraft fees.
Once the budget is complete, accountants prepare a summary to
demonstrate their projections. Often, there is a column for actual
costs in order to compare projections to actual revenues and
expenses. Normally, managers are called in to answer questions such
as:
 Are sales goals met or exceeded?
 Are cost projections met or exceeded?
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  Are there incurred expenses unaccounted for?
Such information helps finance managers to perform a better
planning of future sales and costs and proceed with effective
business decision-making. For instance, if the cost projections are
exceeded, it makes sense to review both variable and fixed costs to
find out why this is happening.
23. Write the job description of F & B controller.
Position Title: F&B Cost Controller
Reports To:  Hotel Financial Controller (FC) / F&B Manager
Position Summary:
As a Food and Beverage cost controller, you are primarily responsible
for calculating costs of food and beverage items and also responsible
for the short and long-term planning of the f&B controlling and
pricing aspects.
Additionally responsible to record information and produce control
reports periodically to help maintain a suitable inventory of food and
beverage items for the entire hotel. He/she also changes the price of
menus items based on the costing information they collect and also
actively take part in engineering the menu in terms of the pricing.
F&B Cost Controller Duties and Responsibilities:
1. Able to effectively control the Food & Beverage Cost.
2. Control the Food and Beverage outlets in terms of wastage,
pilferage and efficiency.
3. Prepare variance analysis for food & beverage and
communicating with relevant parties.
4. Update and maintain receipts into the systems (FMC).
5. Check and verify voids in the POS systems.

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 6. Check and verify discounts on the POS systems.
7. Check and verify any happy hours discounts.
8. Check and verify all complimentary sales in POS systems.
9. Check and verify all staff meals and staff discounts.
10. Check and verify all Package meals.
11. Check and verify all settlements done on the POS system.
12. Check and cross verify if all sales have been transferred
correctly to the Property Management systems (PMS).
13. Check and verify for any lost postings.
14. Check the cost of sales in all F&B outlets and ensure that
the costs are within budget.
15. Check the menu pricing on the POS systems and ensure
the correct prices are loaded.
24. What is budget ? Explain the different types of budgets. What are
the differences between revenue and expenditure ?
Key Differences Between Capital and Revenue Expenditure
1. Capital expenditure generates future economic benefits, but
the Revenue expenditure generates benefit for the current year
only.
2. The major difference between the two is that the Capital
expenditure is a one-time investment of money. On the
contrary, revenue expenditure occurs frequently.
3. Capital expenditure is shown in the Balance Sheet, in asset side,
and in the Income Statement (depreciation), but Revenue
Expenditure is shown only in the Income Statement.
4. Capital Expenditure is capitalized as opposed to Revenue
Expenditure, which is not capitalized.

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 5. Capital Expenditure is a long term expenditure. Conversely,
Revenue Expenditure is a short term expenditure.
6. Capital Expenditure attempts to improve the earning capacity
of the entity. On the contrary, revenue expenditure aims at
maintaining the earning capacity of the company.
7. Capital expenditure is not matched with the capital receipts.
Unlike revenue expenditure, which is matched with the
revenue receipts.
25. Define and explain steps in Planning.
2010
26. Give the flowchart of Food & Beverage control system cycle.
27. List down all the job descriptions of Food & Beverage Manager
with reference to Food & Beverage management.
28. Mention the steps for preparing a budget.
  29. Why there is a necessity of control for an effective Food &
Beverage operation ?
30. Explain the different phases of control.(DONE)
2010-11, 2011-12
31. What is budget ? Discuss the different types of budget with
proper diagram. (DONE)
32. Discuss the different stages of F & B management with proper
diagram.
33. What are the factors that effect F & B management ?
34. What is F & B control ? Why is it necessary for hotel industry ?
(done)
35. What is subsidy price ? Discuss with an example.

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