LEARNING PACKET

PHELEC8 Food and Beverage Cost Control System

Learning Packet for HM 3
Week 1 : ______________________

LEARNING PACKET TITLE: REVENUE AND COST CONCEPTS

I. INTRODUCTION:
Successful restaurant personnel, including chefs, restaurant managers,food and beverage controllers, dining room
managers, and stewards havethe ability to keep costs at predetermined levels. They understand that successful
operations require that costs be carefully established and monitored so that profit will result. Food, beverage, and labor
costs generally represent between 60% and 70% of the total costs of a restaurant operation. If these costs are not
carefully established and monitored, they can gradually increase until profit is eliminated and losses are sustained.

II. DISCUSSION / ENGAGEMENT:

Accountants define a cost as a reduction in the value of an asset for the purpose of securing benefit or gains. In
F&B Business cost is defined as the expense to a hotel or restaurant of goods or service when the goods are consumed or
the service rendered. Food and beverage are “Consumed” when they are used, wastefully or otherwise, and are no longer
available for the purpose which they were acquired.(Units: weight, volume or total value)The cost of labor is incurred
when people are on duty, whether or not they are working and whether they are paid at the end of the shift or at some
later date. (Hourly or weekly or monthly)

FOOD COST AND BEVERAGE COST

Are the cost of sales in the food service industry. The accuracy of revenue projections for food and beverage is critical to
determining whether the business operation will be successful or not.

Not only does the revenue have to pay for all of the other expenses listed on the projected profit and loss statement, but
there should also be money left for the Profit the owner of the business is hoping to earn.

Fixed Cost (FC) and Variable Cost (VC) are used to distinguished between
those cost that have no direct relationship to business and those that do.Fixed
Cost are those that are normally unaffected by changes
in sales volume. Such as real estate taxes, insurance premiums, depreciation,
repairs and maintenance, rent or occupancy cost, most utility cost,
advertisement, professional services.

The term fixed should never taken to mean static or unchanging but merely to
indicate that any changes that may occur in such cost are related only
indirectly or distantly to changes in
business volume.

Variable Cost are those that are clearly related to business volume. As business volume increase, variable cost will
increase and vice versa.
FOOD AND BEVERAGE COST = VARIABLE COST
Food & Beverage cost are considered directly variable cost. Direct Variable Cost are those that are directly linked to
volume of business increase and decrease of volume correspondingly.

Payroll Cost includes salaries and wages and employee benefits and often referred as Labor Cost.
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Because labor cost consist of fixed and variable element it is known as semi-variable cost, meaning a portion should
change in short-term and the other portion remains unchanged.

REVENUE - COST = PROFIT

EXAMPLE:A PRODUCT IS SOLD 70% HIGHER THAN ITS INITIAL COST OF P135.00

A) HOW MUCH IS THE SELLING PRICE?

B) HOW MUCH IS IT GROSS PROFIT?

SOLUTION:
HOW MUCH IS THE SELLING PRICE?
GET 70% OF INITIAL COST
135.00 X 0.70 (70%) =94.50 IS GROSS PROFIT
135 + 94.50 =229.50

Profit should not reality be viewed as what is left over after the bills are paid. I fact, careful planning is necessary to earn
profit. Thus more appropriate formula which rewards the business owner for the risk associated with business ownership
or investment is:

REVENUE - DESIRED PROFIT = IDEAL EXPENSES

Revenue levels can actually be managed to some degree. It is very crucial to understand revenue and its nature.
Revenues are the result of units sold.
REVENUE = TRANSACTION COUNTS X AVERAGE CHECK

III. ASSESSMENT:
Show your solution:
1. The cost of goods sold is computed at P1000, while the sales is equivalent to 30% higher than the costs of
good sold.
A. How much is the selling price?3pts
Solution:

B. How much is it Gross profit? 2pts

Solution:

2. Determine the cost of goods sold if sales is P123,345 and the profit is 25%.
C. How much is the selling price?3pts
Solution:
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D. How much is it Gross profit? 2pts

Solution:

Prepared Reviewed

DYANN S. RAMOS, CPA, MBA

EDWINA LYN D. DULAY Head-College of Business and Management
BSHM Instructor Education

Date: _______________________

Date: September 3, 2021