Cost Accounting for Hospitality and F&B Industry
What is Cost Accounting?
Cost accounting is the task of collecting, analyzing, summarizing, and evaluating various alternative courses of action. It helps in advising the management on the most appropriate course of action based on cost efficiency and capability. Cost accounting provides detailed cost information that management needs to control current operations and plan for the future.
Whether it is a hotel, restaurant, cafe, or any organization, the role of cost accounting is very important in every industry. Because it is only cost accounting that takes care of all financial affairs in the hotel/restaurant. It is the process to manage all the accounting systems and find the solutions for any accounting problem.
Role of Cost Accounting in Hospitality and F&B Industry:
Cost accounting keeps track of all costs/expenses of the hotel’s/restaurant’s business. Without them, the hotel/restaurant manager can’t make further decisions.
On a daily basis business will receive reports of purchase (from the Purchasing department) to keep track of price, quantity, condition of goods coming in due to cost accounting. This needs to be updated frequently because hotel/restaurant order new material every few days such as food and drink. They can’t delay this because food can’t be stored in the house for a long time.
Cost accounting also processes orders from other departments of the hotel/restaurant and sends them to the purchase department again to place orders with outside suppliers.
At the end of month, they will usually go to physical storage of the kitchen/bar to check on month-end stock. This includes counting, scaling stocks, and even measure wine percentage in opened wine bottles.
Follow the steps to effectively summarize the role of cost accounting.
1 – Economy: It covers financial aspects dependent on a manager. The economy comes from keeping things under budget while maintaining quality.
2 – Efficiency: Keeping wastage as low as possible and focus on how well the output is generated.
3 – Effectiveness: It is target-oriented and concludes whether certain targets is being met or not.
If you have any hotel, restaurant, café or any other business-related to Hospitality and F&B Industry contact us today! Our experts will help you in Cost Accounting. You can also contact us for Taxation, Finance Consultancy, and other allied services.