national food service management institute section 12: management issues 1 section 12: management...

Section 12: Management Issues 1 National Food Service Management Institute

Section 12: Section 12:

Management IssuesManagement Issues

Food Purchasing Food Purchasing for Child Care Centersfor Child Care Centers


list management issues related to food purchasing,

explain the two types of methods acceptable for handling inventory and decide which one is best for the center,

Lesson ObjectivesLesson Objectives

The learner will be able to


identify policies that the board of directors/owners of the center should make,

write a purchase plan for the center,




develop an internal control plan, and

explain how to develop a budget and use it as a working tool.




Management IssuesManagement Issues

Inventory

Board/owner policies

Purchase plan

Internal controls

Budgeting


InventoryInventory

Two acceptable methods Food usage

Purchases equal to food usage


Food UsageFood Usage

Monthly

Formula:Beginning Inventory

Purchases

Ending Inventory

Food Used

$0.00

+ $0.00

− $0.00

$0.00


Food UsageFood Usage

Best for high-dollar-value inventory (more than 7 calendar days)


Purchases Equal Purchases Equal to Food Usageto Food Usage

Annually Philosophy:

If inventory is well-controlled, purchases = food used


General Inventory RuleGeneral Inventory Rule

Once a container (box, bag, case)

is opened, it is not counted as part of

the inventory.


Board/Owner PoliciesBoard/Owner Policies

Represent good business practice

Reviewed annually



Employees authorized to make purchases

Standard of conduct Purchasing documents needing

approval Type of inventory



Employees who will sign invoices write checks prepare the Federal claim for reimbursement keep accounting records


Purchase PlanPurchase Plan

Results of Market analysis Market baskets IFBs/RFPs

Presented to board/owners for approval


Internal ControlInternal Control

Multiple staff members responsible for

performing duties related to a certain task


Internal Control . . .Internal Control . . .

. . . safeguards the financial resources of a center.


Internal Control PlanInternal Control Plan

Task Staff Member Assigned

Assigning reimbursement category ClerkCounting and recording meals served CookFiling claims for reimbursement DirectorReceiving checks for reimbursement ClerkDepositing checks for reimbursement DirectorRecording deposit in accounting records ClerkRecommending approved vendors to the board of directors/owners

Director

Making the grocery list Cook


Internal Control PlanInternal Control Plan

Task Staff Member Assigned

Making purchases at approved retail vendors or placing orders with wholesale vendors

Cook

Receiving wholesale orders and storing wholesale and retail purchases

Cook

Signing invoices or store receipts CookWriting checks DirectorMailing checks ClerkRecording payments in the accounting records ClerkTaking inventory Clerk


BudgetingBudgeting

Center director must present a budget to the board of

directors/owners.


Purchasing Process . . .Purchasing Process . . .

. . . includes planning and managing a food budget that allows the center to

meet CACFP meal pattern requirements and

serve a quality food product to children.


BudgetBudget

Normally for 1 year

A financial guide for that year


Planning the BudgetPlanning the Budget

You will need calendar for the year schedule of days the

center operates meal count records for

previous year

Projected number of Projected number of meals served in the yearmeals served in the year



Number of days in a month you serve varies

Enrollment could increase/decrease

Why not use actual Why not use actual meal counts for the past year?meal counts for the past year?


Operating YearsOperating Years

Calendar year: January to December Federal fiscal year: October to

September State fiscal year:

Varies by State Often July to June

Center fiscal year: varies by center School year: varies by State


Activity 15: AnswersActivity 15: Answers

NovemberSunday Monday Tuesday Wednesday Thursday Friday Saturday

1

2 3 4 5 6 7 8

9 10 11 12 13 14 15

16 17 18 19 20 21 22

23 X 24 25 26 27 Thanksgiving Day

28 29 30 X

XXXX

XXX

XXX



MaySunday Monday Tuesday Wednesday Thursday Friday Saturday

1

2 3 4 5 6 7 8

9 Mother’s Day

10 11 12 13 14 15

16 17 18 19 20 21 22

23 24 25 26 27 28 29

30 31 Memorial Day

XXXXX

XXX

XX

X



November 18 X 39 = 702 18 x 49 = 882 18 x 52 = 936

May 20 x 39 = 780 20 x 47 = 940 20 x 51 = 1,020



Month

Number of days

Center is open

Projected number of meals per day1

Total monthly meals2 (number of days x average

meals per day)

Breakfast Lunch Snack Breakfast Lunch SnackOctober, 2005 23 40 50 56 920 1150 1288November, 2005 18 39 49 52 702 882 936December, 2005 20 38 48 47 760 960 940January, 2006 23 40 50 56 920 1150 1288February, 2006 20 37 47 50 740 940 1000March, 2006 21 40 50 56 840 1050 1176April, 2006 22 40 50 56 880 1100 1232May, 2006 20 39 47 51 780 940 1020June, 2006 21 40 50 56 840 1050 1176July, 2006 22 37 46 53 814 1012 1166August, 2006 21 40 50 56 840 1050 1176September, 2006 21 40 50 56 840 1050 1176Totals 9876 12334 13574



Sophisticated accounting records Past year’s costs

Total expenditures for preparing the budget

Monthly expenditures for managing the budget

How much money How much money will be spent for each meal?will be spent for each meal?



New centers:

Federal reimbursement rate for free meals

X

% for food costs

How much money How much money will be spent for each meal?will be spent for each meal?


New Center BudgetNew Center Budget

Contact State Agency to get percentage to use in estimating food budget


New Center BudgetNew Center Budget

Federal Reimbursement RateX

Percentage (from State Agency)

Example: $2.32 (2005/06 Federal rate for lunch)

X65% (% from State Agency)

= $1.51 (budgeted for each lunch)



Snack rate (2005/06 Federal rate)

$0.63 @ 50% = $0.32$0.63 @ 60% = $0.38$0.63 @ 65% = $0.41


Budget AmountBudget Amount

Budget amount for 1 month =

number of meals X

amount per meal spent on food


Budget AmountBudget Amount

Budget amount for October lunch =

1,150 X

$1.51 = $1,736.50


Food BudgetFood Budget

Month1

BreakfastMeals

2Costs

3Extension*

4

LunchMeals

5Costs

6Extension*

7

SnackMeals

8Costs

9Extension*

10

Monthly Total**

11Oct-05 920 $0.83 $763.60 1150 $1.51 $1736.50 1288 $0.41 $528.08 $3028.18Nov-05 702 $0.83 $582.66 882 $1.51 $1331.82 936 $0.41 $383.76 $2298.24Dec-05 760 $0.83 $630.80 960 $1.51 $1449.60 940 $ 0.41 $385.40 $2465.80Jan-06 920 $0.83 $763.60 1150 $1.51 $1736.50 1288 $ 0.41 $528.08 $3028.18Feb-06 740 $0.83 $614.20 940 $1.51 $1419.40 1000 $ 0.41 $410.00 $2443.60Mar-06 840 $0.83 $697.20 1050 $1.51 $1585.50 1176 $ 0.41 $482.16 $2764.86Apr-06 880 $0.83 $730.40 1100 $1.51 $1661.00 1232 $ 0.41 $505.12 $2896.52May-06 780 $0.83 $647.40 940 $1.51 $1419.40 1020 $ 0.41 $418.20 $2485.00Jun-06 840 $0.83 $697.20 1050 $1.51 $1585.50 1176 $ 0.41 $482.16 $2764.86Jul-06 814 $0.83 $675.62 1012 $1.51 $1528.12 1166 $ 0.41 $478.06 $2681.80Aug-06 840 $0.83 $697.20 1050 $1.51 $1585.50 1176 $ 0.41 $482.16 $2764.86Sep-06 840 $0.83 $697.20 1050 $1.51 $1585.50 1176 $ 0.41 $482.16 $2764.86Totals 9876 $7703.28 12334 $17514.28 13574 $4479.42 $32386.76


Managing the BudgetManaging the Budget

The budget must provide

current information.


Budget as Working ToolBudget as Working Tool

Maintain a budget report for each month

Record amount budgeted for the month at the top

Subtract each invoice or grocery receipt


Budget as Working ToolBudget as Working Tool

Line Date Vendor Money Spent Balance1 10/1/2005 Opening budget balance $30282 10/1/2005 ABC Milk Company $37 $29913 10/1/2005 Magilla Supermarket $225 $27664 10/2/2005 Farmer Jones $7 $27595 10/5/2005 Mallard Wholesale $107 $26526 10/8/2005 ABC Milk Company $40 $26127 10/8/2005 Magilla Supermarket $237 $23758 10/10/2005 Duck’s Fruit Stand $98 $22779 10/11/2005 Crum’s Peach Orchard $12 $2265


Budget ReportBudget Report

Only whole dollar amounts

Speed important


Important!Important!

The working budget report should not stop a center

from making the purchases necessary to provide the

meals as planned.


Budgeted AmountBudgeted Amount

Has the enrollment increased? Has there been an unusual event

such as a freezer failing and food spoiling?

Have there been price increases?

If higher than planned, ask:If higher than planned, ask:


Budgeted AmountBudgeted Amount

Are the menus meeting meal patterns?

Are the portion sizes adequate? Has enrollment decreased? Have there been price decreases?

If lower than planned, ask:If lower than planned, ask:


Remember!Remember!

A budget is a plan.

national food service management institute section 12: management issues 1 section 12: management...

Documents

list management issues

inventory food

food usage slide

food usage best

approval slide

food usage monthly formula

inventory purchases

accounting records slide