Exam 2 guide - Cost Controls EXAM #2 Study Guide 1. Chapter...

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Cost Controls EXAM #2 Study Guide 1. Chapter 8: Storing and Issuing Know the role of the storage function (factors to be considered when setting up storage facilities, recordkeeping, tagging, security) 1. Factors to consider: a. Location and layout of facility i. Located between receiving and preparation—three types 1. cold storage, freezer storage, dry storage b. Temperature and humidity control i. Maximize life of products c. Organization and placement of products i. Place expensive items far from door, and most used items close d. Dating and placing stored products i. Date and place price on all stored products e. Recordkeeping i. Two types of products 1. directs : bread, dairy, fresh produce—charged to food costs when received 2. stores : meats beverages, charged to food costs when they leave inventory (requires requisition from storage) f. Security i. Cameras, biometrics Know all the aspects of inventory management and valuation 2. Valuation methods: a. Actual purchase price i. Price tags from all items obtained determines value b. FIFO i. Reflects the latest price of goods so the remaining items should be the most recent items, so latest purchase price is used to calculate inventory value—preferred in hospitality c. Weighted average i. Total amount purchased divided by the weight gives the value d. Latest purchase price i. All inventory items are calculated using the latest price per pound, regardless of how many pounds were last purchased e. LIFO i. Assumes that the remaining inventory items should be from the first purchase, so all calculations are done using price per pound of first purchase—doesn’t allow for inventory rotation Know what par stocks are and what their role is in inventory management 1. Par stock is the amount of product that should be on hand between deliveries. Their role is to help keep inventory at a minimum because inventory represents cash tied up.
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Know how to determine reorder quantities 1. Determine reorder quantity by taking the par stock – reorder point and adding the nominal usage until the next delivery Know the specifics of perpetual inventory 1. Operates much like a checking account where products are subtracted from a set balance of inventory on hand. It eliminates the need for more frequent physical inventories. Know the concept of inventory turnover
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This test prep was uploaded on 04/12/2008 for the course HRIMD 422 taught by Professor Morison during the Fall '07 term at Kansas State University.

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Exam 2 guide - Cost Controls EXAM #2 Study Guide 1. Chapter...

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