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

Food Service Manual for Health Care Institutions
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3. Subtract the value of the inventory at the end of the month (total of the physical inventory
and the stock in the kitchen) to arrive at the total cost of the food used during the
month.
The value of the kitchen inventory may be deleted from the calculation if the amount is
fairly small or has high turnover or if calculating its value is too time-consuming. Other methods
of determining raw food costs can be used. However, the time involved in using other methods
as well as their accuracy should be considered.
Once the total raw food cost for the month has been determined, it can be expressed as
food cost per meal equivalent (as calculated by the method already described). However, this
figure only indicates the average cost of all meals served. The director should also be concerned
with the cost per meal for each group served, patient or nonpatient. Therefore, a method is
needed to allocate costs efficiently and accurately. The simplest method is based on patient and
nonpatient meal counts. A ratio of the two types of meals served should be determined and the
costs assigned accordingly.
In addition to total food costs, the director may want to break down costs into categories
according to food group, such as meat, fish, poultry, and eggs; dairy products; fresh produce;
frozen goods; bakery goods; and groceries. Cost breakdowns are useful for evaluating the
nutritional contributions of various foods and for detecting month-to-month fluctuations that
may require the manager to take corrective action. For example, a decrease in the average
amount spent for meat, fish, poultry, and eggs may indicate that the meals served during the
month were lower in protein content than those served during the preceding month. A considerable
increase might reflect increasing market prices, over which the director has no control,
or the inappropriately frequent use of expensive meat items. Small month-to-month variations
are normal, but wide variations may point to the need for corrective action.
Sometimes it is desirable to calculate food costs more frequently than once a month. If dayto-day
figures are needed, the form shown in Exhibit 11.5 can be used. However, the value of
these data should be considered in relation to the time and effort required to record and report
them. The fact that daily cost calculations are even less accurate than weekly or monthly cost
figures because of variations in purchasing and use patterns should also be taken into account.
However, the daily food cost record does reflect the approximate cost per day. In addition, it
provides data for calculating monthly total purchase and cost figures that can be used in
preparing the monthly performance report. The monthly performance report can then be compared
with the operating budget. Computer-assisted inventory and accounting systems are able
to provide weekly or even daily food cost data with relative ease and at reasonable expense.
Other aspects of food costs that should not be overlooked are the cost of food stocked on
patient floors and the cost of supplementary nourishments served from the kitchen.
Periodically, a count of all food items sent to patient floors should be recorded, and the costs
should be assigned. The total cost of these items is then divided by the number of patient days
for that period to determine the average cost of floor-stocked food per patient day. The costs
of other nourishments not stocked on patient floors are usually considered a part of the patient
food cost and are not treated separately in the accounting process.
Monthly Labor Costs
Payroll records are a convenient source of data on labor costs. A form such as the one shown
in Figure 11.5 can be used to record labor hours worked and paid on a monthly basis. In some
cases, institutions may prefer reporting by week or by pay period. Either of these alternative
reporting periods offers the advantage of supplying data based on a fixed number of days. This
simplifies the comparison of labor hours and costs. However, monthly reporting has the advantage
of relating labor costs to other expenses reported and summarized by the month. The form
shown in Figure 11.5 also provides a convenient record of overtime worked, sick days taken,
and vacation days used.