Chapter Five-Using Financial Reports to
Analyze Program Efficiency
Program Analysis
Case Study
#1
ÄPart I: Determining Costs of Operation to Total
Revenue
Part II: Determining Participation
Calculating Adult Meal Costs
National Food Service Management Institute
Financial Management Participant Workbook
Chapter Five-Using Financial Reports to
Analyze Program Efficiency
Case Study # 1: Part I
Answer Sheet
Determining Costs of Operation to Total Revenue
1a.
Formula - Percent of Salaries and Wages to Total Revenue =
Cost of Salaries
Total Revenue
1b.
=$
699,319
2,468,317
= $ 297,528
2,468,317
.3684 %
= $ 140,581
2,468,317
= .0570 %
=
$ 363,905
2,468,317
= .1474 %
Formula - Percent of Capital Equipment to Total Revenue =
Equipment Cost
Total Revenue
1g.
=
Formula - Percent of Supplies to Total Revenue =
Supply Cost
Total Revenue
1f.
.1205 %
Formula - Percent of Commodity Value to Total Revenue =
Commodity Value
Total Revenue
1e.
=
Formula - Percent of Food Cost to Total Revenue =
Cost of Purchased Food = $ 909,400
Total Revenue
2,468,317
1d.
.2833 %
Percent of Employee Benefits to Total Revenue =
Cost of Employee Benefits
Total Revenue
1c.
=
= $ 48,521
2,468,317
=___.0197 %
Formula - Percent of Indirect Cost to Total Revenue =
Indirect Cost
Total Revenue
=$
60,651
2,468,317
National Food Service Management Institute
=
.0246 %
Financial Management Participant Workbook
Chapter Five-Using Financial Reports to
Analyze Program Efficiency
Answer Sheet, Cont.
Determining Costs of Operation to Total Revenue
1h.
Formula - Percent of Overhead to Total Revenue =
Overhead Costs
Total Revenue
=$
90,976
2,468,317
= __.0369 %
2.
Total all percentages in 1a. through 1h. =1.0578
The operation is spending approximately 5% - 6% more than it
is receiving in revenue.
3.
Add the answer in 1a, 1b, and 1c. for a total percent of
purchased food and labor costs. The answer is approximately
77% (.7722). If the value of commodities are added, the total
percent for all food and labor is 83% (.8292).
If food and labor costs increase by 8% and no additional
revenues are planned to cover the increase, then the
administration may need to adjust other program expenditures.
With an 8% increase in labor and purchased food, the operation
will be spending only about 80% of current total revenue for
labor and purchased food combined.
See calculations below.
Assume an increase of 5% in purchased food costs as follows:
$909,400 x 5% = $45,470
$909,400 + $45,470 = $954,870
$954,870 ÷ $2,468,317 = .3869
Assume an increase of 3% in labor costs as follows:
($699,319 + $297,528) x 3% = $29,905.41
$699,319 + $297,528 + 29,905 = $1,026,752
$1,026,752 ÷ $2,468,317 = .4160
The sum of .3869 + .4160 equals .8029 or 80% of current
revenue. HOWEVER, if the value of commodities (.0570) is
added, the percent of labor and food to total revenue is 86%
(.8599).
National Food Service Management Institute
Financial Management Participant Workbook