1. Chapter 8 Monthly Inventory and Monthly Food Cost
Principles of Food, Beverage, and Labor Cost Controls, Ninth Edition

2. Important Chapter Terms
Closing inventory: Physical inventory at the end of a period, expressed in terms of units, value, or both
Intraunit transfer: Food or beverage transfer between departments in a single hotel, restaurant, or similar establishment
Interunit transfer: Food or beverage transfer between units in a chain
Grease sales: Dollar value of fats and oils sold to rendering companies

3. Five Methods of Valuing Physical Inventory
Actual purchase price
First-in, first-out (latest prices)
Weighted average purchase price
Latest purchase price (most recent prices)
Last-in, first-out (earliest prices)

4. Important Chapter Formulas
Cost ÷ Sales = Cost %
Cost of food sold ÷ Food sales = Food cost %
Total inventory = Opening inventory + Closing inventory
Average inventory = Total inventory ÷ 2
Inventory turnover = Food cost ÷ Average inventory

5. Techniques for Determining Cost of Employee Meals
Cost of separate issues
Prescribed amount per meal per employee
Prescribed amount per period
Sales value multiplied by cost percent

6. Determining Cost of Food Sold
Opening inventory
+ Purchases
= Total available for sale
– Closing inventory
= Cost of food issued
+ Cooking liquor
+ Transfers from other units
= Subtotal
– Food to bar (directs)
– Transfers to other units
– Grease sales
– Steward sales
– Gratis to bar(s)
– Promotion expense
= Cost of food consumed
– Cost of employees’ meals
= Cost of food sold
© John Wiley & Sons, Inc. 2009