Philippine E-Journals

An Enhancement of the Existing Food Costing System of a Restaurant in Los Baños, Laguna

Ada E. Ballesfin

Discipline: Accountancy

 

Abstract:

The study reiterated the importance of cost for restaurants. It is essential for valuing inventory, determining the cost of goods sold and making decisions. Restaurants commit mistakes by ignoring costs that should be included and including costs that should be ignored. An efficient and effective costing system allows restaurateurs to keep a focused eye on its food cost and provide management with information on operations and performance.

 

The study investigated the current practices of a restaurant in Los Baños, Laguna regarding its policies and procedures in food costing. This paper presented suggestions on how to go about allocating cost to inventory and goods sold to maximize the benefits that effective costing has to offer. It sought to describe, asses, and identify the weaknesses in the current system of the restaurant. In addition, recommendations were developed to enhance the food costing system of the restaurant.

The study used action type of research in evaluating the existing food costing system and practices in inventory valuation of a restaurant in Los Baños, Laguna. An open-ended questionnaire was used to collect data and answer the questions related to the study. An interview with management was also conducted. Likewise, key personnel were interviewed to asses if the policies and procedures were being observed and practiced.

Results showed that there were a lot of weaknesses in the current system of the restaurant. The internal control procedures on material requisition were lax. There were no formal forms and reports accomplished to record the purchases and issuances of materials. In addition, the procedures on purchases of perishable and non-perishable goods were confusing. Duties and responsibilities were not specified and combined to facilitate control considering the limited human resources. Lastly, the restaurant has no cost accounting system to record and monitor its food cost.

Results confirmed that the study was able to design an enhanced inventory, payroll, and cost accounting system. The study proposed a system for recording purchases, material requisitions, issuances, and payroll. The study also suggested procedures for accounting of raw materials used, direct labor, employee meals, complimentary sales, and work-in-process. The proposed procedures were based on the current human resource of the restaurant.