WEEK 7 : MANAGING

FOOD AND BEVERAGE

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PRODUCT COST
 Cost of Sales

01
Computing cost of food
and beverage sold
02
Computing cost with
transfer
03
COMPUTING COST OF FOOD SOLD
recognize that the cost of sales incurred by an operation in an accounting period is most often not equal to the amount of food purchases in that same accounting period.

Beginning Inventory Ending Inventory

the RM value of all food on hand at the beginning refer to the dollar value of all food on hand at the
of accounting period. Its determined physical end of the accounting period
inventory, actual count and valuation of all food
storage in production areas. COST Cost of Food Consumed
the actual dollar value of all food used, or

Purchases
OF FOOD SOLD consumed, by the operation. Includes the cost of
any complementary meal served to guests as well
or known as cost of goods sold is
The sum cost of all food bought during accounting as the value of any food (meals) eaten by
the actual amount of all food
period employees.
expenses incurred by the
operation minus the cost of
employee meals. Cost of food Employees Meals
Food Available for Sale sold is calculated on at least a Labor related, not food related , cost. Free of
reduced-cost employee meals are a benefits
The sum of the beginning inventory and the monthly basis because it
reported in P&L statement. offered by employers, much in the same manner
purchases made during a specific accounting
as they may provide medical insurance/ paid
period.
vacation. So, it should not be recorded as a food
Also can refer as goods available for sales
cost. The dollar value of all food eaten by
employees is subtracted from the cost food
consumed and added to the cost of labor.
The formula used to compute an operation’s
food cost percentage as follow :
COMPUTING
COST OF
BEVERAGE
SOLD
To properly analyze an operation’s beverage cost percentage, managers must first determine the amount of
beverage used in an accounting period and the amount of beverage sales achieved in the same period .

The formula used to compute an operation’s beverage cost percentage is as follows :

COMPUTING COSTS
WITH TRANSFERS
•In some operation, other reduction from and
addition to food and beverage expenses must be
considered when accurately calculating the
operation’s cost of good sold. The value transfer to
and from one operating department to another
should be recorded on a product transfer form on a
product transfer form. After all appropriate transfer
have been made, accurate cost of beverage sold and
cost of food sold calculation can be made.
EXERCISE