Business Math

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Business Math

• A workshop for ProStart Teachers
• Presented by the National Restaurant Association
  Educational Foundation

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What we will review..

• Purchasing math applications
• Labor Cost
• Basic Accounting

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Purchasing Math Applications

• Specification Sheets yr. 2 / 7.2
• Purchase Orders yr. 2 / 7.2
• Inventory Control yr. 1 / 12.3
• Requisitions yr. 2 / 7.2

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Specification SheetDescribes the characteristics
of products and services that an operation wants
to buy

• Exact name of product
• Cost
• Quantity
• Size
• Acceptable waste
• U.S. Grade quality
• Package type and size
• Preservation method
• Color
• Form

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Purchase OrderA legally binding written document
that details exactly what the buyer is ordering
from the vendorr

• Name of operation, address, phone number
• Buyers name
• Name of supplier
• Suppliers contact person
• Date of the order
• Desired date of receipt
• Shipping method
• Quantity
• Brief description of item
• Size of item
• Unit price
• Total price for entire order, including sales
  tax, shipping, and any other charges
• Any special information regarding the item or
  delivery

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Inventory Terms

• Opening Inventory The value of the food on hand
  at the beginning of the month.
• Purchases The value of the food items purchased
  during the month.
• Closing Inventory The value of the food on hand
  at the end of the month.

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Inventory Control

• Determine dollar value of inventory
• Analyze ways to determine closing inventory by
  performing math calculations
• Determine daily and monthly food costs

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Key Terms..

• Book inventory
• Closing inventory
• FIFO
• Inventory turnover
• LIFO (last-in, first out)
• Weighted average purchase

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Determining the value of the closing inventory

• Actual purchase price
• FIFO
• Weighted average purchase price
• Latest purchase price
• LIFO

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Food Cost Determination

• Opening Inventory (items on hand)
• Purchases Total Available for Sale
• - Closing Inventory
• Cost of food sold or Cost of Sales

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Requisition Forms

• Forms that are used to get approval for large
  purchases

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Labor Cost

• Employee Turnover yr 1 10.5
• Payroll Budget yr 1
  10.3
• Labor Cost Percentage

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Employee Turnover RateThe ratio of employees
who leave to total employees
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The Formula

• Number of employees leaving X 100
• Total number of employees
• Turnover Rate

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Payroll Budget

• Payroll budget is a semi- variable cost item
• Salaried workers such as managers tend to remain
  fixed
• Hourly workers payroll costs vary in relation to
  sales volume

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Labor Cost Percentage

• The percentage of total sales that represents the
  cost of labor

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The Formula

• Cost of Labor
• Sales Labor Cost

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What it Means

• Example
• 29,330 (cost of labor
• 83,300 (sales) 35 LCP
• Or
• 35 of each sales dollar is for labor

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Basic Accounting

• Cost of Sales yr. 2 / 9.1
• Revenue yr. 1 / 12.2
• Income Statements

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Cost of Sales

• The figure that reflects the food cost for a
  given period of time, usually a month.
• (opening purchases closing)
• Costs of Sales

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Types of Accounts

• Asset
• Liability
• Owners equity
• Revenues
• Expenses

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Double Entry Accounting

• Records equal debits and credits for every
  business transaction
• Insures that both sides of every transaction are
  recorded
• Entries are made into T-Accounts

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Revenue

• Money that an operation takes in when it sells
  products or services

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Average Daily Sales

• Total Dollar Sales
• Total of Covers
• Average Sales per customer

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The Profit and Loss Statement

• Also known as the income statement
• Lists income, FB related expense, labor
  expense, and any other expense
• Identifies profit

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Example

• Income F B, labor, other expenses
• Profit