National Food Service Management Institute Section 12: Management Issues 1 Section 12: Management Issues Food Purchasing for Child Care Centers

National Food Service Management Institute Section 12: Management Issues 2 list management issues related to food purchasing, explain the two types of methods acceptable for handling inventory and decide which one is best for the center, Lesson Objectives The learner will be able to

National Food Service Management Institute Section 12: Management Issues 3 identify policies that the board of directors/owners of the center should make, write a purchase plan for the center, Lesson Objectives The learner will be able to

National Food Service Management Institute Section 12: Management Issues 4 develop an internal control plan, and explain how to develop a budget and use it as a working tool. Lesson Objectives The learner will be able to

National Food Service Management Institute Section 12: Management Issues 5 Management Issues Inventory Board/owner policies Purchase plan Internal controls Budgeting

National Food Service Management Institute Section 12: Management Issues 6 Inventory Two acceptable methods Food usage Purchases equal to food usage

National Food Service Management Institute Section 12: Management Issues 7 Food Usage Monthly Formula: Beginning Inventory Purchases Ending Inventory Food Used $ $0.00 − $0.00 $0.00

National Food Service Management Institute Section 12: Management Issues 8 Food Usage Best for high-dollar-value inventory (more than 7 calendar days)

National Food Service Management Institute Section 12: Management Issues 9 Purchases Equal to Food Usage Annually Philosophy: If inventory is well-controlled, purchases = food used

National Food Service Management Institute Section 12: Management Issues 10 General Inventory Rule Once a container (box, bag, case) is opened, it is not counted as part of the inventory.

National Food Service Management Institute Section 12: Management Issues 11 Board/Owner Policies Represent good business practice Reviewed annually

National Food Service Management Institute Section 12: Management Issues 12 Board/Owner Policies Employees authorized to make purchases Standard of conduct Purchasing documents needing approval Type of inventory

National Food Service Management Institute Section 12: Management Issues 13 Board/Owner Policies Employees who will sign invoices write checks prepare the Federal claim for reimbursement keep accounting records

National Food Service Management Institute Section 12: Management Issues 14 Purchase Plan Results of Market analysis Market baskets IFBs/RFPs Presented to board/owners for approval

National Food Service Management Institute Section 12: Management Issues 15 Internal Control Multiple staff members responsible for performing duties related to a certain task

National Food Service Management Institute Section 12: Management Issues 16 Internal Control safeguards the financial resources of a center.

National Food Service Management Institute Section 12: Management Issues 17 Internal Control Plan Task Staff Member Assigned Assigning reimbursement category Clerk Counting and recording meals served Cook Filing claims for reimbursement Director Receiving checks for reimbursement Clerk Depositing checks for reimbursement Director Recording deposit in accounting records Clerk Recommending approved vendors to the board of directors/owners Director Making the grocery list Cook

National Food Service Management Institute Section 12: Management Issues 18 Internal Control Plan Task Staff Member Assigned Making purchases at approved retail vendors or placing orders with wholesale vendors Cook Receiving wholesale orders and storing wholesale and retail purchases Cook Signing invoices or store receipts Cook Writing checks Director Mailing checks Clerk Recording payments in the accounting records Clerk Taking inventory Clerk

National Food Service Management Institute Section 12: Management Issues 19 Budgeting Center director must present a budget to the board of directors/owners.

National Food Service Management Institute Section 12: Management Issues 20 Purchasing Process includes planning and managing a food budget that allows the center to meet CACFP meal pattern requirements and serve a quality food product to children.

National Food Service Management Institute Section 12: Management Issues 21 Budget  Normally for 1 year  A financial guide for that year

National Food Service Management Institute Section 12: Management Issues 22 Planning the Budget You will need calendar for the year schedule of days the center operates meal count records for previous year Projected number of meals served in the year

National Food Service Management Institute Section 12: Management Issues 23 Planning the Budget Number of days in a month you serve varies Enrollment could increase/decrease Why not use actual meal counts for the past year?

National Food Service Management Institute Section 12: Management Issues 24 Operating Years Calendar year: January to December Federal fiscal year: October to September State fiscal year: Varies by State Often July to June Center fiscal year: varies by center School year: varies by State

National Food Service Management Institute Section 12: Management Issues 25 Activity 15: Answers November SundayMondayTuesdayWednesdayThursdayFridaySaturday X Thanksgiving Day X X X X X X XX X X X

National Food Service Management Institute Section 12: Management Issues 26 Activity 15: Answers May SundayMondayTuesdayWednesdayThursdayFridaySaturday Mother’s Day Memorial Day X X X X X XX X X X X

National Food Service Management Institute Section 12: Management Issues 27 Activity 15: Answers  November  18 X 39 = 702  18 x 49 = 882  18 x 52 = 936  May  20 x 39 = 780  20 x 47 = 940  20 x 51 = 1,020

National Food Service Management Institute Section 12: Management Issues 28 Activity 15: Answers Month Number of days Center is open Projected number of meals per day 1 Total monthly meals 2 (number of days x average meals per day) BreakfastLunchSnackBreakfastLunchSnack October, November, December, January, February, March, April, May, June, July, August, September, Totals

National Food Service Management Institute Section 12: Management Issues 29 Planning the Budget Sophisticated accounting records Past year’s costs Total expenditures for preparing the budget Monthly expenditures for managing the budget How much money will be spent for each meal?

National Food Service Management Institute Section 12: Management Issues 30 Planning the Budget New centers: Federal reimbursement rate for free meals X % for food costs How much money will be spent for each meal?

National Food Service Management Institute Section 12: Management Issues 31 New Center Budget Contact State Agency to get percentage to use in estimating food budget

National Food Service Management Institute Section 12: Management Issues 32 New Center Budget Federal Reimbursement Rate X Percentage (from State Agency) Example: $2.32 (2005/06 Federal rate for lunch) X 65% (% from State Agency) = $1.51 (budgeted for each lunch)

National Food Service Management Institute Section 12: Management Issues 33 Activity 16: Answers Snack rate (2005/06 Federal rate) 50% = $ % = $ % = $0.41

National Food Service Management Institute Section 12: Management Issues 34 Budget Amount Budget amount for 1 month = number of meals X amount per meal spent on food

National Food Service Management Institute Section 12: Management Issues 35 Budget Amount Budget amount for October lunch = 1,150 X $1.51 = $1,736.50

National Food Service Management Institute Section 12: Management Issues 36 Food Budget Month 1 Breakfast Meals 2 Costs 3 Extension* 4 Lunch Meals 5 Costs 6 Extension* 7 Snack Meals 8 Costs 9 Extension* 10 Monthly Total** 11 Oct-05920$0.83$ $1.51$ $0.41$528.08$ Nov-05702$0.83$ $1.51$ $0.41$383.76$ Dec-05760$0.83$ $1.51$ $ 0.41$385.40$ Jan-06920$0.83$ $1.51$ $ 0.41$528.08$ Feb-06740$0.83$ $1.51$ $ 0.41$410.00$ Mar-06840$0.83$ $1.51$ $ 0.41$482.16$ Apr-06880$0.83$ $1.51$ $ 0.41$505.12$ May-06780$0.83$ $1.51$ $ 0.41$418.20$ Jun-06840$0.83$ $1.51$ $ 0.41$482.16$ Jul-06814$0.83$ $1.51$ $ 0.41$478.06$ Aug-06840$0.83$ $1.51$ $ 0.41$482.16$ Sep-06840$0.83$ $1.51$ $ 0.41$482.16$ Totals 9876 $ $ $ $

National Food Service Management Institute Section 12: Management Issues 37 Managing the Budget The budget must provide current information.

National Food Service Management Institute Section 12: Management Issues 38 Budget as Working Tool Maintain a budget report for each month Record amount budgeted for the month at the top Subtract each invoice or grocery receipt

National Food Service Management Institute Section 12: Management Issues 39 Budget as Working Tool LineDateVendorMoney SpentBalance 110/1/2005Opening budget balance$ /1/2005ABC Milk Company $37$ /1/2005Magilla Supermarket $225$ /2/2005Farmer Jones $7$ /5/2005Mallard Wholesale $107$ /8/2005ABC Milk Company $40$ /8/2005Magilla Supermarket $237$ /10/2005Duck’s Fruit Stand $98$ /11/2005Crum’s Peach Orchard $12$2265

National Food Service Management Institute Section 12: Management Issues 40 Budget Report Only whole dollar amounts Speed important

National Food Service Management Institute Section 12: Management Issues 41 Important! The working budget report should not stop a center from making the purchases necessary to provide the meals as planned.

National Food Service Management Institute Section 12: Management Issues 42 Budgeted Amount Has the enrollment increased? Has there been an unusual event such as a freezer failing and food spoiling? Have there been price increases? If higher than planned, ask:

National Food Service Management Institute Section 12: Management Issues 43 Budgeted Amount Are the menus meeting meal patterns? Are the portion sizes adequate? Has enrollment decreased? Have there been price decreases? If lower than planned, ask:

National Food Service Management Institute Section 12: Management Issues 44 Remember! A budget is a plan.