 Example Inventory Process
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Purpose
The
Steps for an example simple inventory process for a Cheeseburger are shown
below.
The Ingredients for
the Cheeseburger are:
1
Hamburger Patty
1
Hamburger Bun
1
American Cheese Slice
Step 1: Setup the
Inventory Items for a Cheeseburger
Note:
Inventory Groups, Subgroups,
Units and Vendors must be
established before completing the following steps.
▪ Enter
the Inventory Item, Hamburger Patty. In
this example, Hamburger Patties are sold by the Recipe Unit “Each” and counted
in the Stock Unit "Each". The Purchase Unit is “Case”. The Par Level is 3 Cases and the Min.
Purchase is 1 Case. The Purchase Cost of a Case is $12.00 or $0.50 a Hamburger
Patty (see Figure 4.27).
Figure 4.27
▪ Enter
the Inventory Item, Hamburger Bun. In
this example, Hamburger Buns have a Recipe Unit of “Each” and a Stock Unit of
"Each". The Purchase Unit is “Case”. The Par Level is 3 Cases and the
Min. Purchase is 1 Case. The Purchase Cost of a Case is $6.00 or $0.25 a
Hamburger Bun (see Figure 4.28).
Figure 4.28
▪ Enter
the Inventory Item, American Cheese Slice. In this example, American Cheese Slices have a
Recipe Unit of “Each” and a Stock Unit of "Each". The Purchase
Unit is “Pkg”. The Par Level is 2 Pkgs and the Min. Purchase is 1 Pkg. The
Purchase Cost of a Pkg is $10.00 or $0.10 an American Cheese Slice (see Figure
4.29).
Figure 4.29
Step
2: Procedure to enter the Recipe for the Cheeseburger Menu Item
▪ Create
a Menu Item named "Cheeseburger" and
set the price to $5.95 for this example (see Figure 4.30).
Figure 4.30
▪ Enter
the Recipe for the Cheeseburger as shown in Figure
4.31. The Total Ingredient Cost is $0.85 bringing the Food Cost percentage for
the Cheeseburger to 14.28% (see Figure 4.31)
Figure 4.31
Step
3: Create an Inventory Worksheet
Report
▪ Select
the Items (American Cheese Slice, Hamburger Bun and Hamburger Patty) used for
the Cheeseburger that will be used to Enter
Inventory, Enter Invoices and view the Inventory Usage Analysis
Report. In this example, the Inventory Worksheet is named
"Cheeseburger Worksheet" (see Figure 4.32).
Figure 4.32
Step 4: Enter the
Initial Inventory
▪ For
this example, the Inventory was taken
at the end of the day on 06/01/200X. The Inventory is calculated at the end of
the business day it was taken (see Figure 4.33).
Figure 4.33
▪ For
this example, 67 American Cheese Slices, 32 Hamburger Buns and 48 Hamburger
Patties were counted at the end of the business day 06/01/200X and entered into
the Cheeseburger Worksheet below. Verify the Qty and Post the Inventory (see
Figure 4.34).
Figure 4.34
Step 5: Enter the Invoice of any purchases between
taking Inventories.
▪ Select
the Post Date and the Invoice # for the Invoice. Select the Cheeseburger
Worksheet and select Create (see Figure 4.35).
Figure 4.35
▪ Enter
the Qty for the Items received on the Invoice. For this example, 3 Cases of
Hamburger Patties, 3 Cases of Hamburger Buns and 1 Pkg of American Cheese
Slices were received (see Figure 4.36). Verify the Qty and Price and Post the
Invoice.
Figure
4.36
Step 6: Enter the Ending Inventory to calculate the
Variance on the Inventory Usage Analysis
Report.
▪ In
this example, the Inventory was taken 06/08/200X, a week after the previous
Inventory was taken (see Figure 4.37).
Figure 4.37
▪ For
this example, 158 American Cheese Slices, 97 Hamburger Buns and 112 Hamburger
Patties were counted at the end of the business day 06/08/200X and entered into
the Cheeseburger Worksheet below. Verify the Qty and Post the Inventory.
Figure 4.38
Step
7: Viewing the Inventory Usage Analysis Report.
▪ Select
the latest Inventory Cheeseburger Worksheet to view the report (see Figure
4.39).
Figure
4.39
▪ The Inventory Usage Analysis Report is displayed below (see
Figure 4.40). For this example, 7 Cheeseburgers were sold between 06/02/200X
and 06/08/200X.
▪ Note: In this example, the Actual Quantities are
not equal to the ideal quantity to better illustrate the various computation on
the Inventory Usage Analysis Report.
The Actual End Inv.
should equal the Initial Inventory + Purchases – QTY Sold. However, the actual
number is not equal to the ideal number in this example and will show up on the
Inventory Usage Analysis Report.
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Inventory Usage Analysis for 3/2/200X |
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Focus Cafe |
created
at 6/9/200X 4:16:36 PM |
Page 1
of 1 |
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Unit Usage ------------------------------------------ |
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Dollar Usage ---------------- |
----------------
Food Cost ----------------- |
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Beg |
Unit |
Stock |
Begin |
Qty |
Proj |
Actual |
Proj |
Actual |
% |
$ |
% |
$ |
% |
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Item |
Date |
Cost |
Unit |
Inv |
+ Purchases |
- Sold |
= End
Inv |
End Inv
= |
Variance |
End Inv |
End Inv
= |
Variance |
Variance |
COGS |
COGS |
COGU |
COGU |
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American Cheese Slice |
06/02/200X |
0.19 Each |
67.00 |
100.00 |
7.00 |
160.00 |
158.00 |
-2.00 |
16.00 |
15.80 |
-0.20 |
-1.27 |
0.70 |
1.83 |
0.90 |
2.35 |
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Hamburger Bun |
06/02/200X |
0.25 |
Each |
32.00 |
72.00 |
7.00 |
97.00 |
97.00 |
0.00 |
24.25 |
24.25 |
0.00 |
0.00 |
1.75 |
4.57 |
1.75 |
4.57 |
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Hamburger Patty |
06/02/200X |
0.50 |
Each |
48.00 |
72.00 |
7.00 |
113.00 |
112.00 |
-1.00 |
56.50 |
56.00 |
-0.50 |
-0.89 |
3.50 |
9.14 |
4.00 |
10.44 |
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147.00 |
244.00 |
21.00 |
370.00 |
367.00 |
-3.00 |
96.75 |
96.05 |
-0.70 |
-0.82 |
5.95 |
15.54 |
6.65 |
17.36 |
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Figure 4.40
Figure 4.40.1 American Cheese Slice Usage
Analysis
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Heading |
Field |
Description/Formula |
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Unit Usage |
Projected Ending Inventory |
Proj. End Inv. (160) = Begin Inv. (67) + Purchases (100) – QTY Sold
(7). |
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Actual Ending Inventory |
The actual number of American Cheese Slices on hand was 158 (as
entered in Figure 4.38). |
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Variance |
Variance (-2) = Actual End Inv. (158) – Proj. End Inv. (160). Note: There are 2 fewer American
Cheese slices than expected. |
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Dollar Usage |
Projected Ending Inventory |
Proj. End Inv. Dollar Usage ($16.00) = Unit Cost ($0.10) x Proj. End
Inv. Unit Usage (160). |
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Actual Ending Inventory |
Actual End Inv. Dollar Usage ($15.80) = Unit Cost ($0.10) x Actual End
Inv. Unit Usage (158). |
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Variance |
Variance (-$0.20) = Actual End Inv. ($15.80) - Proj. End Inv.
($16.00). Note: The cost of the
missing American Cheese Slices is $0.20. |
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Food Cost |
Cost of Goods Sold |
Cost of Goods Sold ($0.70) = Unit Usage QTY Sold (7) * American
Cheese Slice Each Cost ($0.10). |
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Cost of Goods Used |
Cost of Goods Used ($0.90) = Actual Usage * American Cheese Slice
Each Cost ($0.10). |
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Food Cost Variance |
Food Cost Variance (-$0.20) = Cost of Goods Sold ($0.70) - Cost of
Goods Used ($0.90). |
Figure 4.40.2 Hamburger Bun Usage Analysis
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Heading |
Field |
Description/Formula |
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Unit Usage |
Projected Ending Inventory |
Proj. End Inv. (97) = Begin Inv. (32) + Purchases (72) – QTY Sold
(7). |
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Actual Ending Inventory |
The actual number of Hamburger Buns on hand was 97 (as entered in
Figure 4.38). |
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Variance |
Variance (0) = Actual End Inv. (97) – Proj. End Inv. (97). Note: There is exactly the number of
Hamburger Buns on hand as expected. |
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Dollar Usage |
Projected Ending Inventory |
Proj. End Inv. Dollar Usage ($24.25) = Unit Cost ($0.25) x Proj. End
Inv. Unit Usage (97). |
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Actual Ending Inventory |
Actual End Inv. Dollar Usage ($24.25) = Unit Cost ($0.25) x Actual
End Inv. Unit Usage (97). |
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Variance |
Variance (0) = Actual End Inv. ($24.25) - Proj. End Inv. ($24.25). Note: The cost of the missing
American Cheese Slices is $0.20. |
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Food Cost |
Cost of Goods Sold |
Cost of Goods Sold ($1.75) = Unit Usage QTY Sold (7) * Hamburger Bun
Each Cost ($0.25). |
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Cost of Goods Used |
Cost of Goods Used ($1.75) = Actual Usage * Hamburger Bun Each Cost
($0.25). |
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Food Cost Variance |
Food Cost Variance ($0.00) = Cost of Goods Sold ($1.75) - Cost of
Goods Used ($1.75). |
Figure 4.40.3 Hamburger Patty Usage Analysis
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Heading |
Field |
Description/Formula |
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Unit Usage |
Projected Ending Inventory |
Proj. End Inv. (113) = Begin Inv. (48) + Purchases (72) – QTY Sold
(7). |
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Actual Ending Inventory |
The actual number of Hamburger Patties on hand was 112 (as entered in
Figure 4.38). |
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Variance |
Variance (-1) = Actual End Inv. (112) – Proj. End Inv. (113). Note: There are 1 fewer Hamburger
Patties than expected. |
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Dollar Usage |
Projected Ending Inventory |
Proj. End Inv. Dollar Usage ($56.50) = Unit Cost ($0.50) x Proj. End
Inv. Unit Usage (113). |
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Actual Ending Inventory |
Actual End Inv. Dollar Usage ($56.00) = Unit Cost ($0.50) x Actual
End Inv. Unit Usage (112). |
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Variance |
Variance (-$0.50) = Actual End Inv. ($56.00) - Proj. End Inv.
($56.50). Note: The cost of the
missing Hamburger Patty is $0.50. |
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Food Cost |
Cost of Goods Sold |
Cost of Goods Sold ($3.50) = Unit Usage QTY Sold (7) * Hamburger
Patty Each Cost ($0.50). |
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Cost of Goods Used |
Cost of Goods Used ($4.00) = Actual Usage * Hamburger Patty Each Cost
($0.50). |
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Food Cost Variance |
Food Cost Variance (-$0.50) = Cost of Goods Sold ($3.50) - Cost of
Goods Used ($4.00). |
