Food-Service-Manual-for-Health-Care-Institutions

Food Service Manual for Health Care Institutions
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Exhibit 11.2. Format for Monthly Profit-and-Loss Statement
Food Revenues $
Cost of Food
Purchases $
Less: inventory
Net food costs $
Cost of Labor
Salaries/wages $
Benefits
Total labor costs $
Operating Costs
Office rent $
Laundry
Maintenance
Telephone
Postage
Utilities
Depreciation
Equipment
Total operating costs $
Total Expenses $
Operating Profit (Loss) $
(Revenues minus total expenses)
A profit-and-loss statement is a report developed by the finance and accounting departments
that lists revenue and expense and the difference between the two. The profit-and-loss
statement will vary on a monthly basis because of the fluctuation in cost of purchases, inventory
on hand, increase in operating expense, and depreciation.
Depreciation is an accounting procedure that spreads the cost of capital equipment or
building over the life span of the item. It is calculated by dividing the purchase price of an item
by its expected lifetime. Food service departments also have assets and liabilities. Assets are
items of value owned by the department such as inventories and equipment. Liabilities are
debts that are an obligation of the department such as invoices owed for food and supplies,
payroll, and interest payments. There are fixed assets such as land, buildings, equipment, and
improvements. Fixed assets are capitalized and depreciated over time. Liquid assets are items
on hand that can be easily converted to cash, such as food and supply inventory. Two other
accounting terms that affect the profit-and-loss statement include accounts receivable and
accounts payable. Accounts receivable is the record of money owed to a business for products
that have been received and for which an invoice has been sent. Accounts payable is the record
of money owed by the organization (food service) to a creditor for the purchase of food and
supplies, rent, and any other outstanding loan.
Labor Cost Budget
Payroll records are a convenient source of data on labor costs. The hours worked and the costs
associated with the work are usually documented by a time-card system. Smaller operations