1. Chapter 10 Actual Versus Standard Food Costs Principles of Food, Beverage, and Labour Cost Controls, Canadian Edition

2. Learning Objectives After reading this chapter, you should be able to: 10.1 Define standard cost and explain how it is calculated. 10.2 Calculate and compare actual and standard costs using the daily method. 10.3 Describe how to use a Menu Pre-Cost and Abstract form. 10.4 Define potential savings and list several conditions that affect it. 10.5 Calculate and compare actual and standard costs using the periodic method.

3. Setting Standards Achievable standards are realistic Take normal variances into account Ideal standards may never be reached They represent a perfect situation (no spoiled goods, no worker errors, etc.) Standard costs are compared with actual costs, favourable variances result when actual costs are less than standard costs

4. Daily Comparison Use standard costs and selling prices for standard portions All personnel follow established standards and standard procedures At the end of the day use actual portion sales to add to the sales history Determine standard cost and cost percent results with actual sales

5. Menu Pre-Cost and Abstract Complete the forecast (left side) with accurate standard potion costs determined by: Formula Recipe detail cost card Butcher test Cooking loss test Yield factors

6. Menu Pre-Cost and Abstract Use the following to complete the sheet: Number forecast = guests expected Sales price (S.P.) = Menu price Food cost percent (F.C. %): Cost ÷ Sales price Total cost: Number forecast × Cost Total sales: Number forecast × Sales price

7. Undesirable Forecast Three ways an undesirable forecasted food cost percent can be changed: 1.Changing sales prices 2.Altering portion standards (sizes, ingredients, and/or recipes) 3.Adding or eliminating menu items

8. Understanding Actual cost percent: Ratio of actual cost of sales to total sales for a given period Standard cost percent: Ratio of standard cost to actual dollar sales for a given period

9. Abstract The abstract (right-hand portion), of the form is prepared after sales have taken place Calculate the Total Cost by multiplying the actual number sold X the standard cost Determine standard cost percent based on actual portions sold by dividing total standard costs by total sales

10. Comparing Forecast and Actual Three reasons for comparing: 1.To see if a menu item has sold in greater quantities than forecasted 2.To determine the extent to which forecasts are wrong 3.To see the extent to which forecasting techniques can be improved

11. Potential Savings Potential savings are the difference between actual and standard costs. Reasons: Over purchasing Overproduction Pilferage Spoilage Improper portioning Failure to follow standard recipes

12. Key Terms Abstract, p. 273 Actual cost percent, p. 275 Menu Pre-Cost and Abstract, p. 268 Potential savings, p. 277 Standard cost, p. 267 Standard cost percent, p. 275 Variance, p. 266

13. Copyright