Cost Control in Food and Drink Companies

Product oriented companies develop a development budget which estimates the number of units that must definitely be manufactured to meet up with the sales goals. The development budget also quotes the many costs associated with manufacturing those products, including labour and materials.

Cash Move/Cash budget

The cashflow budget is a prediction of future cash receipts and expenditures for a particular time frame. It usually protects a period in the short term future. The cash stream budget helps the business enterprise determine when income will be sufficient to cover expenses so when the company should seek outside funding.

Marketing budget

The marketing budget is an estimate of the money needed for campaign, advertising, and public relations in order to market the merchandise or service.

Project budget

The project budget is a prediction of the costs associated with a particular company job. These costs include labour, materials, and other related bills. The job budget is often broken down into specific responsibilities, with task budgets designated to each.

Revenue budget

The Income Budget consists of earnings receipts of administration and the costs met from these earnings. Tax revenues are made of fees and other tasks that the federal government levies.

Expenditure budget

A budget type which include of spending data items.

(Arthur & Sheffrin, 2003)

What is fixed cost?

Fixed cost is thought as hey do not vary proportionally with volume, but rarely are they completely fixed in real sense. They could fluctuate for other reasons. (Ojugo, 1999, p349 )

Variable cost

Variable cost are those cost which upsurge in amount with the increase in production and decrease in volume with reduction in production as materials cost, labour cost, vitality, repair, fuel etc. variable cost changes in immediate proportion to the amount of production. (Gupta et al. 2007)

What is cash flow statement?

Cash flow statement is the financial record that assignments what your business plan means in conditions money. It really is same as a budget. It projected affirmation used for interior planning and quotes how much money will stream into and out of a business throughout a designated period of time, usually the approaching tax yr. (Jinnet & Pinson, 2006)

Advantages of cashflow statement

Cash flow affirmation act as an important tools of short-term financial research and planning. The main advantages are outlined below

  • Cash flow statement is very useful in getting ready cash budget as cash is the very basis of business operations cash flow shows very useful in evaluating the money position of the concern
  • The projected cash flow statement helps fund manager in exploring the options of repayment of long term debts which will depend on upon the availability of cash
  • Cash flow statement can be used for making appraisal of various capital investment jobs just to determine their liquidity and success.
  • A assessment of the cash flow affirmation of pervious 12 months and projected cashflow statement uncovers deviations of actual from budgeted.
  • For repayment of liabilities which will probably mature immediately, cash is more important than working capital. Cash flow statement is certainly an improved tool of examination than funds flow statement as far as short term research can be involved.
  • Cash flow affirmation permits the management to describe why the business is facing problems in paying dividend while it has acquired good gains.
  • It assists with taking lending options from banking institutions and other finance institutions; the repayment capacity of the company can be comprehended by going right through the cash stream statement.
  • It supplements the evaluation provided by money flow affirmation as cash is a part of the working capital.

What is charging sheet?

A cost sheet is a assertion of cost incurred, or even to be incurred, for creating a given level of outcome or for rendering services, as the truth may be. Preparation of your cost sheet helps cost control and costing decisions. (Banerjee, 2006)

Cost sheet for Hospitality

The standerised reciepe cost sheet is an archive of the ingredient cost reqiured to produce an item sold because of your procedure. This standerised cost sheet can be created using any basic spreadsheet software. (Dopson, 2010)

Advantages of cost sheet in hospitality

New employees can be better trained.

Helpful to keep up food laws and regulations.

Helpful to clarify about any food item to the visitor.

Helpful for accurate purchasing in order to gain earnings out of business.

Purchasing, acquiring, storing and issuing


Purchasing can be defined as a function concerned with the search, selection, purchase, receipt, storage space and final use of your commodity relative to the catering insurance plan of the establishment.

Types of purchasing

Blanket Orders

A Blanket Purchase Order is a kind of purchase order made to consolidate repeated small acquisitions from an individual supplier. It really is essentially a kind of open account which is bound in terms of the things which may be ordered, who are able to place the requests, the period for which it is usually to be open, and the total amount that can be bought. This form of purchase order is useful for departments that have repetitive supply needs.

Standing Order

A Standing up Purchase Order is purchasing method found in purchasing leases (e. g. vehicle, property and equipment), and equipment maintenance. In most cases, equipment maintenance purchases are set up for one year. Standing orders for leases should be designed for the term of the lease.

Regular Purchase Order

The Purchase Order (Regular) is the essential purchasing system for making single instance purchases. It really is a contract providing for the delivery by a specific date of detailed goods or services at a predetermined price.

Source -www. urmc. rochester. edu

Objectives of receiving, storing and issuing


Quantity of something delivered must similar the number ordered

Quality of something delivered must be the same as the product quality ordered

Price on the invoice for every item delivered ought to be the same as the purchase price quoted or detailed when the order was placed


Prevent pilferage

Ensure accessibility when products are needed

Preserve quality


To ensure the timely release of items from inventory in the needed quantities

To avoid the misuse of items between release from inventory and delivery to the required department


Banerjee, B. (2006). Cost Accounting Theory And Practice (12th ed. ). New Delhi: Prentice Hall of India.

Dopson, L. R. (2010). Food and Drink Cost Control (5th ed. ). Canada: John Wiley and sons, Inc.

Jinnet, L. P. (2006). Small Buisness Start-Up (6th ed. ). Chicago: Kalpan Magazines.

Ojugo, C. (1999). Food & Beverage Cost Control (2nd ed. ). New York: Delmar.

S. P. Gupta, Ajay Sharma, Satish Ahuja. (2007). Cost Accounting (1st ed. ). New Delhi: V. K. Corporations.

Sullivan, Arthur; Steven M. Sheffrin (2003), Economics: Concepts in action. Upper Saddle River, New Jersey: Pearson Prentice Hall

https://www. urmc. rochester. edu/purchasing/purchaseorder. cfm

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