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used grease are also subtracted from the cost of
goods consumed. After these adjustments have
been made, the final result is the cost of goods sold
�food or beverage).
A concern in computing the cost of goods sold is
the method chosen to value the inventory. There
are at least five ways that inventory can be valued,
which will affect the cost of goods sold. The first-in
first-out method requires that the first products
received will be the first products used, which
means that the remaining products at the end of
the accounting period will be the most recent
ones purchased. The modified version of this
method uses the most recent purchase price to
value all of the inventory.
In contrast, the-last in first-out method states
that the oldest products are the ones that remain in
inventory. The specific identification method values
the remaining inventory by assigning the actual
cost of the actual unit that remains in inventory at
the end of the period. The weighted average
method calculates the ending inventory based on
the weighted average of the purchases during the
period. Food and beverage analysis is the comparison
of the cost of food or beverage sold to the net
food or beverage revenue or the comparison of the
contribution margin of the food or beverage
department �food or beverage revenue minus cost
of food or beverage sold) to prior periods or a
budget.
Further reading
Schmidgall, R. �1997) Hospitality Industry Managerial
Accounting, 4th edn, East Lansing, MI: Educational
Institute of the American Hotel and Motel
Association.
Uniform System of Accounts for the Lodging Industry, 9th
edn, East Lansing, MI: Educational Institute of
the American Hotel and Motel Association.
food-borne illness
STEPHEN M. LEBRUTO, USA
Illness from food is caused by the ingestion of
foodstuffs which have been directly or indirectly
contaminated with harmful bacteria, such as
salmonella �see sanitation). Such illnesses frequently
cause stomach pains, diarrhoea and/or
vomiting. Tourists avoid such illnesses by drinking
bottled water, eating hot foods, and avoiding
salads, local fruits, cold dishes and shellfish unless
provided by reputable sources.
food service, contract
KATHRYN WEBSTER, UK
A management contract is an arrangement
under which operational control is vested by
contract in a separate business which performs
the necessary management functions for a fee. In
the contract food service business, this fee may be a
straight fee, one linked to the turnover of the
business, one in which purchasing discounts are
returned to the client organisation to offset against
the fee, or a combination of these. Foodservice is
typically contracted out for employee feeding in
offices and factories, and increasingly in schools,
hospitals and some tourism establishments.
See also: commissary
forecasting
forecasting 233
PETER JONES, UK
Planning under conditions of uncertainty is both
difficult and necessary, and it creates a substantial
need for forecasts. Accurate forecasts of international
tourism demand are particularly important
on account of the perishable nature of the
product �unfilled airline seats, empty hotel
rooms, and unused hire cars result in lost revenue
which cannot be recouped). They are essential for
efficient planning by those businesses connected
with the international tourism market, as well
as of great interest to governments in origin and
destination countries and to national tourism
organisations. Forecasting techniques may be split
into qualitative research and quantitative
methods, and the latter may be further subdivided
into causal and non-causal methods �see
causal model).