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3rd/4th Sem F & B Control Notes

Basic Costing: Food Cost Control

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Last updated: 11 July 2023

Costing is the process of calculating the expenses involved in producing a product or providing a service. In this blog, we’ll go over the basics of costing and why it’s important.

What is Costing?

Costing is a process that involves identifying and allocating costs to the different products or services offered by a business. In the food and beverage industry, this is particularly important because it can help businesses understand how much it costs to produce each dish or drink. This, in turn, can help them set prices that are fair to customers while still allowing the business to make a profit.

Why is Costing Important?

Costing is essential for any business that wants to be profitable. By understanding the costs involved in producing a product or providing a service, businesses can make informed decisions about pricing and budgeting. This can help them avoid overpricing their products, which can lead to lost sales, or underpricing them, which can lead to lost revenue.

Types of Costs

There are two main types of costs that businesses need to consider: fixed costs and variable costs.

  • Fixed Costs: Fixed costs are costs that remain the same regardless of how many products or services are produced. Examples of fixed costs in the food and beverage industry include rent, salaries, and equipment costs.
  • Variable Costs: Variable costs, on the other hand, are costs that vary depending on the amount of product or service being produced. Examples of variable costs in the food and beverage industry include food and beverage costs, labor costs, and utility costs.

Costing Methods

There are several costing methods that businesses can use to determine the cost of their products or services. Two common methods are:

  • Job Costing: Job costing involves allocating costs to a specific job or project. In the food and beverage industry, this could involve allocating costs to a specific menu item.
  • Process Costing: Process costing involves allocating costs to a specific process. In the food and beverage industry, this could involve allocating costs to the entire production process of a menu item.

Conclusion

Costing is a critical part of the food and beverage industry. By understanding the basics of costing, you’ll be able to make informed decisions about pricing and budgeting, which can help you be successful in the industry. Remember to consider both fixed and variable costs, and to choose a costing method that works best for your business. Good luck!

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Syllabus BHM205

01 Food Cost Control

  1. Introduction to Cost Control
  2. Define Cost Control
  3. The Objectives and Advantages of Cost Control
  4. Basic costing
  5. Food Costing

02 Food Control Cycle

  1. Purchasing Control
  2. Aims of Purchasing Policy
  3. Job Description of Purchase Manager/Personnel
  4. Types of Food Purchase
  5. Quality Purchasing
  6. Food Quality Factors for different commodities
  7. Definition of Yield
  8. Tests to arrive at standard yield
  9. Definition of Standard Purchase Specification
  10. Advantages of Standard Yield and Standard Purchase Specification
  11. Purchasing Procedure
  12. Different Methods of Food Purchasing
  13. Sources of Supply
  14. Purchasing by Contract
  15. Periodical Purchasing
  16. Open Market Purchasing
  17. Standing Order Purchasing
  18. Centralised Purchasing
  19. Methods of Purchasing in Hotels
  20. Purchase Order Forms
  21. Ordering Cost
  22. Carrying Cost
  23. Economic Order Quantity
  24. Practical Problems

03 Receiving Control

  1. Aims of Receiving
  2. Job Description of Receiving Clerk/Personnel
  3. Equipment required for receiving
  4. Documents by the Supplier (including format)
  5. Delivery Notes
  6. Bills/Invoices
  7. Credit Notes
  8. Statements
  9. Records maintained in the Receiving Department
  10. Goods Received Book
  11. Daily Receiving Report
  12. Meat Tags
  13. Receiving Procedure
  14. Blind Receiving
  15. Assessing the performance and efficiency of receiving department
  16. Frauds in the Receiving Department
  17. Hygiene and cleanliness of area

04 Storing & Issuing Control

  1. Storing Control
  2. Aims of Store Control
  3. Job Description of Food Store Room Clerk/personnel
  4. Storing Control
  5. Conditions of facilities and equipment
  6. Arrangements of Food
  7. Location of Storage Facilities
  8. Security
  9. Stock Control
  10. Two types of foods received – direct stores (Perishables/nonperishables)
  11. Stock Records Maintained Bin Cards (Stock Record Cards/Books)
  12. Issuing Control
  13. Requisitions
  14. Transfer Notes
  15. Perpetual Inventory Method
  16. Monthly Inventory/Stock Taking
  17. Pricing of Commodities
  18. Stock taking and comparison of actual physical inventory and Book value
  19. Stock levels
  20. Practical Problems
  21. Hygiene & Cleanliness of area

05 Production Control

  1. Aims and Objectives
  2. Forecasting
  3. Fixing of Standards
    1. Definition of standards (Quality & Quantity)
    2. Standard Recipe (Definition, Objectives and various tests)
    3. Standard Portion Size (Definition, Objectives and equipment used)
    4. Standard Portion Cost (Objectives & Cost Cards)
  4. Computation of staff meals

06 Sales Control

  1. Sales – ways of expressing selling, determining sales price, Calculation of selling price, factors to be considered while fixing selling price
  2. Matching costs with sales
  3. Billing procedure – cash and credit sales
  4. Cashier’s Sales summary sheet