Financial Management: A Course for School Nutrition Directors
Course Workbook
National Food Service Management Institute The University of Mississippi CN_117_0910 2012
This project has been funded at least in part with Federal funds from the U.S. Department of Agriculture, Food and Nutrition Service through an agreement with the National Food Service Management Institute at The University of Mississippi. The contents of this publication do not necessarily reflect the views or policies of the U.S. Department of Agriculture, nor does mention of trade names, commercial products, or organizations imply endorsement by the U.S. government. The University of Mississippi is an EEO/AA/TitleVI/Title IX/Section 504/ADA/ADEA Employer. In accordance with Federal law and U.S. Department of Agriculture policy, this institution is prohibited from discriminating on the basis of race, color national origin, sex, age, or disability. To file a complaint of discrimination, write USDA, Director, Office of Civil Rights; Room, 326-W, Whitten Building, 1400 Independence Avenue, SW, Washington, DC 20250-9410 or call (202) 720-5964 (voice and TDD). USDA is an equal opportunity provider and employer.”
© 2012, National Food Service Management Institute, The University of Mississippi Except as provided below, you may freely use the text and information contained in this document for non-profit or educational use providing the following credit is included Suggested Reference Citation: National Food Service Management Institute. (2012). Financial management: A course for school nutrition directors. University, MS: Author. The photographs and images in this document may be owned by third parties and used by The University of Mississippi under a licensing agreement. The University cannot, therefore, grant permission to use these images. For more information, please contact
[email protected].
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National Food Service Management Institute The University of Mississippi Building the Future Through Child Nutrition The National Food Service Management Institute (NFSMI) was authorized by Congress in 1989 and established in 1990 at The University of Mississippi in Oxford and is operated in collaboration with The University of Southern Mississippi in Hattiesburg. The Institute operates under a grant agreement with the U.S. Department of Agriculture, Food and Nutrition Service. PURPOSE The purpose of the NFSMI is to improve the operation of Child Nutrition Programs through research, education and training, and information dissemination. MISSION The mission of the NFSMI is to provide information and services that promote the continuous improvement of Child Nutrition Programs. VISION The vision of the NFSMI is to be the leader in providing education, research, and resources to promote excellence in Child Nutrition Programs.
CONTACT INFORMATION Headquarters The University of Mississippi Phone: 800-321-3054 Fax: 800-321-3061 www.nfsmi.org
Education and Training Division Information Services Division The University of Mississippi 6 Jeanette Phillips Drive P.O. Drawer 188 University, MS 38677-0188
Applied Research Division The University of Southern Mississippi 118 College Drive #5060 Hattiesburg, MS 39406-0001 Phone: 601-266-5773 Fax: 888-262-9631
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Table of Contents Course Checklist …………………………………………………………….……………….… 1 Lesson 1: Importance of Financial Management ..…………………………………………....... 5 Lesson 2: Importance of Effective Communication and Ethical Behavior……..........................14 Lesson 3: Development of a Financial Management Information System ..……………….….. 24 Lesson 4: Financial Reporting of Revenue and Expenditure Transactions ..……………….…..33 Lesson 5: Setting Meal Standards for Financial Management and Analysis .………….……….43 Lesson 6: Managing Revenue in School Nutrition Programs……………………….…...……...49 Lesson 7: Managing Expenditures in the School Nutrition Program……………….….…..……64 Lesson 8: Controlling Food and Labor Cost in the School Nutrition Program.…………………73 Lesson 9: Financial Planning and Budget Development…...……………………………………87 Lesson 10: Developing and Analyzing a School Nutrition Program Budget …………..…….…94 Lesson 11: Tools to Analyze the Financial Status of School Nutrition Programs….…………..116 Lessons 1-5 Review Pre- and Post-Quiz………………………………………………………..133 Lessons 6-9 Review Pre- and Post-Quiz………………………………………………………..135
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Course Checklist Instructions: In the blanks provided, you can make a check by each assignment as it is completed. Introduction Prepare for your class by setting a date and time to take the course, download the course workbook, and have supplies (pen, paper, and calculator) ready. Lesson 1: Importance of Financial Management _________ 1. Lesson 1 Pre-Quiz _________ 2. Key Terms for Financial Management Handout _________ 3. The Role of the School Nutrition Director Activity _________ 4. Financial Management Definition Interactive Activity _________ 5. Lesson 1 Post-Quiz
Lesson 2: Importance of Effective Communication and Ethical Behavior _________ 1. Lesson 2 Pre-Quiz _________ 2. Stakeholder Communication Activity _________ 3. What is Ethical Behavior? Interactive Activity _________ 4. Discussion of Answers Handout _________ 5. Lesson 2 Post-Quiz
Lesson 3: Development of a Financial Management Information System _________ 1. Lesson 3 Pre-Quiz _________ 2. Classification of Revenue Interactive Activity _________ 3. Expenditure Category Activity _________ 4. What Are Your Indirect Costs? Activity _________ 5. Lesson 3 Post-Quiz 1
Lesson 4: Financial Reporting of Revenue and Expenditure Transactions _________ 1. Lesson 4 Pre-Quiz _________ 2. Statement of Revenue and Expenditures Handout and Activity _________ 3. Statement of Net Assets (Balance Sheet) Handout _________ 4. Fund Balance Calculations Activity _________ 5. Methods of Budgeting Interactive Activity _________ 6. Lesson 4 Post-Quiz
Lesson 5: Setting Meal Standards for Financial Management and Analysis _________ 1. Lesson 5 Pre-Quiz _________ 2. Meal Equivalent Conversion Handout _________ 3. Meal Equivalent Conversion Activity _________ 4. Lesson 5 Post-Quiz
Lesson 6: Managing Revenue in School Nutrition Programs _________ 1. Lesson 6 Pre-Quiz _________ 2. Calculator Tips Handout _________ 3. Calculating Revenue per Meal Equivalent Interactive Activity _________ 4. Setting Meal Prices Survey Interactive Activity _________ 5. Setting Final Meal Prices Activity _________ 6. Bar Chart Handout _________ 7. Pricing Nonreimbursable Food Items Interactive Activity _________ 8. Lesson 6 Post-Quiz
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Lesson 7: Managing Expenditures in the School Nutrition Program _________ 1. Lesson 7 Pre-Quiz _________ 2. Calculating the Cost to Produce a Meal/Meal Equivalent Interactive Activity _________ 3. Percentages of Costs to Total Revenue Interactive Activity _________ 4. Comparing Revenue to Expenditures Activity _________ 5. Lesson 7 Post-Quiz
Lesson 8: Controlling Food and Labor Cost in the School Nutrition Program _________ 1. Lesson 8 Pre-Quiz _________ 2. USDA Lunch and Breakfast Cost Study Handout _________ 3. Productivity Using Meals per Labor Hour Activity _________ 4. Determining Staffing Needs Activity _________ 5. Analyzing Participation Activity _________ 6. Cost of Food Used Activity _________ 7. Lowering Food Cost Handout _________ 8. Lesson 8 Post-Quiz
Lesson 9: Financial Planning and Budget Development _________ 1. Lesson 9 Pre-Quiz _________ 2. Customer Satisfaction Factors Interactive Activity _________ 3. Internal Organization Considerations Activity _________ 4. Emerging Trends Activity _________ 5. Lesson 9 Post-Quiz
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Lesson 10: Developing and Analyzing a School Nutrition Program Budget _________ 1. Lesson 10 Pre-Quiz _________ 2. Budget Building: Interactive Case Study _________ 3. Revenue Budget Interactive Worksheet _________ 4. Expenditure Budget Interactive Worksheet _________ 5. Analyzing the Budget Interactive Worksheet _________ 3. Lesson 10 Post-Quiz
Lesson 11: Tools to Analyze the Financial Status of School Nutrition Programs _________ 1. Lesson 11 Pre-Quiz _________ 2. Spreadsheets and Pie Charts Handout _________ 3. Setting up a Spreadsheet Activity _________ 4. Using Pie Charts to Summarize Financial Data Activity _________ 5. Creating a Pie Chart to Show Meal Cost in Each Category _________ 6. Lesson 11 Post-Quiz
Financial Management Review Lessons 1 - 5 _________ 1. Pre-Quiz _________ 2. Post-Quiz
Financial Management Review Lessons 6 - 9 _________ 1. Pre-Quiz _________ 2. Post-Quiz
Signature __________________________________
Date _______________________
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Financial Management: A Course for School Nutrition Directors
Lesson 1
The Importance of Financial Management
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Key Terms for Financial Management Handout Key Term Accountability Accounts Payable Accounts Receivable Afterschool Care Snacks A la carte Sales Allowable Cost Assets Attendance Factor Average Daily Participation Bonus USDA Foods (Commodities) Break-even Budget Capital Equipment Communication Competitive Foods Cost Controls
Definition Responsibility to deliver what is expected and willingness to bear the consequences for failure to perform as expected. The amount the school nutrition program owes for goods and services that have been purchased (unpaid bills). The amount of funds earned, but not yet received by the school nutrition program for meal services provided. Includes reimbursement, special school events, and contract meals. Reimbursable snacks served in an afterschool care program operated by a school or school district that participates in the National School Lunch Program. The overall category for food items that are priced separately and sold separately from a reimbursable meal. Expenses which are readily identifiable as costs applicable to the school nutrition program. Cash, accounts receivable, funds due from all sources, inventory values, and the net value of large equipment. The average number of students present at school expressed as a percentage. The average number of students eating meals in the school nutrition program on a daily basis. Food (commodities) provided to schools as they are available from surplus agricultural stocks. The point at which expenditures and total revenue are exactly equal. It can be expressed as dollars or a percent of revenue. A financial plan that projects revenue and expenditures for a specified period of time. Equipment or furniture that costs over a specified dollar amount, as specified by the state, with a life expectancy greater than one year. The item is recorded to a fixed asset account. The exchange of ideas, messages, and information by speech, signals, writing, and behavior. Foods sold to students at school during a meal period in competition with the National School Lunch or School Breakfast Programs. Keeping operational costs within limits needed to generate a positive bottom line while providing customers with a level of service to generate repeat business.
Cost of Food Used
The value or cost of food used in a specific accounting period.
Encumbrances
The amount of the fund balance reserved for outstanding purchase orders.
Ethics Federal Revenue Sources
Involves principles of right or good conduct. Payments received from federal funds for reimbursable meals, afterschool care snacks, grants, and cash in lieu of USDA Foods. The value of donated USDA Foods received is also considered a federal
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Financial Goals/Objectives Financial Integrity Financial Management Information System (FMIS) Forecasting Fringe Benefits Fund Balance Indirect Cost
Inventory Liabilities Loss Leader Meal Equivalency Meals per Labor Hour Meal Reimbursement Nonreimbursable Food Sales Operational Costs Productivity
Rebate
Reduced Priced Meals Revenue School Food Authority
revenue source. Establishment of a framework for making deliberate financial decisions that enable the school nutrition program to better manage finances. Maintaining a fiscally sound school nutrition program by continually monitoring the revenue and expenditures of the program. A standard system of data collection and financial analyses that can be used as a management tool and to evaluate financial management decisions. Monitoring current revenue and expenditures of a school nutrition program and studying trends that will impact both. Compensation for employees that is in addition to salaries/wages, such as health insurance, retirement, or paid vacation. Funds that are reserved or designated for purposes such as encumbrances and inventory and unreserved funds. Unreserved funds represent the excess of funds over liabilities that are not restricted for specific purposes. The school nutrition program’s share of general school districts costs that are incurred for common or joint purposes and cannot be readily identified as a direct cost. The amount recovered must be through an approved cost allocation plan. The value of food and supplies that are being held for future use. Accounts payable, accrued salaries and benefits, amounts due to other school district funds, deferred income, and state income taxes owed. Loss leaders are items offered at discounts (generally below cost) in order to introduce the product with the hopes of increasing customer demand. Conversion of different meal services – snacks, breakfast, extra sales, and lunch – to a lunch equivalent. All reimbursable meals served to children and full paid adult lunches are considered to be one meal equivalent. A productivity index used by school nutrition program administrators to monitor the efficiency of the operation and to determine appropriate staffing. Federal cash payment received for breakfast and lunch meals that meet federal standards and are served to eligible children. Meals and other food items sold in the school nutrition programs, but are not eligible for reimbursement through federal funds. Costs directly attributable to the production and service of meals and other foods in the school nutrition programs. The rate at which goods or services are produced, especially output per unit of labor. Money received from a company as an incentive to use a product. If the rebate is received during the year in which the food is purchased, it is recorded as a reduction to food costs. Rebates from the prior school year are recorded as revenue. Meals served to students who are eligible to receive reduced price meal benefits under USDA eligibility guidelines. Income received in exchange for goods or services provided by the school nutrition program. The local governing body that has the legal authority for the administration of USDA school nutrition programs.
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Special Functions Stakeholder State Matching Funds Statement of Net Assets Statement of Revenue and Expenditures USDA Foods (Entitlement Commodities)
Meals or refreshments provided to groups outside the school nutrition program. Examples are athletic banquets, faculty functions, and PTA refreshments. Individuals or groups that have a strong interest in the success of the school nutrition program’s services. State appropriated revenue that is required by USDA to be paid to school districts for use in the school nutrition program. A financial statement that reflects the financial position of the operation on any given day. Also known as a Balance Sheet. The financial report of all revenues and expenditures earned and expended for a given period of time. The report tells program administrators whether the school nutrition program is operating at a profit or a loss. Level of food assistance mandated by federal laws provided to schools based on number of reimbursable lunches served during the previous school year.
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The Role of the School Nutrition Director Activity Instructions: In the space provided below, list some of the different roles of the School Nutrition Director. Regardless of the actual job requirements, school nutrition program directors play a role in providing leadership to fulfill the following responsibilities: _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________
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The Role of the School Nutrition Director Activity Answer Key Instructions: In the space provided below, list some of the different roles of the School Nutrition Director. Regardless of the actual job requirements, school nutrition program directors play a role in providing leadership to fulfill the following responsibilities:
oversee the management of the school nutrition program’s financial resources,
establish and maintain financial accountability,
involve other administrators, school board members, cafeteria managers, and school nutrition staff to identify the desired financial outcome for the school nutrition program,
promote a team approach in practicing good financial management principles,
assess, monitor, and evaluate effective and efficient use of program funds, and
maintain an on-going training program for school based staff (studies show trained employees contribute to a better bottom line).
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Financial Management Definition Interactive Activity Instructions: In the left column are definitions of terms you use often in your job. Read the definition and write the term in the column on the right.
Definition of terms
Terms
Conversion of different meal services to a lunch equivalent. The overall category for food items that are priced and sold separately from a reimbursable meal. The exchange of ideas, messages, and information by speech, signals, writing, behavior. Reimbursable snack served in an afterschool care program operated by a school that participates in the NSLP. The local governing body that has the legal authority for the administration of USDA school nutrition program The financial report of all revenue and expenditures earned and expended for a given period of time. A financial statement that reflects the financial position of the operation on any given day. Meals served to students who are eligible to receive reduced price meal benefits under USDA eligibility guidelines. The school nutrition program’s share of general school district costs that are incurred for common or joint purposes and cannot be readily identified as a direct cost. Involves principles of right or good conduct. Keeping operational costs within limits needed to generate a positive bottom line while providing customers with a level of service to generate repeat business. The value or cost of food used in a specific accounting period. Cost directly attributable to the production and service of meals and other foods in the school nutrition programs.
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Financial Management Definition Interactive Activity Answer Key Instructions: In the left column are definitions of terms you use often in your job. Read the definition and write the term in the column on the right.
Definition of terms Conversion of different meal services to a lunch equivalent. The overall category for food items that are priced and sold separately from a reimbursable meal. The exchange of ideas, messages, and information by speech, signals, writing, behavior. Reimbursable snack served in an afterschool care program operated by a school that participates in the NSLP. The local governing body that has the legal authority for the administration of USDA school nutrition program The financial report of all revenue and expenditures earned and expended for a given period of time. A financial statement that reflects the financial position of the operation on any given day. Meals served to students who are eligible to receive reduced price meal benefits under USDA eligibility guidelines. The school nutrition program’s share of general school district costs that are incurred for common or joint purposes and cannot be readily identified as a direct cost. Involves principles of right or good conduct. Keeping operational costs within limits needed to generate a positive bottom line while providing customers with a level of service to generate repeat business. The value or cost of food used in a specific accounting period. Cost directly attributable to the production and service of meals and other foods in the school nutrition programs.
Terms Meal Equivalency À la carte Sales Communication Afterschool Snacks School Food Authority Statement of Revenue and Expenditures Statement of Net Assets Reduced Priced Meals Indirect Cost
Ethics Cost Controls Cost of Food Used Operational Cost
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Lesson 1 Pre- and Post-Quiz: 1. The responsibility to deliver what is expected and willingness to bear the consequences for failure to perform as expected is a) communication. b) productivity. c) accountability. d) operational cost. 2. A financial plan that projects revenue and expenditures for a specified period of time is a) a financial goal. b) a budget. c) a fund balance. d) indirect costs. 3. Financial management includes the process of defining a) accounts payables and receivables. b) free and reduced priced meals. c) statement of revenues and expenditures. d) financial goals and program objectives. 4. School nutrition directors play a role in providing leadership to fulfill several responsibilities. Two of these responsibilities are a) to establish and maintain financial accountability and to maintain an on-going training program for school nutrition staff. b) to decrease productivity and resources. c) to plan a budget and decrease cost control measures. d) to encourage a team approach and practice bad financial management principles. 5. Keeping operational costs within limits needed to generate a positive bottom line while providing customers with a level of service to generate repeat business is a) allowable cost. b) cost controls. c) break-even. d) forecasting.
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Financial Management: A Course for School Nutrition Directors
Lesson 2
Importance of Effective Communication and Ethical Behavior
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Stakeholder Communication Part 1 Activity Instructions: Using the communication types below, decide who communicates the information to the School Nutrition Director. Some of these may have more than one answer. ________ 1. Financial goals ________ 2. Meal counts ________ 3. School activities that affect participation (field trips) ________ 4. Menu likes and dislikes ________ 5. Board goals ________ 6. Wellness activities ________ 7. Food and supply orders ________ 8. Pricing ________ 9. Vending machine policies _______ 10. District goals _______ 11. Inventory values _______ 12. Policies on pricing increases _______ 13. Promotions _______ 14. Student acceptance of new menu items
Communication Types A) B) C) D)
From the School Board and Superintendent to the School Nutrition Director From the Principal to the School Nutrition Director From the Students, Parents, and Community to the School Nutrition Director From the Cafeteria Manager and Staff to the School Nutrition Director
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Stakeholder Communication Part 2 Activity Instructions: Using the communication types below, decide what information the School Nutrition Director communicates to the stakeholders. Some of these may have more than one answer. 1. Pricing and pricing changes 2. Student satisfaction data 3. Menus and menu information 4. Information on free and reduced-price meal numbers 5. Promotions 6. Requests for price increases 7. Budget for the school 8. Monthly financial reports on operating expenses and budget variances 9. Wellness initiatives 10. Policies and procedures on financial issues (change, banking procedures, theft records) 11. Cost containment initiatives 12. Merchandising activities planned for the cafeteria 13. Yearly projections of revenues and expenditures
Communication Types A) B) C) D)
From the School Nutrition Director to the Students, Parents, and Community From the School Nutrition Director to the School Board and Superintendent From the School Nutrition Director to the Cafeteria Manager and Staff From the School Nutrition Director to the Principal
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Stakeholder Communication Part 1 Activity Suggested Answer Key Instructions: Using the communication types below, decide who communicates the information to the School Nutrition Director. Some of these may have more than one answer. A
1. Financial goals
D
2. Meal counts
B
3. School activities that affect participation (field trips)
C
4. Menu likes and dislikes
A
5. Board goals
B
6. Wellness activities
D
7. Food and supply orders
C
8. Pricing
B
9. Vending machine policies
A
10. District goals
D
11. Inventory values
A
12. Policies on pricing increases
C
13. Promotions
D
14. Student acceptance of new menu items
Communication types A) B) C) D)
From the School Board and Superintendent to the School Nutrition Director From the Principal to the School Nutrition Director From the Students, Parents, and Community to the School Nutrition Director From the Cafeteria Manager and Staff to the School Nutrition Director
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Stakeholder Communication Part 2 Activity Suggested Answer Key Instructions: Using the communication types below, decide what information the School Nutrition Director communicates to the stakeholders. Some of these may have more than one answer. A, C, & D 1. Pricing and pricing changes B
2. Student satisfaction data
A, C, & D 3. Menus and menu information 4. Information on free and reduced-price meal numbers
D A&C
5. Promotions
B
6. Requests for price increases
C
7. Budget for the school
B
8. Monthly financial reports on operating expenses and budget variances
A
9. Wellness initiatives
D
10. Policies and procedures on financial issues (change, banking procedures, theft records)
B
11. Cost containment initiatives
D
12. Merchandising activities planned for the cafeteria
C
13. Yearly projections of revenues and expenditures
Communication types A) B) C) D)
From the School Nutrition Director to the Students, Parents, and Community From the School Nutrition Director to the School Board and Superintendent From the School Nutrition Director to the Cafeteria Manager and Staff From the School Nutrition Director to the Principal
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What is Ethical Behavior? Interactive Activity Instructions: Rate each action using the following scale: E = ethical, U = unethical, I = illegal, BBP=bad business practice. You may use these more than once. Regulations and policies differ from state to state. It is important that you check with your state agency and comply with regulations and policies of the state in which your program resides.
ACTION
RATING
1. Intentionally over/understating financial data on state reports 2. Using the department copier for personal use 3. The same individual collects cash, reconciles cash receipts to sales, makes the bank deposit, and receives the deposit slip 4. Ignoring local school board, city, and/or county policies 5. You have used all your allowed personal days so you use your sick days as extra personal days (You have earned them.) 6. Claiming second lunches as reimbursable meals 7. Items, such as an iPod, to be used for the benefit of the school nutrition program, accepted in place of a monetary rebate on a purchased product 8. Accepting a trip/vacation from a supplier 9. Giving a wedding present to the district superintendent 10. Accepting a loan of $100 from a foodservice employee
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What is Ethical Behavior? Interactive Activity Answer Key Instructions: Rate each action using the following scale: E = ethical, U = unethical, I = illegal, BBP=bad business practice. You may use these more than once. Regulations and policies differ from state to state. It is important that you check with your state agency and comply with regulations and policies of the state in which your program resides.
ACTION 1. Intentionally over/understating financial data on state reports 2. Using the department copier for personal use 3. The same individual collects cash, reconciles cash receipts to sales, makes the bank deposit, and receives the deposit slip 4. Ignoring local school board, city, and/or county policies 5. You have used all your allowed personal days so you use your sick days as extra personal days (You have earned them.) 6. Claiming second lunches as reimbursable meals 7. Items, such as an iPod, to be used for the benefit of the school nutrition program, accepted in place of a monetary rebate on a purchased product 8. Accepting a trip/vacation from a supplier
RATING I/U U E/BBP
U/I U
U/I E
U/I
9. Giving a wedding present to the district superintendent
E
10. Accepting a loan of $100 from a foodservice employee
U/BBP
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Discussion of Answers Handout 1. Intentionally over/understating financial data on state reports is a fraudulent activity and illegal. 2. Using the department copier for a personal use is unethical and, depending on the school district’s policy and the amount of copying, one might have to reimburse the district for this expense. 3. If only one person does the claim or the bank deposit, it may be ethical unless there is a specific regulation against such a practice, but it is an unwise or bad business practice. This allows employees to be tempted by dishonesty and may be against school district policy. 4. Ignoring local school board, city, and/or county policies is unethical and depending on the specific situation, might be illegal. 5. Using sick days for personal days when you have used up all your allowed personal days (You have earned them.) is unethical unless school district policy sanctions this use of sick days. 6. Claiming second lunches as reimbursable meals is unethical and illegal. 7. Choosing items, such as an iPod to be used for the benefit of the school nutrition program, in place of a monetary rebate on a purchased product is ethical as long as the equipment is used for school nutrition program purposes such as a student prize associated with a promotion. Documentation of this is recommended. 8. Accepting a trip/vacation from a supplier probably involves more than a $20 cost and is unethical. Some states have rules that disallow such activities. 9. Giving a wedding present to the district superintendent is a onetime occasion so even though this person may be the person who decides your raise, it’s ethical. 21
10. Accepting a loan of $100 from a foodservice employee is unwise and unethical. You conduct this person’s performance review and decide raises. You should not be beholden to your subordinates. It is also a bad business practice to have this type of relationship with subordinates.
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Lesson 2 Pre- and Post-Quiz: 1. Communication is a) the exchange of money from the sale of food. b) the exchange of ideas, messages, and information by speech, signals, writing, and behavior. c) the value of cost of food used in a specific accounting period. d) the point at which expenditures and total revenue are exactly equal. 2. A stakeholder is a) the local governing body that has the legal authority for the administration of USDA eligibility guidelines. b) the person responsible for delivering USDA foods provided to the schools. c) the average number of students present at school expressed as a percentage. d) individuals or groups that have a strong interest in the success of the school nutrition program’s services. 3. The principles of right or good conduct are a) ethics. b) accountability. c) budget. d) cost controls. 4. The three R’s of business ethics are a) respect, rebate, and revenue. b) rebate, reduced price meals, and revenue. c) respect, responsibility, and results. d) responsibility, rebate, and revenue. 5. Claiming second lunches as reimbursable meals is a) legal. b) illegal and ethical. c) legal and ethical. d) illegal.
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Financial Management: A Course for School Nutrition Directors
Lesson 3
Development of a Financial Management Information System
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Classification of Revenue Interactive Activity Instructions: Look at the Revenue Received column; then, look at the Revenue Source column and decide which Revenue Source best describes the Revenue Received and write it in the blank provided.
Revenue Received
Revenue Source
_____________ Money earned on bank deposits and investments
Local
_____________ Monetary value of food donated to schools by USDA
State
_____________ Cash rebates from food companies received by the school nutrition program after the fiscal year has closed
Federal Miscellaneous
_____________ Revenue received from students for the sale of à la carte food items
Fund Transfer
_____________ Grant money awarded to school districts who submit successful proposals for special projects such as Team Nutrition _____________ Money received from the sale of surplus equipment _____________ Revenues paid to school districts by the state for use in school nutrition programs _____________ Cash payment received as reimbursement for meals that meet federal standards and are served to eligible children _____________ Revenue received from contract meals provided to the local YMCA _____________ Funds transferred to the school nutrition program from the school district’s general fund
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Classification of Revenue Interactive Activity Answer Key Instructions: Look at the Revenue Received column; then, look at the Revenue Source column and decide which Revenue Source best describes the Revenue Received and write it in the blank provided.
Revenue Received
Revenue Source
Local
Money earned on bank deposits and investments
Local
Federal
Monetary value of food donated to schools by USDA
State
Misc.
Cash rebates from food companies received by the school nutrition program after the fiscal year has closed
Federal Miscellaneous
Local
Revenue received from students for the sale of a la carte food items
Fund Transfer
State or Federal __ Grant money awarded to school districts who submit successful proposals for special projects such as Team Nutrition. Misc.
Money received from the sale of surplus equipment
State
Revenues paid to school districts by the state for use in school nutrition programs
Federal
Cash payment received as reimbursement for meals that meet federal standards and are served to eligible children
State
Revenue received from contract meals provided to the local YMCA
Fund Transfer Funds transferred to the school nutrition program from the school district’s general fund
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Expenditure Category Activity Instructions: Read the questions and answer them based on your school nutrition program. There are no right or wrong answers. This is something for you to think about in terms of a financial analysis of your program.
Question 1: If you are conducting a financial analysis of your program, which expenditure categories would you most likely look at first? _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________
Question 2: In a program analysis, which expenditure categories could be combined as “overhead expenses”? _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________
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Expenditure Category Activity Possible Solutions Instructions: Read the questions and answer them based on your school nutrition program. There are no right or wrong answers. This is something for you to think about in terms of a financial analysis of your program.
Question 1: If you are conducting a financial analysis of your program, which expenditure categories would you most likely look at first? While there are no research-based standards in school nutrition programs for relating costs to revenue, past industry guidelines have suggested that approximately 80% of funds expended were for food and labor leaving about 20% for all other program costs. Later in the course, we will look at a new cost study by USDA that may suggest a change in these percentages.
Question 2: In a program analysis, which expenditure categories could be combined as “overhead expenses”? There are no right or wrong answers, however, categories such as purchased professional services, purchased property services, other services, miscellaneous, and fund transfer are usually considered overhead since individually they represent such a small percentage of total revenue.
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What Are Your Indirect Costs? Activity Instructions: In the space below list examples of expenditures that could be classified as costs incurred for joint purposes (indirect costs). List 4 examples. _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________
Now, from the list above, list the indirect costs your district is charging you. _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________
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What Are Your Indirect Costs? Activity Possible Answers Instructions: In the space below list examples of expenditures that could be classified as costs incurred for joint purposes (indirect costs). List 4 examples. 1. space used for the program’s meal services, 2. utilities, 3. grounds and landscaping, and 4. certain categories of shared labor (janitorial, etc.) when it is not billed directly to the school nutrition program.
Now, from the list above, list the indirect costs your district is charging you. Is your school district charging you indirect costs? If so, how much and what items are you paying for? You might want to check with your District Business Manager or Accountant to see what you are being charged and what items you are paying for.
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Lesson 3 Pre- and Post-Quiz: 1. Financial Management Information System is a useful financial tool for classifying revenue and expenditures. a) True b) False 2. ____________ is income received in exchange for goods or services provided by the school nutrition program. a) Interest b) Rebate c) Fund transfer d) Revenue 3. The two major sources of revenue in most school districts are a) local sources and federal reimbursement payments. b) meal equivalency and meals per labor hour. c) indirect costs and inventory. d) bonus USDA Foods and purchased services. 4. The school nutrition program’s share of general school district costs incurred for joint purposes such as utility expenditures is called a) special property service costs. b) professional services costs. c) indirect costs. d) miscellaneous costs. 5. Cash received from students for the sale of nonreimbursable food items is classified as a a) local source. b) miscellaneous source. c) school source. d) fund transfer. 6. There are several categories of expenditures. Three of them are a) accounts payable, accounts receivable, and budget. b) labor, supplies, and indirect costs. c) USDA foods, assets, and inventory. d) capital equipment, accounts payable, and productivity. 7. In the school nutrition program there are allowable costs that can be identified specifically with the production and service of meals to school children. These allowable costs are a) competitive foods. b) forecasting. c) expenditures. d) special functions. 31
8. ___________ are compensation for employees that is in addition to salaries/wages. a) Operational costs b) Fringe benefits c) Meal equivalencies d) Stakeholders 9. A useful financial management information system a) provides a uniform and consistent financial reporting structure. b) provides useless and out-of-date financial information. c) supports a business school’s reporting requirements. d) supports a banking financial system.
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Financial Management: A Course for School Nutrition Directors
Lesson 4
Financial Reporting of Revenue and Expenditure Transactions
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Statement of Revenue and Expenditures Handout and Activity School Nutrition Program Ending ____________ (Month or Year) Instructions: Look at the current month and the previous month’s total revenue. On the handout circle or make a check by the area you think is the main source of the difference in revenue. Revenue Source Local Sources Student Meal Sales Adult Meal Sales Other Food Sales Contract Meals Interest State Sources Federal Sources (includes USDA Food value) Miscellaneous Fund Transfer-In Total Revenue
Current Month
Expenditures Salaries and Wages Employee Benefits Purchased Services Property Services Purchased Food/ USDA Food Supplies Miscellaneous Capital Equipment Indirect Costs Fund Transfer-Out Total Expenditures Net Excess/Deficit
Previous Month
YTD
$ 24,978 2,376 11,326 1,575 260 18,831
$ 23,025 2,175 10,785 1,560 255 0
$ 96,150 9,102 44,222 6,250 1,030 18,831
186,639 0 0 $245,985
182,220 8,010 0 $228,030
737,718 8,010 0 $921,313
Current Month $ 65,875 28,975 375 305 96,190
Previous Month $ 63,900 25,364 326 280 90,183
YTD $259,550 108,678 1,402 1,170 372,746
24,750 625 0 5,835 0 222,930 $ 23,055
21,360 0 55,000 5,830 0 262,243 ($ 34,213)
92,220 950 70,000 23,330 0 930,046 ($ 8,733)
Notes: (1) School Nutrition Program directors should modify the Statement of Revenue and Expenditures to meet the local and state requirements. (2) The dollar amounts shown in this statement are for a hypothetical school district and are illustrative only. They are not tied to any other activity in this lesson.
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Statement of Revenue and Expenditures Activity Answer Key School Nutrition Program Ending ____________ (Month or Year) Instructions: Look at the current month and the previous month’s total revenue. On the handout circle or make a check by the area you think is the main source of the difference in revenue. Revenue Source Local Sources Student Meal Sales Adult Meal Sales Other Food Sales Contract Meals Interest State Sources Federal Sources (includes USDA Food value) Miscellaneous Fund Transfer-In Total Revenue Expenditures Salaries and Wages Employee Benefits Purchased Services Property Services Purchased Food/ USDA Food Supplies Miscellaneous Capital Equipment Indirect Costs Fund Transfer-Out Total Expenditures Net Excess/Deficit
Current Month $ 24,978 2,376 11,326 1,575 260
Previous Month
YTD
$ 23,025 2,175 10,785 1,560 255 0
$ 96,150 9,102 44,222 6,250 1,030 18,831
186,639 0 0 $245,985
182,220 8,010 0 $228,030
737,718 8,010 0 $921,313
Current Month $ 65,875 28,975 375 305 96,190
Previous Month $ 63,900 25,364 326 280 90,183
YTD $259,550 108,678 1,402 1,170 372,746
24,750 625 0
21,360 0
92,220 950 70,000
18,831
5,835 0 222,930 $ 23,055
55,000 5,830 0 262,243 ($ 34,213)
23,330 0 930,046 ($ 8,733)
Notes: (1) School Nutrition Program directors should modify the Statement of Revenue and Expenditures to meet the local and state requirements. (2) The dollar amounts shown in this statement are for a hypothetical school district and are illustrative only. They are not tied to any other activity in this lesson.
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Statement of Net Assets (Balance Sheet) Handout Total Assets = Total Liabilities + Fund Balance
School Nutrition Program Ending _______________ (Month or Year) ASSETS Current Assets Cash and Cash Equivalents Sales Tax Collection Investments Due from Federal Funds Due from State Funds Due from Other Funds Other Receivables Inventories Purchased Food and USDA Food Supplies Total Current Assets Noncurrent Assets Furniture and Equipment Less accumulated depreciation Total Noncurrent Assets Total Assets LIABILITIES Current Liabilities Accounts Payable Accrued Salaries Accrued Payroll Deductions Due to other Funds Deferred Revenue Sales Tax Owed Total Current Liabilities FUND BALANCE Invested in Capital Assets (minus depreciation) Reserved for Encumbrances Reserved for Inventory Unreserved/Undesignated Funds Total Fund Balance Total Liabilities and Fund Balance
$205,230 0 10,225 185,365 0 1,525 260 8,500 3,055 414,160 425,456 (400,124) 25,332 $439,492
$172,695 70,500 19,050 975 2,225 0 265,445 25,332 24,670 11,555 112,490 174,047 $439,492
Note: The dollar amounts shown in this statement are for a hypothetical school district and are illustrative only. They are not tied to any other activity in this lesson.
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Fund Balance Calculations Activity Instructions: In the space below calculate how to determine the Unreserved/Undesignated Funds line item. Look at the previous handout if you need to.
Why is the Unreserved/Undesignated Funds line item important to you as a school nutrition director? List at least three reasons in the space below. ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________
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Fund Balance Calculations Activity Answer Key Instructions: In the space below calculate how to determine the Unreserved/Undesignated Funds line item. Look at the previous handout if you need to. Total Fund Balance Minus “Invested in Capital Assets” Minus “Reserved for Encumbrances” Minus “Reserved for Inventory” = “Unreserved/Undesignated Funds”
$174,047 - 25,670 - 24,670 - 11,555 $112,490
Why is the Unreserved/Undesignated Funds line item important to you as a school nutrition director? List at least three reasons in the space below. The Fund Balance is important to the school nutrition director as a tool for program management. It consists of capital assets, funds reserved for specific purposes, and unreserved funds. Why is the information related to the fund balance important? 1. It verifies how much of the fund balance is reserved for encumbrances. 2. It determines how much of the fund balance is in inventory value. 3. It determines how much money is unreserved/undesignated and therefore available for expenditures. 4. It gauges how the program is performing financially.
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Methods of Budgeting Interactive Activity Instructions: Answer the following questions about the methods of budgeting using the terms in the Word List at the bottom of the page. 1. What type of budget begins with the previous year’s budget? ____________________________________________________________ 2. What type of budget begins with zero and builds the budget for each line item? ____________________________________________________________ 3. What type of budget uses a combination of the previous types of budget? ____________________________________________________________
Word List Combination Incremental (baseline) Zero
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Methods of Budgeting Interactive Activity Answer Key Instructions: Answer the following questions about the methods of budgeting using the terms in the Word List at the bottom of the page. 1. What type of budget begins with the previous year’s budget? Incremental (baseline) 2. What type of budget begins with zero and builds the budget for each line item? Zero 3. What type of budget uses a combination of the previous types of budget? Combination
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Lesson 4 Pre- and Post-Quiz: 1. The financial report most often used by school nutrition program directors to analyze whether the expenses of the operation are being managed within the revenues received is the a) Statement of Net Assets. b) Statement of Revenue and Expenditures. c) Statement of Revenue. d) Budget. 2. Probably no other financial management tool contributes more directly to both the financial and nutritional integrity of a school nutrition program than the a) budget. b) expenditure summary report. c) revenue analysis. d) food and labor cost comparisons. 3. The three types of financial reports used in a school nutrition program are a) Statement of Revenue, Statement of Expenditures, and Budget. b) Budget, Fund Balance, and Statement of Net Loss. c) Budget, Statement of Net Assets, and Statement of Revenue and Expenditures. d) Statement of Assets, Liabilities, and Unreserved/Undesignated Funds. 4. Cash, accounts receivable, funds due from all sources, inventory values, and the net value of large equipment are considered a) assets. b) accounts payable. c) bonus USDA foods. d) liabilities. 5. A financial statement that reflects the financial position of the operation on any given day is a) Statement of Revenue. b) Statement of Net Assets. c) Budget. d) Statement of Revenue and Expenditures. 6. If there is ______ in the fund balance over a period of time it may be a red flag indicating too much money is being spent. a) an increase b) a decrease c) no change d) no improvement
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7. A financial plan that projects revenue and expenditures for a specified period of time is a) Statement of Revenue. b) Statement of Net Assets. c) Budget. d) Statement of Revenue and Expenditures. 8. Three types of budgeting are a) zero, assets, and combination. b) assets, incremental, and combination. c) zero, incremental, and assets. d) zero, incremental, and combination. 9. A category on the Statement of Net Assets that represents the amount available to spend in the school nutrition program is the a) total assets. b) USDA foods. c) unreserved/undesignated. d) total liabilities. 10. A significant ________ in funds may be an indication that the nutrition program is not spending enough funds on the program. a) increase b) decrease c) change d) improvement
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Financial Management: A Course for School Nutrition Directors
Lesson 5
Setting a Meal Standard for Financial Management and Analysis
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Meal Equivalent Conversion Handout
Meal Equivalent Conversions – SAMPLE Participation data for the current school year Maple School District served 692,114 reimbursable student lunches, 10,110 adult lunches, 303,485 reimbursable student breakfasts, and 27,873 reimbursable afterschool snacks during the past year. In addition, the school district received a total of $128,155 for the sale of nonreimbursable foods. Calculations for converting the participation data into meal equivalents are provided in the sample below. Total Meals/Sales Meal Categories Student Lunch Adult Lunch Student Breakfast Snacks Nonreimbursable Food sales Total Meal Equivalents
692,114 10,110 303,485 27,873
Conversion Factor 1 1 .67 .33
$128,155
*
Meal Equivalents
(303,485 x .67) (27,873 x .33)
692,114 10,110 203,335 9,198
($128,155 ÷ 2.9925)
42,825 957,582
*Food Sales divided by Free Lunch Reimbursement ($2.77) + USDA Food Value per Lunch ($0.2225). Note these are the 2011-2012 reimbursement rates.
Meal Equivalent Conversion Formulas
1 lunch = 1 lunch
3 breakfasts = 2 lunches (2 divided by 3 = .67)
3 snacks = 1 lunch (1 divided by 3 = .33)
All other food sales = revenue from food sales / (current free lunch reimbursement + current USDA Food value per lunch)
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Meal Equivalent Conversion Activity Meal Equivalent Conversions – SAMPLE Participation data for the current school year Maple School District served 692,114 reimbursable student lunches, 10,110 adult lunches, 303,485 reimbursable student breakfasts, and 27,873 reimbursable afterschool snacks during the past year. In addition, the school district received a total of $128,155 for the sale of nonreimbursable foods. Calculations for converting the participation data into meal equivalents are provided in the sample below. Total Meals/Sales Meal Categories Student Lunch Adult Lunch Student Breakfast Snacks Nonreimbursable Food Sales Total Meal Equivalents
692,114 10,110 303,485 27,873 $128,155
Conversion Factor 1 1 .67 .33 *
Meal Equivalents
(303,485 x .67) (27,873 x .33)
692,114 10,110 203,335 9,198
($128,155 ÷ 2.9925)
42,825 957,582
*Food Sales divided by Free Lunch Reimbursement ($2.77) + USDA Food Value per Lunch ($0.2225). Note these are the 2011-2012 reimbursement rates.
Instructions: Using the formulas provided in this lesson, answer the following questions: 1. If an elementary school served 485 breakfasts one morning, how many breakfast meal equivalents were served?
2. A school nutrition program served 168 reimbursable snacks for the day in the district’s afterschool care program. Convert the afterschool snacks to meal equivalents.
3. A high school nutrition program sold $250 in extra menu items for the day. Convert the revenue from the food sales to meal equivalents using the formula above.
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Meal Equivalent Conversion Activity Answer Key Meal Equivalent Conversions – SAMPLE Participation data for the current school year Maple School District served 692,114 reimbursable student lunches, 10,110 adult lunches, 303,485 reimbursable student breakfasts, and 27,873 reimbursable afterschool snacks during the past year. In addition, the school district received a total of $128,155 for the sale of nonreimbursable foods. Calculations for converting the participation data into meal equivalents are provided in the sample below. Total meals/sales Meal Categories Student Lunch Adult Lunch Student Breakfast Snacks Nonreimbursable food sales Total Meal Equivalents
692,114 10,110 303,485 27,873
Conversion Factor 1 1 .67 .33
$128,155
*
Meal Equivalents
(303,485 x .67) (27,873 x .33)
692,114 10,110 203,335 9,198
($128,155 ÷ 2.9925)
42,825 957,582
*Food Sales divided by Free Lunch Reimbursement ($2.77) + USDA Food Value per Lunch ($0.2225). Note these are the 2011-2012 reimbursement rates.
Instructions: Using the formulas provided in this lesson, answer the following questions: 1. If an elementary school served 485 breakfasts one morning, how many breakfast meal equivalents were served? 485 x .67 = 325 meal equivalents 2. A school nutrition program served 168 reimbursable snacks for the day in the district’s afterschool care program. Convert the afterschool snacks to meal equivalents. 168 x .33 = 55 meal equivalents 3. A high school nutrition program sold $250 in extra menu items for the day. Convert the revenue from the food sales to meal equivalents using the formula above. $250.00 ÷ 2.9925 (2.77 + 0.2225) = 84 meal equivalents
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Lesson 5 Pre- and Post-Quiz: 1. If an elementary school served 227 breakfasts one morning, how many breakfast meal equivalents were served? a) 75 b) 114 c) 152 d) 227 2. The conversion of different meal services is a) meal reimbursement. b) nonreimbursable food sales. c) meal equivalency. d) meals per labor hour. 3. In most states, adult meals are counted with student meals when determining meal equivalents. a) True b) False 4. ______ is the federal cash payment received for breakfast and lunch meals that meet federal standards and are served to eligible children. a) Federal revenue sources b) Accountability c) Bonus USDA foods d) Meal reimbursement 5. The conversion formula for “all other food sales” changes every year because a) the revenue from student meal sales change. b) the free lunch reimbursement and USDA food value rates change. c) the price of student meals and the reimbursement rate change. d) schools always receive entitled and bonus USDA foods. 6. Meals and other food items sold in the school nutrition programs, but are not eligible for reimbursement through federal funds are a) meal equivalents. b) meal reimbursements. c) nonreimbursable foods. d) competitive foods. 7. In most school districts, what is the unit of measurement used to evaluate the effectiveness and efficiency of the nutrition program operation? a) reimbursable student lunches b) reimbursable adult lunches c) reimbursable breakfast d) reimbursable snacks 47
8. In the meal equivalent conversion formulas a) 3 breakfasts = 1 lunch and 3 snacks = 1 lunch. b) 3 breakfasts = 2 lunches and 3 snacks = 1 lunch. c) other food sales = 3 lunches and 3 snacks = 1 lunch. d) all food sales = 2 lunches.
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Financial Management: A Course for School Nutrition Directors
Lesson 6
Managing Revenue in School Nutrition Programs
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Calculator Tips Handout Time saving tip when using a repetitive multiplier or a repetitive divisor when using a calculator (repetitive multipliers or divisors are retained in memory automatically by default) Repetitive Multiplier Enter your multiplier first
Example with repetitive multiplier “5”
Followed by the “X” sign
5 X 9 = 45
Followed by the number you want to multiply
6 = {30}
Hit “=” sign for answer
8 = {40}
Enter the second number you want to multiply
Hit “=” sign for answer Etc.
Repetitive Divisor
Enter the number you want to divide
Followed by the division sign, ÷ or /
20 ÷ 200 = .10
Followed by your divisor
40 = {.20}
Hit “=” sign for answer
100 = {.50}
Enter the second number you want to divide
Hit “=” sign for answer
Example with repetitive divisor “200”
Etc.
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Calculating Revenue per Meal Equivalent Interactive Activity Calculating the projected average revenue earned per meal equivalent is important in the management of school nutrition programs. Instructions: Complete the following activity to determine how much average revenue per meal equivalent is projected from each revenue source. Calculate the amount received from each revenue source four decimal places. If the 5th decimal place is 5 or higher, round UP; if 4 or less, round DOWN. Use the Calculator Tips to help with some of the calculations. The first calculation has been done for you. Given: Formula: Revenue ÷ Total Meal Equivalents There were 957,582 meal equivalents served in 2011-2012 Add all of your answers in the last column to get the Total Revenue per Meal Equivalent.
Revenue Analysis Revenue Account Student Meal Sales
Dollar Amount Received
Average Revenue Per Meal Equivalent
$ 310,850
Adult Meal Sales
27,803
Other Food Sales
113,955
Contract Food Sales Federal Reimbursement USDA Foods State Supplement
14,200 1,949,908 140,153 18,835
Interest
3,155
Miscellaneous
5,800
Total Revenue
$0.3246
$2,584,659
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Calculating Revenue per Meal Equivalent Interactive Activity Answer Key Calculating the projected average revenue earned per meal equivalent is important in the management of school nutrition programs. Instructions: Complete the following activity to determine how much average revenue per meal equivalent is projected from each revenue source. Calculate the amount received from each revenue source four decimal places. If the 5th decimal place is 5 or higher, round UP; if 4 or less, round DOWN. Use the Calculator Tips to help with some of the calculations. Given: Formula: Revenue ÷ Total Meal Equivalents There were 957,582 meal equivalents served in 2011-2012 Add all of your answers in the last column to get the Total Revenue per Meal Equivalent.
Revenue Analysis Revenue Account Student Meal Sales
Dollar Amount Received
Average Revenue Per Meal Equivalent
$ 310,850
(310,850 ÷ 957,582)
$0.3246
Adult Meal Sales
27,803
(27,803 ÷ 957,582)
0.0290
Other Food Sales
113,955
(113,955 ÷ 957,582)
0.1190
14,200
(14,200 ÷ 957,582)
0.0148
1,949,908
(1,949,908 ÷ 957,582)
2.0363
140,153
(140,153 ÷ 957,582)
0.1464
18,835
(18,835 ÷ 957,582)
0.0197
Interest
3,155
(3,155 ÷ 957,582)
0.0033
Miscellaneous
5,800
(5,800 ÷ 957,582)
0.0061
Contract Food Sales Federal Reimbursement USDA Foods State Supplement
Total Revenue
$2,584,659
2.6992
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Setting Meal Prices Survey Interactive Activity Instructions: Answer True or False to each of the following statements below that are related to pricing meals. If the statement is false, what word or phrase should be changed to make it true? 1. _______________ To ensure the financial stability of the school nutrition department, the director must develop a sound method for setting meal prices. 2. _______________ Establishing a reasonable price for meals classified as “free” is essential to both student participation and program accountability. 3. _______________ Setting prices for student and adult meals is generally a collaborative effort involving the school nutrition director, superintendent, and the school board. 4. _______________ It is important to remember that in accordance with the federal regulations, reimbursable meals served in school nutrition programs must be priced as individual components. 5. _______________ The meal price should, as a rule, cover previous year costs for meals served less federal reimbursement and the value of entitlement USDA foods.
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Setting Meal Prices Survey Interactive Activity Answer Key Instructions: Answer True or False to each of the following statements below that are related to pricing meals. If the statement is false, what word or phrase should be changed to make it true? 1.
True
To ensure the financial stability of the school nutrition department; the director
must develop a sound method for setting meal prices. 2.
False
Establishing a reasonable price for meals classified as “free” is essential to both
student participation and program accountability. (The word “free” should be “paid.”) 3.
True
Setting prices for student and adult meals is generally a collaborative effort
involving the school nutrition director, superintendent, and the school board. 4.
False
It is important to remember that in accordance with the federal regulations,
reimbursable meals served in school nutrition programs must be priced as individual components. (Reimbursable meals must be priced as a unit.) 5.
False
The meal price should, as a rule, cover previous year costs for meals served less
federal reimbursement and the value of entitlement USDA foods. (The word previous should be replaced with current.)
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Setting the Final Meal Prices Activity Maple School District established meal prices based on the average projected costs of the meal minus (-) Section 4 reimbursement minus (-) USDA Food value. Prices are usually set with board approval at the end of July for the following school year. Instructions: Using the values given below, calculate the base meal price for students and adults for both breakfast and lunch. Recommend a final price to charge for student and adult meals. Lunch: Projected meal cost is $2.77. The Section 4 basic reimbursement rate for the coming year will be $0.26 per lunch and $0.2225 for USDA Food. Breakfast: The projected meal cost for breakfast is $1.71 and the Section 4 reimbursement will be $0.27 for each breakfast served. Meal Prices Lunch Average Lunch - Section 4 - USDA Food = Base Price Possible Costs Reimbursement Value Final Price Student $2.77 $ 0.26 $ 0.2225 Adult $2.77 Breakfast Student $1.71 $ 0.27 Adult $1.71 Instructions: Answer the following questions about setting meal prices. 1. When setting the final meal price, should considerations be given to whether a school is elementary or secondary? If so, why?
2. What considerations should be given to rounding when setting meal prices?
3. How would a significant increase in student participation (population increasing faster than normal due to new industry, annexation) impact the process of setting meal prices?
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4. Why should a district consider setting adult prices higher than a break-even cost?
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Setting the Final Meal Prices Activity Answer Key Maple School District established meal prices based on the average projected costs of the meal minus (-) Section 4 reimbursement minus (-) USDA Food value. Prices are usually set with board approval at the end of July for the following school year. Instructions: Using the values given below, calculate the base meal price for students and adults for both breakfast and lunch. Recommend a final price to charge for student and adult meals. Lunch: Projected meal cost is $2.77. The Section 4 basic reimbursement rate for the coming year will be $0.26 per lunch and $0.2225 for USDA Foods. Breakfast: The projected meal cost for breakfast is $1.71 and the Section 4 reimbursement will be $0.27 for each breakfast served. Before we look at the worksheet, do you know why the USDA Food value is not used to determine the base price of breakfast? The value of donated USDA Food is based on the number of lunches served in the prior year. No donated USDA Foods are allocated for the breakfast program. However, USDA Foods are often used in the breakfast program. Now, let’s look at the worksheet on setting meal prices. Meal Prices Lunch Average Lunch - Section 4 - USDA Food Costs Reimbursement Value Student $2.77 $ 0.26 $ 0.2225 Adult $2.77 Breakfast Student $1.71 $ 0.27 Adult $1.71
= Base Price
Possible Final Price
$2.29 $2.77 $1.44 $1.71
Do you remember the formula for setting meal prices? Average projected costs of the meal minus (-) Section 4 reimbursement minus (-) USDA Food value = Base Lunch Price What about breakfast? Where did the $1.71 come from? Formula for Determining Projected Average Student Breakfast Cost Average projected student lunch cost ($2.77) Minus USDA Food value ($0.2225) Multiplied by meal equivalent conversion formula for breakfast (.67) (Lesson 5: Meal Equivalent) Equals Projected Average Student Breakfast Cost ($1.71)
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Setting the Final Meal Prices Activity Answer Key Instructions: Answer the following questions about setting meal prices. 1. When setting the final meal price, should consideration be given to whether a school is elementary or secondary? If so, why? If the district offers more services or larger portion sizes, and students are willing to pay more, then reimbursable meals served at the secondary level could be priced higher. 2. What considerations should be given to rounding when setting meal prices? Prices should be set for ease in collecting payment and making change. For example, the final price could be rounded so the students and cashier handle as few coins as possible during the collection process. Rounded prices are also easier to track in the accounting system when shortages or overages occur. 3. How would a significant increase in student participation (population increasing faster than normal due to new industry, annexation) impact the process of setting meal prices? School districts should consider the value of entitlement USDA Foods the school nutrition program is scheduled to receive. USDA Foods are based on the previous year’s lunches served. Should there be a significant increase in student population; the USDA Food value per plate will actually decrease. If the district nutrition program is operating on a marginal basis, then it might be necessary to consider raising the price of a student lunch. 4. Why should a district consider setting adult prices higher than a break-even cost? Adults should always have additional cost for the convenience and it is always cheaper than outside sources.
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Bar Chart Handout Reading the Bar Chart. Look at the bar chart shown below. Ratio of Revenue to Cost of Meals and Nonreimbursable Items
Break-even
100
Lunch 115
Breakfast
96
Nonreimbursable
71 0
20
40
60
80
100
120
140
1. The first bar represents a hypothetical break-even ratio to provide you with a visual comparison. 2. The second bar represents findings that indicate revenue from reimbursable lunches exceeded the reported costs of producing those meals by an average of 15 percent. 3. By contrast, revenue from reimbursable breakfasts fell short of covering costs by 4 percent, generating only enough revenue to cover 96 percent of costs. 4. According to the last bar, revenues from nonreimbursable sales generated revenue to cover only about 71 percent of the cost to produce the food items, falling short by an average of 29 percent.
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Pricing Nonreimbursable Food Items Interactive Activity Pricing Method: Desired Food Cost Percent Markup Method The formula for determining a base price using the desired food cost percent markup method is: Raw Food Cost ÷ Desired Food Cost Percent Markup Reminder: Convert percent to decimal (i. e., 38% ÷ 100 = .38).
Instructions: Using the formula, determine the base selling price for each of the following nonreimbursable food items offered for sale if the desirable food cost percentage for a school nutrition program is 38% for the school year. Calculation Example: If raw food cost is $0.20 and desired food cost percentage is 38%: $0.20 ÷ .38 = 0.5263 or 0.53 base selling price.
Recommend a final selling price and summarize how you arrived at the price.
Food
Raw Food Cost
Bottled Water
$0.13
Pizza Slice
$0.45
Fresh Apple
$0.22
Ice Cream Cup
$0.19
Baked Corn Chips
$0.16
Base Selling Price
Final Selling Price
Justification for Final Selling Price
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Pricing Nonreimbursable Food Items Interactive Activity Answer Key Pricing Method: Desired Food Cost Percent Markup Method The formula for determining a base price using the desired food cost percent markup method is: Raw Food Cost ÷ Desired Food Cost Percent Markup Reminder: Convert percent to decimal (i.e., 38% ÷ 100 = .38).
Instructions: Using the formula, determine the base selling price for each of the following nonreimbursable food items offered for sale if the desirable food cost percentage for a school nutrition program is 38% for the school year. Calculation Example: If raw food cost is $0.20 and desired food cost percentage is 38%: $0.20 ÷ .38 = 0.5263 or 0.53 base selling price.
Recommend a final selling price and summarize how you arrived at the price.
Food
Raw Food Cost
Base Selling Price
Bottled Water
$0.13
$0.3421
Pizza Slice
$0.45
$1.1842
Fresh Apple
$0.22
$0.5789
Ice Cream Cup
$0.19
$0.50
Baked Corn Chips
$0.16
$0.4211
Final Selling Price
Justification for Final Selling Price
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Lesson 6 Pre- and Post-Quiz: 1. Analyzing financial reports can provide information about patterns or trends in the school nutrition program, possible abuse or theft, and transaction errors. a) True b) False 2. Which of the following is Not a reimbursable meal? a) student lunch with required components b) second student lunch with required components c) afterschool care snack d) students breakfast with required components 3. If a school district sets a goal of 36% for their food cost percentage, what is the minimum they should charge for an ice cream cup that has a raw food cost of $0.19? a) $0.40 b) $0.55 c) $0.70 d) $0.75 4. What should be the base selling price for lunch in the upcoming year, given the following information? Given: Projected food cost for lunch $2.65 Basic reimbursement for lunch .25 USDA Food Value per lunch .20 a) $2.20 b) $2.45 c) $2.65 d) $2.75 5. There are three ways to analyze the revenue generated by the school nutrition program. One of those ways is a) to look at how revenue is dispersed. b) to calculate the average expenses per meal or meal equivalent. c) to calculate the average revenue per meal or meal equivalent. d) to look at how expenses are dispersed. 6. Comparing revenue earned with meal costs a) helps determine where revenue needs to increase. b) allows you to analyze expenditures by cost. c) identifies areas where expenses should be monitored. d) tells you nothing.
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7. When calculating revenue per meal equivalent, you divide the dollar amount received from each source by the total meal equivalents. a) True b) False 8. Where does the majority of revenue come from in most school nutrition programs? a) Paid student meal sales b) A la carte sales c) Adult meal sales d) Free, reduced, and paid student meal sales 9. The formula for setting lunch base prices is a) average projected lunch cost + Section 4 reimbursement + USDA food value. b) average projected lunch cost – Section 4 reimbursement + USDA food value. c) average projected lunch cost – Section 4 reimbursement – USDA food value. d) average projected lunch cost + Section 4 reimbursement – USDA food value. 10. One thing to remember when using the formula to set meal prices is a) the USDA food value and reimbursement amounts always stay the same. b) the USDA food value and reimbursement amounts change each year. c) the USDA food value and reimbursement amounts are different for each school district. d) only your state agency can tell you what your USDA food value is.
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Financial Management: A Course for School Nutrition Directors
Lesson 7
Managing Expenditures in the School Nutrition Program
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Calculating the Cost to Produce a Meal/Meal Equivalent Interactive Activity Instructions: Calculate the cost per meal equivalent for each expenditure category listed. Include the total cost of a meal equivalent. Remember: To calculate the costs to produce a meal equivalent, divide expenditures in each category by the total number of meal equivalents. The first one has been completed for you. Given: Meal Equivalents served for the year totaled 957,582. Expenditure Category
Expenditure Analysis Dollar Amount
Salaries and Wages
$ 774,680
Employee Benefits
317,755
Purchased Food
936,651
USDA Food Value
140,153
Supplies
236,766
Capital Equipment
95,000
Indirect Cost
75,000
Overhead*
84,867
Total Expenditures
Cost Per Meal Equivalent $0.8090
$2,660,872
* Overhead combines several smaller categories of expenditures for purposes of analysis.
Question: What category of expenditures had the highest cost?
Question: What is important to remember from this activity?
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Calculating the Cost to Produce a Meal/Meal Equivalent Interactive Activity Answer Key Instructions: Calculate the cost per meal equivalent for each expenditure category listed. Include the total cost of a meal equivalent. Remember: To calculate the costs to produce a meal equivalent, divide expenditures in each category by the total number of meal equivalents. The first one has been completed for you. Given: Meal Equivalents served for the year totaled 957,582. Expenditure Category
Expenditure Analysis Dollar Amount
Cost Per Meal Equivalent
Salaries and Wages
$ 774,680
(774,680 ÷ 957,582)
0.8090
Employee Benefits
317,755
(317,755 ÷ 957,582)
0.3318
Purchased Food
936,651
(936,651 ÷ 957,582)
0.9781
USDA Food Value
140,153
(140,153 ÷ 957,582)
0.1464
Supplies
236,766
(236,766 ÷ 957,582)
0.2473
Capital Equipment
95,000
(95,000 ÷ 957,582)
0.0992
Indirect Cost
75,000
(75,000 ÷ 957,582)
0.0783
Overhead*
84,867
(84,867 ÷ 957,582)
0.0886
Total Expenditures
$2,660,872
2.7787
* Overhead combines several smaller categories of expenditures for purposes of analysis.
Question: What category of expenditures had the highest cost? If you consider the categories as they are listed, the answer is food which has a cost per meal equivalent of approximately 98 cents per meal. However, you may be thinking that labor costs are higher when you add salaries and wages to the employee benefits. If you add $0.3318 to $0.8090 the cost of labor per meal equivalent is $1.14. Another point to consider is the value of USDA Foods. If you add $0.9781 for purchased food cost to the USDA Food value of $0.1464 the total food cost for a meal equivalent is $1.12, so the two categories are actually similar in costs.
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Question: What is important to remember from this activity? The reasons why this type of analysis is important are Managing expenditures within the revenues received is critical to responsible use of the school nutrition program’s resources and in maintaining customer satisfaction. Every program, regardless of size or method of service, must evaluate expenditures on a regular basis to control costs. When the costs to produce a meal equivalent exceed the average revenue generated per meal, a corrective action plan should be implemented immediately.
67
Percentages of Costs to Total Revenue Interactive Activity Instructions: Calculate the cost percentages to total revenue for each category. Write your answers in the last column of the table. Remember: Calculate the percentages of operational costs to total revenue by dividing the amount in each expenditure category by total revenue and multiplying by 100 to get the percent. The first one has been calculated for you. Given: Total revenue for the year totaled $2,584,659. Expenditure Category
Expenditure Analysis Dollar Amount
Salaries and Wages
$774,680
Employee Benefits
317,755
Purchased Food
936,651
USDA Food Value
140,153
Supplies
236,766
Capital Equipment
95,000
Indirect Cost
75,000
Overhead*
84,867
Total Expenditures
% of Total Revenue (.2997 x 100) 30%
$2,660,872
*Overhead combines several smaller categories of expenditures for purposes of analysis
Question: What do cost percentages tell us?
Less than 100% - operating balance ___________
Equal to 100% - operation _______-___________
More than 100% - operating balance ___________
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Percentages of Costs to Total Revenue Interactive Activity Answer Key Instructions: Calculate the cost percentages to total revenue for each category. Write your answers in the last column of the table. Remember: Calculate the percentages of operational costs to total revenue by dividing the amount in each expenditure category by total revenue and multiplying by 100 to get the percent. The first one has been calculated for you. Given: Total revenue for the year totaled $2,584,659
Expenditure Category
Expenditure Analysis Dollar Amount
% of Total Revenue
Salaries and Wages
(774,680 ÷ 2,584,659)
$774,680
(.2997 x 100)
30%
Employee Benefits
(317,755 ÷ 2,584,659)
317,755
(.1229 x 100)
12%
Purchased Food
(936,651 ÷ 2,584,659)
936,651
(.3624 x 100)
36%
USDA Food Value
(140,153 ÷ 2,584,659)
140,153
(.0542 x 100)
5%
Supplies
(236,766 ÷ 2,584,659)
236,766
(.0916 x 100)
9%
Capital Equipment
(95,000 ÷ 2,584,659)
95,000
(.0368 x 100)
4%
Indirect Cost
(75,000 ÷ 2,584,659)
75,000
(.0290 x 100)
3%
Overhead*
(84,867 ÷ 2,584,659)
84,867
(.0328 x 100)
3%
Total Expenditures
$2,660,872
(1.0294 x 100)
103%
*Overhead combines several smaller categories of expenditures for purposes of analysis
Question: What do cost percentages tell us?
Less than 100% - operating balance _increases___
Equal to 100% - operation _breaks-even________
More than 100% - operating balance decreases___
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Comparing Revenues to Expenditures Activity Instructions: Fill in the blanks in the table in the middle of the page by calculating the gain/loss in income for the 2011-2012 school-year and the gain/loss per meal equivalent. Then answer the questions at the bottom of the page. Given: Revenue and Expenditure information from previous activities Revenue Analysis Expenditure Analysis Revenues Dollar Per Meal Expenditures Dollar Per Meal Amount Equivalent Amount Equivalent Student Sales $310,850 $0.3246 Salaries/Wages $ 774,680 $0.8090 Adult Sales 27,803 0.0290 Benefits 317,755 0.3318 Other Sales 128,155 0.1338 Purchased Food 936,651 0.9781 Federal 1,949,908 2.0363 USDA Foods 140,153 0.1464 USDA Foods 140,153 0.1464 Supplies 236,766 0.2473 Capital State 18,835 0.0197 Equipment 95,000 0.0992 Bank Interest 3,155 0.0033 Indirect Cost 75,000 0.0783 Miscellaneous 5,800 0.0061 Overhead 84,867 0.0886 Total $2,584,659 $2.6992 Total $2,660,872 $2.7787 * Overhead combines several smaller categories of expenditures for purposes of analysis.
Comparing Revenue with Expenditures School Year 2011-2012 Total Revenue Expenditures Net Gain/Loss
$2,584,659 2,660,872
Per Meal Equivalent 2.6992 2.7787
Worksheet Questions: 1. Was there a gain or loss for the year? If so, how much?
2. What percentage of total revenue was this?
3. What was the loss per meal/meal equivalent?
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Comparing Revenues to Expenditures Activity Answer Key Instructions: Fill in the blanks in the table in the middle of the page by calculating the gain/loss in income for the 2011-2012 school-year and the gain/loss per meal equivalent. Then answer the questions at the bottom of the page. Given: Revenue and Expenditure information from previous activities Revenue Analysis Expenditure Analysis Revenues Dollar Per Meal Expenditures Dollar Per Meal Amount Equivalent Amount Equivalent Student Sales $310,850 $0.3246 Salaries/Wages $ 774,680 $0.8090 Adult Sales 27,803 0.0290 Benefits 317,755 0.3318 Other Sales 128,155 0.1338 Purchased Food 936,651 0.9781 Federal 1,949,908 2.0363 USDA Foods 140,153 0.1464 USDA Foods 140,153 0.1464 Supplies 236,766 0.2473 Capital State 18,835 0.0197 Equipment 95,000 0.0992 Bank Interest 3,155 0.0033 Indirect Cost 75,000 0.0783 Miscellaneous 5,800 0.0061 Overhead 84,867 0.0886 Total $2,584,659 $2.6992 Total $2,660,872 $2.7787 * Overhead combines several smaller categories of expenditures for purposes of analysis.
Comparing Revenue with Expenditures School Year 2011-2012 Total Revenue Expenditures Net Gain/Loss
$2,584,659 2,660,872 (76,213)
Per Meal Equivalent 2.6992 2.7787 (0.0795)
Worksheet Questions: 1. Was there a gain or loss for the year? If so, how much? There was a loss of $76,213. 2. What percentage of total revenue was this? The loss of $76,213 divided by the total revenue of $2,584,659 multiplied by 100 calculates a loss of 2.95% (rounded to 3%). The loss percentage can also be calculated by dividing the loss per meal equivalent ($0.0795) by the revenue earned per meal equivalent ($2.6992) and then entering the % key on the calculator. 3. What was the loss per meal/meal equivalent? $0.0795 or a loss of 8 cents per meal equivalent. Hint: If expenditures are more than revenues, the program experienced a loss. 71
Lesson 7 Pre- and Post-Quiz: 1. Analyzing financial reports can provide you with valuable information about a) patterns and trends and abuse or theft. b) equipment to buy and changes in expenditures. c) accounting errors and qualified employees. d) employees to hire and deviations from financial goals. 2. If the total of all cost percentages is equal to 100%, then the operation a) increases. b) decreases. c) breaks-even. d) is over budget. 3. The school nutrition director can determine the net gain/loss of meal or meal equivalent served by a) analyzing the meal cost per expenditure. b) analyzing the percentages of operational costs to total revenue. c) comparing revenues to expenditures. d) analyzing the total cost to produce a meal equivalent. 4. School nutrition directors need to determine how much money is spent per meal on a monthly basis. Which type of analysis will determine this? a) Comparing revenues to expenditures b) Percentages of operational cost to total revenue c) Meal cost per expenditure d) Calculating the cost to produce a meal or meal equivalent 1. a) b) c) d)
If the total of all costs percentages is less than 100%, then the operating balance increases. decreases. breaks-even. is over budget.
6. Operating ratios is a type of measurement that analyzes a) revenues to expenditures. b) the percentages of operational cost to total revenue. c) meal cost per expenditure. d) the total cost to produce a meal or meal equivalent. 7. If the total of all cost percentages is more than 100%, then the operating balance a) increases. b) decreases. c) breaks-even. d) is over budget.
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Financial Management: A Course for School Nutrition Directors
Lesson 8
Controlling Food and Labor Costs in School Nutrition Programs
73
USDA Lunch and Breakfast Cost Study Handout The School Lunch and Breakfast Cost Study-II, released in April 2008 provides a detailed examination of the cost of producing the reimbursable meal.
Table: Average Percentage Distribution of Reported Costs by School Food Authorities School District Food Cost Labor Cost Other Cost Total Cost Size/Enrollment Percentage Percentage Percentage Percentage 1 - 999
46.0
46.3
7.7
100.0
1,000 – 4,999
46.6
41.9
11.5
100.0
5,000+
42.8
45.8
11.4
100.0
* The food cost included the value of USDA Foods
Notice these calculations represent percentages of cost to total costs and not cost to total revenue. However, the study found that reported costs were essentially equal to revenues, indicating that on the average school districts in the study operated slightly above a break-even level. In a break-even situation where the revenue and expenditures are equal, then it is reasonable to assume that food and labor combined accounted for almost 91% of revenue, and all other costs for overhead and supplies accounted for about 9%.
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Productivity Using Meals per Labor Hour Activity Instructions: Maple School District has determined that an elementary school in the district needs to improve productivity. The school nutrition director and school manager performed the following steps to analyze the existing productivity index. Follow the steps and make the necessary calculations to complete the worksheet. Then answer the question at the bottom of the page.
Step # 1: Calculate the current total hours of labor paid daily in the school nutrition program. Employee hours paid daily including the manager Number of employees Number hours worked daily Total number of hours 1 7 7 3 6 18 3 5 15 3 3 9 Total Paid Labor Assigned Daily = Step # 2: Calculate the average number of meal equivalents served daily. Meal Categories Meal Equivalents Lunch (students and adults) Breakfast (182 x .67) Snacks (75 x .33) Nonreimbursable Sales $200 ÷ ($2.77 + 0.2225)* Total Meal Equivalents
440 122 25 67 =
Step # 3: Using the information, calculate meals per labor hour Meals Per Labor Hour = Number of Meals or Meal Equivalents Number of Paid Labor Hours
*Based on 2011-2012 reimbursement rates
Determining Staffing Needs What are at least 4 criteria that may be used to assign labor at a school site?
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Productivity Using Meals per Labor Hour Activity Answer Key Instructions: Maple School District has determined that an elementary school in the district needs to improve productivity. The school nutrition director and school manager performed the following steps to analyze the existing productivity index. Follow the steps and make the necessary calculations to complete the worksheet. Then answer the question at the bottom of the page.
Step # 1: Calculate the current total hours of labor paid daily in the school nutrition program. Employee hours paid daily including the manager Number of employees Number hours worked daily Total number of hours 1 7 7 3 6 18 3 5 15 3 3 9 Total Paid Labor Assigned Daily = 49 Step # 2: Calculate the average number of meal equivalents served daily. Meal Categories Meal Equivalents Lunch (students and adults) Breakfast (182 x .67) Snacks (75 x .33) Nonreimbursable Sales $200 ÷ ($2.77 + 0.2225)* Total Meal Equivalents 654
440 122 25 67 =
Step # 3: Using the information, calculate meals per labor hour Meals Per Labor Hour = Number of Meals or Meal Equivalents Number of Paid Labor Hours = 654 49 = 13.35 MPLH *Based on 2011-2012 reimbursement rates
Determining Staffing Needs What are at least 4 criteria that may be used to assign labor at a school site? the number of meals or meal equivalents served, the number and type of services offered, amount of convenience foods used, skill level of employees, complexity of menu, and type of production system. 76
Determine Staffing Needs Activity
Instructions: After an evaluation of the productivity level is completed, the school nutrition director can make a decision regarding staffing using the following three steps: Step 1: Set a goal for the desired number of meals per labor hour. Step 2: Divide the total meal equivalents by desired number of meals per labor hour to determine the total labor hours needed per day. Step 3: Determine difference between current total paid labor hours and desired paid labor.
Example Step 1: Desired number of meals per labor hour – 17 Step 2: Divide the total meal equivalents from Activity 1 (654) by the desired number of meals per labor hour (17). Answer:___________________
Step 3: Determine the difference between the current total paid labor hours on Activity 1 (49) and the desired number of labor hours in Step 2. ____________ Question 1: Will the school nutrition director need to add or reduce hours to achieve the goal of 17 meals per labor hour?
Question 2: What choices will the director need to consider to achieve the new goal?
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Determine Staffing Needs Activity Answer Key Instructions: After an evaluation of the productivity level is completed, the school nutrition director can make a decision regarding staffing using the following three steps: Step 1: Set a goal for the desired number of meals per labor hour. Step 2: Divide the total meal equivalents by desired number of meals per labor hour to determine the total labor hours needed per day. Step 3: Determine difference between current total paid labor hours and desired paid labor.
Example Step 1: Desired number of meals per labor hour – 17 Step 2: Divide the total meal equivalents from Activity 1 (654) by the desired number of meals per labor hour (17). Answer: __38__
Step 3: Determine the difference between the current total paid labor hours on Activity 1 (49) and the desired number of labor hours in Step 2. 49 – 38 = 11 labor hours Question 1: Will the school nutrition director need to add or reduce hours to achieve the goal of 17 meals per labor hour? Reduce hours Question 2: What choices will the director need to consider to achieve the new goal?
Reduce hours of employees
Eliminate positions
Consider ways to share employees in part time positions
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Analyzing Participation Activity Participation Year End Summary Report Enrollment
Eligibility Status
Lunch 29,148
Free
Eligibility Category/ Enrollment
Total Meals Served
Average Served Daily
Average % Participation/ Enrollment
Average % Participation/ Eligibility Category
14,348
0.49
1,887,502
10,486
35.98
73.08
2,626
0.09
313,030
1,739
5.97
66.22
Paid
12,174
0.42
715,708
3,976
13.64
32.66
Totals
29,148
100.00
2,916,240
16,201
55.58
Free
14,348
0.49
1,053,906
5,855
20.09
40.81
2,626
0.09
143,608
798
2.74
5.56
Paid
12,174
0.42
168,413
936
3.21
6.52
Totals
29,148
100.00
1,365,927
7,588
26.03
Reduced
Breakfast 29,148
Approved Student Eligibility
Days Served – 180
Reduced
Instructions: Using the information from the participation report provided above, fill in the blanks with the information requested in each statement below. Sources for the formulas used to calculate participation rates are provided on pages 77-78 in your FMIS publication. NOTE: You do not need to calculate any of the information asked for in the questions below! You are to read the report and answer the questions based on information provided in the report. 1. What percent of all students enrolled in the school district participated in the lunch program? _________ Breakfast program? ______________ 2. What percent of the total student enrollment qualified for free meals? ________ 3. The report shows that 55.58% of enrolled students participated in the lunch program. What percentage of enrolled student that participated received free lunches? _______ 4. What percent of the enrolled students eligible for a free lunch actually participate in the program on an average day? ______ What percent of students classified in the “paid” category participate? ______ 5. If you were the school nutrition program director in the district with this report, what goal or goals might you set for the next school year regarding student lunch and breakfast participation? Note: The participation and enrollment figures shown in this statement are for a hypothetical school district and are illustrative only. They are not tied to any other activity in this lesson. Sources for the formulas used to calculate participation rates are provided on the pages 77-78 in FMIS.
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Analyzing Participation Activity Answer Key Participation Year End Summary Report Enrollment
Eligibility Status
Lunch 29,148
Free
Eligibility Category/ Enrollment
Total Meals Served
Average Served Daily
Average % Participation/ Enrollment
Average % Participation/ Eligibility Category
14,348
0.49
1,887,502
10,486
35.98
73.08
2,626
0.09
313,030
1,739
5.97
66.22
Paid
12,174
0.42
715,708
3,976
13.64
32.66
Totals
29,148
100.00
2,916,240
16,201
55.58
Free
14,348
0.49
1,053,906
5,855
20.09
40.81
2,626
0.09
143,608
798
2.74
5.56
Paid
12,174
0.42
168,413
936
3.21
6.52
Totals
29,148
100.00
1,365,927
7,588
26.03
Reduced
Breakfast 29,148
Approved Student Eligibility
Days Served – 180
Reduced
Instructions: Using the information from the participation report provided above, fill in the blanks with the information requested in each statement below. Sources for the formulas used to calculate participation rates are provided on pages 77-78 in your FMIS publication. NOTE: You do not need to calculate any of the information asked for in the questions below! You are to read the report and answer the questions based on information provided in the report. 1. What percent of all students enrolled in the school district participated in the lunch program? _55.58___ Breakfast program? __26.03_______ 2. What percent of the total student enrollment qualified for free meals? __49____ 3. The report shows that 55.58% of enrolled students participated in the lunch program. What percentage of enrolled student that participated received free lunches? __35.98__ 4. What percent of the enrolled students eligible for a free lunch actually participate in the program on an average day? _73.08__ What percent of students classified in the “paid” category participate? _32.66__ 5.
If you were the school nutrition program director in the district with this report, what goal or goals might you set for the next school year regarding student lunch and breakfast participation?
Note: The participation and enrollment figures shown in this statement are for a hypothetical school district and are illustrative only. They are not tied to any other activity in this lesson. Sources for the formulas used to calculate participation rates are provided on the pages 77-78 in FMIS.
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Cost of Food Used Activity
Step # 1: Determine the beginning inventory for the month of February* Month
$__________
End of Month Inventory Value
Value of Food Purchases
January
$8,496
$24,021
February
$7,144
$18,677
March
$9,297
$21,583
Step # 2: Add the food purchases for the month of February.
$___________
Equals food available in February
$___________
Step #3: Less ending February inventory
$___________
Cost of Food Used in February
$___________
*Hint: The beginning inventory for the month is the ending inventory of the previous month. For example, the beginning inventory for March is $7,144.
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Cost of Food Used Activity Answer Key
Step # 1: Determine the beginning inventory for the month of February* Month
$ 8,496
End of Month Inventory Value
Value of Food Purchases
January
$8,496
$24,021
February
$7,144
$18,677
March
$9,297
$21,583
Step # 2: Add the food purchases for the month of February.
$ 18,677
Equals food available in February
$ 27,173
Step #3: Less ending February inventory
$ 7,144
Cost of Food Used in February
$ 20,029
*Hint: The beginning inventory for the month is the ending inventory of the previous month. For example, the beginning inventory for March is $7,144.
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Lower Food Costs in School Nutrition Programs Handout 1. Set a goal for managing food costs. Allocate a percentage, for example, 40% of revenue for food costs. 2. Monitor meal costs. Calculate the average food cost per meal on a regular basis. 3. Use standardized recipes. This will ensure more consistent product and shorten training times. 4. Pre-cost and post-cost menus to ensure food items are within predetermined cost levels. 5. Use cycle menus. 6. Reduce plate waste by analyzing reasons for discarded foods. Are menu items unpopular, too large portions, or poor quality? 7. Use portion control tools to ensure accurate serving sizes of menu items. 8. Avoid overproduction of food by careful forecasting. Consider the weather, school activities, and short-day schedules for students. 9. Calculate kitchen waste and account for why it happened. Track cooking mistakes and missed orders. 10. Manage the cost of food items by purchasing through a bid and keep specialized purchases to a minimum. 11. Maintain inventory control. 12. Prohibit the removal of food items from the premises. Do not allow “leftovers” to be taken home. 13. Follow receiving and storage procedures to minimize shortages. 14. Decrease food costs through use of USDA foods. 15. Implement security measures. Product theft can cause major increase in food costs. 16. _________________________________________________________________________. 17. _________________________________________________________________________. 18. _________________________________________________________________________.
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19. _________________________________________________________________________. 20. _________________________________________________________________________.
84
Lesson 8 Pre- and Post-Quiz: 1. USDA foods are not included with purchased foods when determining the total cost of the program. a) True b) False 2. ________ is a factor in evaluating productivity and staffing needs. a) Daily participation of students b) Daily participation of teachers c) Daily participation of contract meals d) Daily participation of parents 3. The school nutrition director should work with upper administration and _______ to set goals for food and labor costs as part of the budget planning process. a) food management representatives b) teachers c) school site managers d) local restaurants 4. Knowing the costs of food used during a given period of time can provide vital information a) concerning the complexity of the menu. b) in preventing waste and food theft during the monitoring period. c) to determine the daily participation. d) concerning extra food sales. 5. Most school nutrition programs use the productivity index of _______ to monitor the efficiency of an operation. a) meal equivalencies b) school nutrition assistants c) overproduction of food d) meals per labor hour 6. Staffing is a complex task and requires monitoring by the a) superintendent b) managers c) school nutrition director d) cashiers 7. How often should inventory of the food in the school nutrition operation be taken? a) annually b) when theft is suspected c) monthly d) inventory should never be taken
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8. _______ is a criterion that can be used to determine assigned labor at a school site. a) Complexity of the menu b) The skill level of the school nutrition staff c) A superintendent’s request d) The number of schools in the district
86
Financial Management: A Course for School Nutrition Directors
Lesson 9
Financial Planning and Budget Development
87
Customer Satisfaction Factors Interactive Activity Instructions: In the left column are definitions of customer satisfaction factors that influence financial planning and budgeting. Read the definition and write the term in the space provided.
Definitions
Customer Satisfaction Factors
1.___________________ Where the customer experiences service; areas should be clean, sanitary, and customerfriendly 2.__________________ Sights, sounds, aromas, emotional reactions, aesthetic features, and the psychological ambience 3.__________________ Interactions experienced by the
Delivery Environment Informational Interpersonal Sensory Procedural
customer, including friendliness, helpfulness, physical appearance, and competence 4.__________________ All the things the customer has to do such as complete meal applications, stand in line, return trays, keep money in his or her account 5.__________________ Act of providing healthy, appealing meals and other food items at the peak of freshness and right temperature 6.__________________ Takes into account what the customer needs to know about the product they are purchasing
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Customer Satisfaction Factors Interactive Activity Answer Key Instructions: In the left column are definitions of customer satisfaction factors that influence financial planning and budgeting. Read the definition and write the term in the space provided.
Definitions
Customer Satisfaction Factors
1. Environment_ Where the customer experiences service; areas should be clean, sanitary, and customer-friendly
Delivery Environment
2._Sensory ____ Sights, sounds, aromas, emotional reactions, aesthetic features, and the psychological ambience 3._Interpersonal _ Interactions experienced by the customer,
Informational Interpersonal Sensory Procedural
including friendliness, helpfulness, physical appearance, and competence 4._Procedural__ All the things the customer has to do such as complete meal applications, stand in line, return trays, keep money in his or her account 5._Delivery___ Act of providing healthy, appealing meals and other food items at the peak of freshness and right temperature 6._Informational__ Takes into account what the customer needs to know about the product they are purchasing
89
Internal Organization Considerations Handout The components of the internal organization and the considerations for financial planning are given in this handout. Think about the different systems in your school nutrition program and what you need to consider when financially planning a school nutrition program.
Components of the Internal Organization
Considerations for Financial Planning Consider employee qualifications, hiring and
1. People
termination procedures, staff training, and student/staff rapport. Match the needs of the program to equipment
2. Equipment
selection and purchase to maximum effectiveness of equipment expenditures.
3. Systems
1. Menu planning – dictates equipment and people considerations 2. Purchasing, receiving, and inventory 3. Storage 4. Production 5. Marketing 6. Financial accountability as it relates to compliance with regulations and an effective reporting system. Examples are cashiering, sales to deposits, and banking.
90
Emerging Trends Activity Instructions: Listed below are seven trends that are impacting financial management decision-making in school nutrition programs or will in the near future. Rank the impact of the innovation/trend on school nutrition programs in order from 7 to 1 (with 7 having the greatest impact and 1 having the least impact). Do not give any of the trends the same rank.
Highest Rank:
7
Lowest 6
5
4
3
2
1
A.________ Labor shortages resulting in increased competition for qualified workers to fill positions as workers retire or leave the industry. B.________ Increased workplace diversity with growing numbers of ethnic groups and social cultures. C.________ Changing demographic makeup of the population leading to fewer families and children, and larger numbers of retirees. D.________ Continued implementation of wellness initiatives that will result in limited nonreimbursable food sales and increased offerings of fruits, vegetables, and whole grain products. E.________ Changing economy resulting in families with children having less discretionary dollars to spend on nonessentials. F.________ A focus on “green” issues such as purchasing more energy efficient equipment and increasing eco-friendly practices such as recycling. G.________ Growing concerns about food safety and food contamination.
91
Lesson 9 Pre- and Post-Quiz: 1. The most important areas to consider when planning and budgeting fall under five categories. Three of these categories are a) trends, financial aspects, and the daily weather. b) innovations, internal organization, and the health inspection. c) innovations, customer satisfaction, and the price of adult meals. d) trends, innovations, and customer satisfaction. 2. Which of the five categories must be considered when forecasting revenue and expenditures for planning and budgeting purposes? a) Trends b) Financial Aspects c) Innovations d) Customer Satisfaction 3. Improved computerization and software for financial recordkeeping, tracking purchase orders, and tracking student food selections would be considered a) an innovation. b) financial aspects. c) customer satisfaction. d) a trend. 4. Which of the five categories is important to the entire school nutrition program and other school officials to look beyond the current program and keep the organization fresh? a) Financial Aspects b) Customer Satisfaction c) Innovations d) Trends 5. Meal price increases due to significant loss to the school nutrition program in the prior year is an example of a) financial aspects. b) customer satisfaction. c) internal organization. d) innovation. 6. Which of the five categories is made up of divisions or components that interact to accomplish organization activities and achieve organizational goals? a) Trends b) Internal Organization c) Financial Aspects d) Innovation
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7. Which of the five categories is the basis for the school nutrition program’s financial foundation? a) Trends b) Financial Aspects c) Innovations d) Customer Satisfaction 8. Which of the five categories has general tendencies of directions in which a market or industry is moving? a) Financial Aspects b) Customer Satisfaction c) Trends d) Innovations
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Financial Management: A Course for School Nutrition Directors
Lesson 10
Developing and Analyzing a School Nutrition Program Budget
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Budget Building: Interactive Case Study Maple School District The school foodservice administrator is preparing the budget for the coming year. Using the information below and the following revenue and expenditure reports, calculate the financial data needed to prepare the budget. The school district serves meals 180 days per year. Number of meals served is expected to stay the same. Revenue Due to a loss during the past year, the price of a student breakfast will be increased from $0.80 to $1.00, a student lunch from $2.00 to $2.25, and adult lunches from $2.75 to $3.00. Federal reimbursement 2011-2012 rates. Meal Prices Breakfast Full Paid Student Reduced Student Adult
Lunch Full Paid Student Reduced Student Adult
$2.25 0.40 3.00
Federal Reimbursement Rates (2011-2012) Lunch Breakfast Free Student $1.51 Free Student Reduced Student 1.21 Reduced Student Paid Student 0.27 Paid Student
$2.77 2.37 0.26
$1.00 0.30 1.50
Afterschool Care Snack Service All snack sites qualify as “free” eligible. The federal reimbursement for each free snack in the budget year will be $0.76. Other Revenue Other Food Sales Prices charged for extra foods, a la carte items, and special functions are expected to increase by 2%. The increase will be calculated on the revenue received during the current year. Contract Food Sales The district plans a 3% increase in contract meal prices. Historical data indicates that the number of contract meals to outside organizations remain constant from year to year. Interest The school has negotiated a higher interest rate on bank deposits. The increase will amount to an estimated 1% increase in interest for the school foodservice fund. State Matching According to a state memo, state matching funds will increase by 2%.
95
Miscellaneous Current year rebates that arrived in July accounted for a larger than usual revenue in the miscellaneous category. Historical data indicates the district received an average of $3,000 in food rebates after June 30 over the past several years. USDA Foods USDA Food Value per meal (based on student lunches served) will increase from $0.2025 to $0.2225 per reimbursable lunch. The total number of reimbursable student lunches served in the current year totaled 692,114 (See Revenue Report: Paid, 134,814, Reduced Price, 52,796, and Free, 504,504.)
Expenditures Salaries and Wages The board has given all employees a 4% raise in salaries. The salary increases will also result in an increase in benefits. Benefits The business manager advised the school nutrition director to budget a 3% increase for benefits. Purchased Food According to the state agency and market reports, food purchases are expected to rise 5%. USDA Food Values For budgeting purposes, USDA foods received are expected to be expended. The amount budgeted for USDA food revenue will also be budgeted as USDA food expenditure. General Supplies The school nutrition program plans to increase the budget for supplies 4% due to higher bid prices. Equipment Because of a decrease in the fund balance over the past year, the school nutrition director is reducing the amount for equipment purchases. The school nutrition department plans to add two new pieces of equipment for an approximate total of $50,000.00. Indirect Cost The school board has agreed not to increase the amount for indirect cost charged to the school nutrition program. Overhead Due to a general increase in prices, the school nutrition program is planning to budget for an increase of 5% in overhead expenditures.
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Annual Revenue Report [Current Year] Maple School District Breakfast
Number
Price Charged
Reimbursement
Total $
Paid Students
19,291
$0.80
$15,433
Reduced Price
15,435
0.30
4,631
0
1.50
0
Adult Breakfast Paid Student (Fed. R.)
19,291
$0.26
5,016
Reduced Student (Fed. R.)
15,435
1.18
18,213
268,759
1.40
376,263
Free Student (Fed. R.) Total Revenue/Breakfast Lunch
$419,556 Number
Price Charged
Reimbursement
Total
Paid Students
134,814
$2.00
$269,628
Reduced Price
52,796
0.40
21,118
Adult Lunch
10,110
2.75
27,803
Paid Student (Fed. R.) Reduced Student (Fed. R) Free Student (Fed. R.) Afterschool Snacks (Free Site)
134,814
$0.26
35,052
52,796
2.32
122,487
504,504
2.72
1,372,251
27,873
0.74
20,626
Total Revenue Lunch/Snacks
$1,868,965 Other Revenue Notes
Revenue Item Other Food Sales Contract Food Sales Interest State Matching
District receives one annual payment
*Miscellaneous
*Rebates on food previous year purchases
Extra foods, a la carte, special school events Local organization (lunch for elderly)
Total Other
5,800 $155,945
Sub-Total Revenue
(Breakfast, Lunch, Other)
USDA Food Value
Based on reimbursable lunches previous year
Total All Revenue
Revenue $113,955 14,200 3,155 18,835
$2,444,466 140,153 $2,584,619
Note - Check with your state agency for the best method to project revenue from state funds. If state funds are issued on reimbursable meals served, add sections under meal & breakfast categories for state revenue. Calculations are rounded to nearest whole
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Annual Expenditure Report [Current Year] Maple School District Expenditure Category Salaries and Wages
Expenditure Amounts $774,680
Employee Benefits
317,755
Purchased Food
936,651
USDA Food Value
140,153
Supplies
236,766
Capital Equipment
95,000
Indirect Cost
75,000
*Overhead
84,867
Total Annual Expenditures
$2,660,872
*Overhead combines several smaller categories of expenditures for purposes of analysis.
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Revenue Budget Worksheet Interactive Case Study Budget Planning: Calculate blank cells using Maple School District Data Revenue Budget Worksheet Breakfast
Number
Price
Paid Students
19,291
Reduced Price
15,435
Adult Breakfast
Reimbursement
Total
0.30
0
Paid Student (Fed. R.)
19,291
0.27
Reduced Student (Fed. R.)
15,435
1.21
268,759
1.51
Free Student (Fed. R.) Total Revenue/Breakfast Lunch
Number
Paid Students
134,814
Reduced Price
52,796
Adult Lunch
10,110
Paid Student (Fed. R.) Reduced Student (Fed. R) Free Student (Fed. R.) Afterschool Snacks (All Free)
Price
Reimbursement
Total
0.40
134,814
0.26
52,796
2.37
504,504
2.77
27,873
0.76
Total Revenue/Lunch & Snacks
Other Revenue Revenue Item
Current Year Revenue
100% plus % increase
14,200
2% (Multiply x 102 and then hit percent sign instead of equal sign) 3%
3,155
1%
State Matching
18,835
2%
Miscellaneous
5,800
Based on historical data
Other Food Sales Contract Bank Interest
Total Other
$113,955
$155,945 Sub total revenue for breakfast, lunch, and other
Sub-Total Revenue USDA Food Value
Budgeted Revenue
$140,153
1
692,114 x $0.2225
Total All Revenue 1
Lunches served this year x new USDA Food rate Note - Check with your state agency for the best method to project revenue from state funds. If state funds are issued on reimbursable meals served, add sections under meal & breakfast categories for state revenue.
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Expenditure Budget Worksheet Interactive Case Study Budget Planning: Calculate blank cells using Maple School District Data. Current Year New Budget Expenditure Expenditure Category Projected % Increase Expenditures Totals Salaries and Wages
$774,680
Employee Benefits
317,755
Purchased Food
936,651
USDA Food Value
140,153
Supplies
236,766
Capital Equipment
95,000
Indirect Cost
75,000
*Overhead
84,867
Total Expenditures
$2,660,872
Hint – To calculate projected cost in budget, multiply expenditure x percent increase + 100 (Example 103), and then push percent key. If you use the = sign, you will get a decimal, not a percent.
100
Analyzing the Budget A budget is a tool for financial management. It helps the school food nutrition administrator decide when a price increase is needed and when expenditures must be decreased. Analyze the budget you have just completed for Maple School District by answering the following questions. 1. What is the projected bottom line net (excess or deficit) in the budget? Compare Revenue Budget worksheet with the Expenditure Budget worksheet. 2. Based on the budget worksheets, will there be an improvement in the financial status of the school nutrition program in Maple School District in the next school year? If so, how much? 3. What contributed to the improvement? 4. How much of the $74,213 loss could be attributed to a loss in the adult meals category? Hint: Revenue from adult meals is $2.75 per meal served x 10,110 lunches served = $27,803 Costs of adult meals is lunches served x cost per meal (10,110 x $2.7787)
5. What are the percentages of projected expenditures to total budgeted revenue in the following categories (Total projected revenue in new budget = $2,697,505). Refer to the Expenditure Budget for the amount budgeted in each category. This is an interactive spreadsheet. Category Salaries and Wages
Budgeted Amount
% of Revenue
$805,667
(.2987 x 100) 29.87%
327,288
12.13%
Purchased Food USDA Food Value
983,484
36.46%
153,995
5.71%
Supplies Capital Equipment
246,237
9.13%
50,000
1.85%
Indirect Cost
75,000
2.78%
Overhead Total Expenditures
89,110
3.30%
Employee Benefits
Rounded Percentage
$2,730,781
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6. How many total meal equivalents are projected for Maple School District in the new budget? Complete the cells and make the necessary calculations. This is an interactive spreadsheet.
Meal Category Student Lunch Adult Lunch Student Breakfast Snacks Non-reimbursable food sales/contract sales
Conversion Meals/Sales Factor Meal Equivalents 692,114
1
10,110
1
303,485
.67
27,873
.33
$130,860
*
Total Meal Equivalents *Food Sales divided by Free Lunch Reimbursement ($2.77) + USDA Food Value per Meal ($0.2225). Use new reimbursement rate for calculations.
7. What is the projected revenue per meal equivalent in the budget? Formula: Total Projected Revenue ÷ Projected Meal Equivalents
8. What is the projected cost to produce a meal? Formula: Projected Expenditures ÷ Projected Meal Equivalents
9. Based on the new projected meal cost, will the price for adult lunches be sufficient to cover the cost in the next school year?
10. Are there any changes you would recommend to erase this deficit? Why?
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Revenue Budget Worksheet Answer Key Interactive Case Study Budget Planning: Calculate blank cells using Maple School District Data Revenue Budget Worksheet Breakfast
Number
Price
Reimbursement
Total
Paid Students
19,291
$1.00
$19,291
Reduced Price
15,435
0.30
4,631
0
1.50
0.00
Adult Breakfast Paid Student (Fed. R.)
19,291
$0.27
5,209
Reduced Student (Fed. R.)
15,435
1.21
18,676
268,759
1.51
405,826
Free Student (Fed. R.)
453,633
Total Revenue/Breakfast Lunch
Number
Price
Reimbursement
Total
Paid Students
134,814
$2.25
303,332
Reduced Price
52,796
0.40
21,118
Adult Lunch
10,110
3.00
30,330
Paid Student (Fed. R.) Reduced Student (Fed. R) Free Student (Fed. R.) Afterschool Snacks (All Free)
134,814
$0.26
35,052
52,796
2.37
125,127
504,504
2.77
1,397,476
27,873
0.76
Total Revenue/Lunch & Snacks
21,183 $1,933,618
Other Revenue Revenue Item
Current Year Revenue
100% plus % increase
Budgeted Revenue
14,200
2% (Multiply x 102 and then hit percent sign instead of equal sign) 3%
3,155
1%
3,187
State Matching
18,835
2%
19,212
Miscellaneous
5,800
Based on historical data
3,000
Other Food Sales Contract Bank Interest
Total Other
$113,955
$155,945
USDA Food Value Total All Revenue
$140,153
14,626
156,259 Sub total revenue for breakfast, lunch, and other
Sub-Total Revenue
$116,234
1
692,114 x $0.2225
2,543,510 153,995 $2,697,505
1
Lunches served this year x new USDA Food rate Note - Check with your state agency for the best method to project revenue from state funds. If state funds are issued on reimbursable meals served, add sections under meal & breakfast categories for state revenue.
103
Expenditure Budget Worksheet Interactive Case Study Answer Key Budget Planning: Calculate blank cells using Maple School District Data. Current Year New Budget Expenditure Expenditure Category Projected % Increase Expenditures Totals
Salaries and Wages
$774,680
4% (Multiply x 104 and then hit percent sign instead of equal sign)
Employee Benefits
317,755
3%
327,288
Purchased Food
936,651
5%
983,484
692,114 x 0.2225 (should match revenue)
153,995
$805,667
*
USDA Food Value
140,153
Supplies
236,766
4%
246,237
Capital Equipment
95,000
Based on need
50,000
Indirect Cost
75,000
No Change
75,000
*Overhead
84,867
Total Expenditures
$2,660,872
5% 89,110 $2,730,781
Hint – To calculate projected cost in budget, multiply expenditure x percent increase + 100 (Example 103), and then push percent key. If you use the = sign, you will get a decimal, not a percent.
104
Analyzing the Budget Answer Key A budget is a tool for financial management. It helps the school food nutrition administrator decide when a price increase is needed and when expenditures must be decreased. Analyze the budget you have just completed for Maple School District by answering the following questions. 1. What is the projected bottom line net (excess or deficit) in the budget? Compare Revenue Budget worksheet with the Expenditure Budget worksheet. Total revenue ($2,697,505) – Total expenditures ($2,730,781) = $33,276 2. Based on the budget worksheets, will there be an improvement in the financial status of the school nutrition program in Maple School District in the next school year? If so, how much? Yes. The current year loss is $76,253; new budget loss is $33,276. 3. What contributed to the improvement? Possible Answer: Less money spent on equipment. All other expenditure categories are about the same percent of total revenue as the previous year. 4. How much of the $76,253 loss could be attributed to a loss in the adult meals category? Hint: Revenue from adult meals is 2.75 per meal served x 10,110 lunches served = $27,803 Costs of adult meals is lunches served x cost per meal (10,110 x $2.7787) 10,110 x $2.7787 = $28,093 costs to serve adult lunches. $28,093 (cost) minus -$27,803 (revenue) = $290 loss in adult lunches 5. What are the percentages of projected expenditures to total budgeted revenue in the following categories (Total projected revenue in new budget = $2,697,505). Refer to the Expenditure Budget for the amount budgeted in each category. This is an interactive spreadsheet. Category Salaries and Wages
Budgeted Amount
% of Revenue
Rounded Percentage
$805,667
(.2987 x 100) 29.87%
30%
327,288
12.13%
12%
Purchased Food USDA Food Value
983,484
36.46%
36%
153,995
5.71%
6%
Supplies Capital Equipment
246,237
9.13%
9%
50,000
1.85%
2%
Indirect Cost
75,000
2.78%
3%
Overhead Total Expenditures
89,110
3.30%
3%
Employee Benefits
$2,730,781
101%
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6. How many total meal equivalents are projected for Maple School District in the new budget? Complete the cells and make the necessary calculations. This is an interactive spreadsheet.
Meal Category Student Lunch Adult Lunch Student Breakfast Snacks Non-reimbursable food sales/contract sales
Conversion Meals/Sales Factor Meal Equivalents 692,114
1
692,114
10,110
1
10,110
303,485
.67
(303,485 x .67)
203,335
27,873
.33
(27,873 x .33)
9,198
($130,860 ÷ 2.9925)
43,729
$130,860
*
Total Meal Equivalents
958,486
*Food Sales divided by Free Lunch Reimbursement ($2.77) + USDA Food Value per Meal ($0.2225). Use new reimbursement rate for calculations.
7. What is the projected revenue per meal equivalent in the budget? Formula: Total Projected Revenue ÷ Projected Meal Equivalents $2,697,505 ÷ 957,582 = $2.8170 8. What is the projected cost to produce a meal? Formula: Projected Expenditures ÷ Projected Meal Equivalents $2,730,781 ÷ 957,582 = $2.8517 9. Based on the new projected meal cost, will the price for adult lunches be sufficient to cover the cost in the next school year? The price budgeted for an adult lunch is $3.00; the projected cost is slightly over $2.85 ($2.8517). This could result in a small gain in adult meals. Total Revenue: $3.00 x 10,110 adult meals = $30,330 Total Cost: $2.8517 x 10,110 adult meals = $28,831 (gain of about $1,499.00) 10. Are there any changes you would recommend to erase this deficit? Why?
Supplies are over 9% of total revenue; possible waste? Examine expenditures. Look at revenue sources. If it is costing over $2.85 to prepare a meal equivalent, then the school district may need to increase the price to paying students and adult prices. Re-evaluate a la carte and catering prices. The school nutrition program should examine prices charged for nonreimbursable food items. All items should be priced so there is no loss to the district. Evaluate prices so meal revenues are not supporting nonreimbursable food sales. Increase breakfast participation without increasing labor. 106
Statement of Revenue and Expenditures School Nutrition Program Ending ____________ (Month or Year)
Revenue Source Local Sources Student Meal Sales Adult Meal Sales Other Food Sales Contract Meals Interest State Sources Federal Sources (includes USDA Food value) Miscellaneous Fund Transfer-In Total Revenue
Current Month
Previous Month
YTD
Expenditures Salaries and Wages Employee Benefits Purchased Services Property Services Purchased Food USDA Food Supplies Miscellaneous Capital Equipment Indirect Costs Fund Transfer-Out Total Expenditures Net Excess/Deficit
Current Month
Previous Month
YTD
107
Statement of Net Assets (Balance Sheet) School Nutrition Program Ending _______________ (Month or Year) ASSETS Current Assets Cash and Cash Equivalents Sales Tax Collection Investments Due from Federal Funds Due from State Funds Due from Other Funds Other Receivables Inventories Purchased Food and USDA Food Supplies Total Current Assets Noncurrent Assets Furniture and Equipment Less accumulated depreciation Total Noncurrent Assets Total Assets LIABILITIES Current Liabilities Accounts Payable Accrued Salaries Accrued Payroll Deductions Due to other Funds Deferred Revenue Sales Tax Owed Total Current Liabilities FUND BALANCE Invested in Capital Assets (minus depreciation) Reserved for Encumbrances Reserved for Inventory Unreserved/Undesignated Funds Total Fund Balance Total Liabilities and Fund Balance
108
Budget Planning Sheet Annual Revenue Report [Current Year] Breakfast
Number
Price Charged
Reimbursement
Total $
Reimbursement
Total
Paid Students Reduced Price Adult Breakfast Paid Student (Fed. R.) Reduced Student (Fed. R.) Free Student (Fed. R.) Total Revenue/Breakfast Lunch
Number
Price Charged
Paid Students Reduced Price Adult Lunch Paid Student (Fed. R.) Reduced Student (Fed. R) Free Student (Fed. R.) Afterschool Snacks (Free Site) Total Revenue Lunch/Snacks
Revenue Item
Other Revenue Notes
Other Food Sales
Extra foods, a la carte, special school events
Contract Food Sales
Local organization (lunch for elderly)
Revenue
Interest State Matching
District receives one annual payment
*Miscellaneous
*Rebates on food previous year purchases
Total Other Sub-Total Revenue
(Breakfast, Lunch, Other)
USDA Food Value
Based on reimbursable lunches previous year
Total All Revenue
109
Annual Expenditure Report [Current Year] Expenditure Category Salaries and Wages
Expenditure Amounts
Employee Benefits Purchased Food USDA Food Value Supplies Capital Equipment Indirect Cost *Overhead Total Annual Expenditures
110
Comparing Revenues to Expenditures School Year _________________
Revenues
Revenue Analysis Dollar Per Meal Amount Equivalent
Student Sales Adult Sales Other Sales Federal Reimbursement USDA Foods
Expenditure Analysis Expenditures Dollar Per Meal Amount Equivalent Salaries/Wages Benefits Purchased Food
State Bank Interest Miscellaneous
USDA Foods Supplies Capital Equipment Indirect Cost Overhead
Total
Total
Comparing Revenue with Expenditures School Year _________________
Total
Per Meal Equivalent
Revenues Expenditures Net Gain/Loss
111
Physical Inventory Sheet Sheet No. Performed By
Date School
Item No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
Item Description
Purchased Price
USDA Food
Quantity
Extension
112
Physical Inventory Sheet Sheet No. Performed By
Date School
Item No.
Item Description
Purchased Price
USDA Food
Quantity
Extension
113
Lesson 10 Pre- and Post-Quiz: 1. The financial report most often used by school nutrition program directors to analyze whether the expenses of the operation are being managed within the revenues received is a) Statement of Net Assets. b) Statement of Revenues and Expenditures. c) Statement of Revenue. d) Budget. 2. Analyzing financial reports can provide information about patterns or trends in the school nutrition program, possible abuse or theft, and transaction errors. a) True b) False 3. The school nutrition director can determine the net gain/loss of meal or meal equivalent served by a) analyzing the meal cost per expenditure. b) analyzing the percentages of operational costs to total revenue. c) comparing revenues to expenditures. d) analyzing the total cost to produce a meal equivalent. 4. There are three ways to analyze the revenue generated by the school nutrition program. One of those ways is a) to look at how revenue is dispersed. b) to calculate the average expenses per meal or meal equivalent. c) to calculate the average revenue per meal or meal equivalent. d) to look at how expenses are dispersed. 5. School nutrition directors need to determine how much money is spent per meal on a monthly basis. Which type of analysis will determine this? a) Comparing revenues to expenditures b) Percentages of operational cost to total revenue c) Meal cost per expenditure d) Calculating the cost to produce a meal or meal equivalent 6. In most school districts, what is the unit of measurement used to evaluate the effectiveness and efficiency of the nutrition program operation? a) reimbursable student lunches b) reimbursable adult lunches c) reimbursable breakfast d) reimbursable snacks
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7. A financial plan that projects revenue and expenditures for a specified period of time is a) Statement of Revenue. b) Statement of Net Assets. c) Budget. d) Statement of Revenue and Expenditures. 8. One thing to remember when using the formula to set meal prices is a) the USDA food value and reimbursement amounts always stay the same. b) the USDA food value and reimbursement amounts change each year. c) the USDA food value and reimbursement amounts are different for each school district. d) only your state agency can tell you what your USDA food value is. 9. In the meal equivalent conversion formulas a) 3 breakfasts = 1 lunch and 3 snacks = 1 lunch. b) 3 breakfasts = 2 lunches and 3 snacks = 1 lunch. c) other food sales = 3 lunches and 3 snacks = 1 lunch. d) all food sales = 2 lunches. 10. The formula for setting lunch base prices is a) average projected lunch cost + Section 4 reimbursement + USDA food value. b) average projected lunch cost – Section 4 reimbursement + USDA food value. c) average projected lunch cost – Section 4 reimbursement – USDA food value. d) average projected lunch cost + Section 4 reimbursement – USDA food value.
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Financial Management: A Course for School Nutrition Directors
Lesson 11
Tools to Analyze the Financial Status of School Nutrition Programs
116
Creating Spreadsheets and Pie Charts in Excel Handout Saving and Printing Excel Spreadsheets and Pie Charts 2
1
Instructions: Saving Your Work 1. To quickly save a document, click on the SAVE (computer disk) button at the top of the ribbon. Note: If you are saving the file for the first time, you will be asked to give it a name. 2. To save a document to a different location or by a different name;
Click on the Office Button icon, click SAVE AS.
In the File name box, enter a new name for the file.
In the SAVE IN box, specify where you want the file saved.
Click SAVE.
117
Printing (from Excel) You can print your document by clicking the Office Button icon in the top left hand corner of the screen. To ensure that gridlines show up on your spreadsheet printout;
Click on PAGE LAYOUT on the ribbon at the top of the page, then click the SHEET OPTIONS under the Gridlines/Headings box on the ribbon.
Select the GRIDLINES checkbox.
Click PRINT.
Note: Worksheets print faster if you print without gridlines.
118
Setting up a Spreadsheet Activity Instructions: The formulas used in this activity are the same formulas used in Lesson 7 Activities 1 and 2 on pages 58 and 61 in your course workbook, the numbers are different. 1. Click on the Start button at the bottom left of the computer screen. 2. Click on Programs or All Programs. 3. Select Microsoft Office and open the Microsoft Excel 2007 program to display a worksheet on the computer screen. Excel will open a blank workbook each time unless you choose a specific file. 4. Plan the spreadsheet. You may need to customize the spreadsheet by enlarging column widths. This is important to allow room for typing labels and data entry. To widen columns, place the mouse pointer on the line between Column A and B in the Column Header row. The pointer will change to a double-headed arrow. Click the left mouse button and drag the double-headed arrow to the right to widen the column. We will double the space in each column (columns A, B, C, and D) for this exercise. Widen columns B, C, and D using the same procedure used to widen column A. 5. Next, type a label at the top of each column to explain the information in the spreadsheet. To bold the label headings, select (highlight) the headings you want to put in bold font; go to the Font tab and select B for bold. To center the labels within the cells, select the cells in which you wish the labels to be centered, go to the Alignment Tab and select the diagram of a document with the text centered.
Column A1 identifies the row titles so type Expenditures in A1.
Column B will contain the data needed to analyze in dollar amounts. Press the right arrow or the Tab key to move to cell B1 and type in Dollar Amount.
Columns C and D represent what you want Excel to calculate. Type Meal Cost in C1 and Cost % of Revenue in D1. Abbreviate as much as possible. See Example 1 on the next page. 119
Example 1: Column Labels A Expenditures
1
B Dollar Amount
C Meal Cost
D Cost % of Revenue
2 3 4 5 6 7 8 9 10
6. The next step in the planning stage is to set the number of decimal places to display in Columns C & D. Because Columns A and B cells will contain data that you enter, there is no need to change the decimal setting.
First, decide the number of decimal places you want to display in column C. In Lesson 7 Activity 1, 4 decimal places were used.
Click on cell C2; hold down the left mouse button and move down to highlight rows 2 – 10. Excel will calculate these cells for us.
On the Home tab, click the Number arrow in the dialogue box. Click on Number in the display list. A Decimal places box will appear. To display 4 decimal places on the spreadsheet, arrow up to 4 and click OK.
120
Repeat the process for column D, but instead of displaying 4 decimal places, display 2 decimal places for the percentage costs of revenue. Remember, you want to display the number in Column D in the form of a percent. If there are too many decimals in the calculation, you can use the “decrease decimals function” to get the desired number of decimals. This is located in the same box above the Number dialogue box. The box on the left is the Increase Decimal box and on the right is the Decrease Decimal box.
Click OK to return to the spreadsheet.
7. Enter the row titles. Click cell A2. Type Salaries in A2. Press the down arrow to move to cell A3. Repeat the process until you have typed in all expenditure categories shown below. 8. Highlight cells A1- A10 and bold the labels in each cell. Example 2: Row Titles A Expenditures
1 2 3 4 5 6 7 8 9 10
B Dollar Amount
C Meal Cost
D Cost % of Revenue
Salaries Benefits Purchased Food USDA Food Value Supplies Capital Equip. Indirect Cost Overhead Total
9. Now you are ready to enter data for financial analysis. In this spreadsheet you want Excel to calculate meal costs and cost percentages. Click on cell B2 and enter 742,000 for Salaries.
Press the down arrow key as you continue entering data. Watch carefully to ensure that no typos are made.
Continue data entry by typing:
B3: 308,500,
B4: 909,370,
B5: 145,108, 121
B6: 229,870,
B7: 90,000,
B8: 75,000, and
B9: 82,395.
Example 3: Data Entry A Expenditures
1 2 3 4 5 6 7 8 9 10
Salaries Benefits Purchased Food USDA Food Value Supplies Capital Equip. Indirect Cost Overhead Total
B Dollar Amount
C Meal Cost
D Cost % of Revenue
742,000 308,500 909,370 145,108 229,870 90,000 75,000 82,395
10. Next, create a formula for Column C that will allow Excel to calculate the average meal cost by expenditure category. Remember, meal cost is determined by dividing the dollar amount in each category by the total number of meal equivalents. For this spreadsheet, use the 972,777 meal equivalents.
Click on cell C2 which represents Salaries.
Type in the formula =B2/972777. It is important to remember that Excel formulas start with the equal sign. The equal sign tells Excel what follows is a formula, and not just another number. Notice there is no comma in the number representing meal equivalents.
Hit enter and the cost per meal for salaries will appear in cell C2.
To paste the formula in the remaining Click on cell C2. It should contain 0.7628.
Move the mouse pointer to Home at the top left corner of the screen. Click copy. Move mouse pointer to cell C3, click and hold down the left mouse button highlighting C3 through C9. Move the mouse pointer to Home at the top of the screen and click Paste.
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Cells for each of the remaining categories in Column C will populate with the meal cost carried to the 4th decimal place.
Example 4: Meal Cost Calculation Given: Meal Equivalents – 972,777
1
A Expenditures
2 3 4 5 6 7 8 9 10
Salaries Benefits Purchased Food USDA Food Value Supplies Capital Equip. Indirect Cost Overhead Total
B Dollar Amount 742,000 308,500 909,370 145,108 229,870 90,000 75,000 82,395
C Meal Costs
D Cost % of Revenue
0.7628 0.3171 0.9348 0.1492 0.2363 0.0925 0.0771 0.0847
11. To insert the formula for calculating the cost percentage of total revenue, repeat the process used in Column C. The formula must tell Excel to divide the dollar amount in each category in Column B by the total amount of revenue and then convert the value to percent. For this spreadsheet, use the total revenue of $2,491,684.
Click on cell D2.
Type in the formula =B2/2491684*100. This formula coverts decimals to percentages.
Hit enter and the cost percentage to total revenue for salaries will appear in cell D2.
Paste the formula in the remaining cells by following the instructions for determining meal costs in Column C.
You can round the calculations in Column E by choosing 0 decimal places. Type the formula =B2/2491684*100 in cell E2, then copy the formula to cell E9. Find
this box on the ribbon to change the way the numbers appear in the spreadsheet. 123
Example 5: Calculating Percentages of Cost to Total Revenue Given: Total Revenue - $2,491,684 1 2 3 4 5 6 7 8 9 10
A Expenditures Salaries Benefits Purchased Food USDA Food Value Supplies Capital Equip. Indirect Cost Overhead Total
B Dollar Amount
C Meal Costs
D Cost % of Revenue
742,000 308,500
0.7628 0.3171
29.78 12.38
E % Rounded 30% 12%
909,370
0.9348
36.50
37%
145,108 229,870 90,000 75,000 82,395
0.1492 0.2362 0.0925 0.0771 0.0847
5.82 9.23 3.61 3.01 3.31
6% 9% 4% 3% 3%
12. The last step is to total Columns B, C, D, and E. You could type a formula, but in this case it might be easier to use the SUM symbol ( ∑ ) at the top of the screen. Notice it looks sort of like a Capital E written backwards. Highlight rows B2 through E9 with the mouse pointer. Move the pointer to ∑ at the top of the screen and click. The total of all categories will appear in columns B, C, D, and E. Example 6: Column Totals
1 2 3 4 5 6 7 8 9 10
A Expenditures Salaries Benefits Purchased Food USDA Food Value Supplies Capital Equip. Indirect Cost Overhead Total
B Dollar Amount
C Meal Costs
D Cost % of Revenue
742,000 308,500 909,370
0.7628 0.3171 0.9348
29.78 12.38 36.50
E % Rounded 30% 12% 37%
145,108 229,870 90,000 75,000 82,395 2,582,243
0.1492 0.2363 0.0925 0.0771 0.0847 2.6545
5.82 9.23 3.61 3.01 3.31 103.64
6% 9% 4% 3% 3% 104%
13. Save the spreadsheet under a file name of your choosing. For this spreadsheet, save the file as “Expenditure Analysis.”
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Using Pie Charts as a Way of Summarizing Financial Data Activity
Instructions: 1. Open Office 2007 Microsoft Excel. 2. Open the spreadsheet file that contains the data you want to display in a Pie Chart. 3. Click on the Insert tab at the top of the screen. Highlight the labels and data in Columns A and B that you want in the pie chart, i.e., highlight A2 through B9. Note that we are excluding row 10 (Total) because Excel knows the sum internally when you highlight rows 2-9.
4. Click on the Chart Wizard icon at the top of the screen and click on the desired chart or go to Insert, click on the arrow in the right corner of the Chart box to bring up the Insert Chart box.
Select “pie” in the left column.
Next select the desired view (i.e., flat, 3-D, etc.) of the Pie Charts.
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5. Select OK at the bottom of the chart wizard. This brings up your chart.
Dollar Amount Salaries Benefits P. Food USDA Food Value Supplies Capital Equip.
You will note the chart gives you little information. The chart will need to customize with the pertinent information.
Customizing Your Pie Charts The pie chart lacks all of the category names and other data you need to present. To get the category names and any other data
Select the legend area by clicking on the legend.
Move the legend up to the top of the figure.
At the middle of the bottom of the legend box, left click and drag this down to expand the
legend box.
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The chart will look like this
Dollar Amount
Salaries Benefits P. Food USDA Food Value Supplies Capital Equip. Indirect Cost Overhead
To get a percentage breakdown
Click on the main chart area.
Right-click to get the following dialog box
Dollar Amount Salaries Benefits P. Food USDA Food Value Supplies Capital Equip. Indirect Cost Overhead
Click on Add Data Labels. This will give the values of the dollar amount (not the percentages).
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This Pie Chart will appear.
Expenditures
75,000 90,000
82,395
Salaries
229,870 742,000
145,108
Benefits P. Food USDA Food Value
308,500 909,370
Supplies Capital Equip. Indirect Cost Overhead
If you want percentages, right click on the main chart area. The Format Data Label dialog box will appear. You can customize the chart using this box.
3.01, 3% 3.61, 3% 9.23, 9%
Cost % of Revenue 3.31, 3% 29.78, 29%
5.82, 6%
Benefits P. Food USDA Food Value Supplies
36.50, 35%
Salaries
12.38, 12%
Capital Equip. Indirect Cost Overhead
You can modify data label alignments by clicking on each individual set of numbers. For instance, percentages can be moved so they appear below the values by placing the cursor after the comma between the sets of numbers and hitting return. What do these percentages represent? It is important to remember that these percentages represent the proportion of each expenditure category to total expenditures and not to total revenue.
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Another way to modify the data label alignments is to click on the area next to the title of the chart.
Dollar Amount Salaries Benefits P. Food USDA Food Value Supplies Capital Equip. Indirect Cost Overhead
At the top of the ribbon, under the Chart Tools tab, click layout. A new ribbon will appear.
Look at the labels area. You can change the title, data labels, where the labels are located, and the placement of the legend. You can customize the chart for your needs.
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Creating a Pie Chart to Show Meal Cost in Each Category Activity
Instructions: 1. Go back to the Excel Spreadsheet. 2. Before you create the pie chart, you need to change the decimal display to show only 2 decimals for meal costs. This represents a more meaningful tool to the average viewer. 3. If the cells that you want to select for the chart are not in a continuous range, select the first group of cells that contain the data you want in the pie chart. Hold down CTRL, and then select any additional cell groups that you want to include. The nonadjacent selections must form a rectangle. For the pie chart that you are creating
Select the Expenditure labels, A2 – A9, and highlight.
Hold down CTRL and select the meal cost data, C2 – C9.
4. Open the Chart Wizard and repeat all steps. In step 3, type in the total meal cost in the title i.e., Per Meal Costs = $2.65. When you complete the steps, the new chart will appear. The pie charts are ready to print or you can save them in your files for printing later. Indirect Cost, 0.08, 3% Capital Equip., 0.09, 3% Supplies, 0.24, 9%
Per Meal Cost = $2.65 Overhead, 0.08, 3%
Salaries, 0.76, 29%
Benefits P. Food
0.15, 6%
P. Food, 0.93, 35%
Salaries
USDA Food Value Supplies Benefits, 0.32, 12%
Capital Equip. Indirect Cost
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What Does the Meal Cost Pie Chart Represent? The Pie Chart is a very graphic picture of the cost to produce a meal equivalent and which categories of expenditures are taking more dollars. If you are trying to communicate to a group of faculty members that you are spending 76 cents for labor and another 32 cents for benefits, they may not “get the picture.” However, if you distribute this pie chart, it becomes very clear that a huge “chunk” of the $2.65 that it costs to produce a meal equivalent goes for employee salaries and benefits. This type pie chart can be used when communicating the need for increasing the price of meals to school officials, board members, and parents.
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Lesson 11 Pre- and Post-Quiz: 1. Spreadsheets are useful to set up tables of information, but are more useful in the ability to ______ ______ and ______ automatically when values change. a. count meals, sales b. calculate formulas, recalculate c. order food, milk d. check schedules, deliveries 2. Spreadsheet software can be purchased, but is also available free off the internet. a. True b. False 3. Pie Charts can be created using data from a ______. a. Web site b. production record c. work schedule d. spreadsheet 4. Spreadsheets are a great tool when preparing budgets, financial statements, and other tasks that require ______. a. your signature b. calculations c. production records d. meal counts
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Review Pre- and Post-Quiz Lessons 1-5 1. Communication is a) the exchange of money from the sale of food. b) the exchange of ideas, messages, and information by speech, signals, writing, and behavior. c) the value of cost of food used in a specific accounting period. d) the point at which expenditures and total revenue are exactly equal. 2. The two major sources of revenue in most school districts are a) local sources and federal reimbursement payments. b) meal equivalency and meals per labor hour. c) indirect cost and inventory. d) bonus USDA foods and purchased services. 3. Financial management includes the process of defining a) accounts payable and receivable. b) free and reduced priced meals. c) statement of revenues and expenditures. d) financial goals and program objectives. 4. In the meal equivalent conversion formulas a) 3 breakfasts = 1 lunch and 3 snacks = 1 lunch. b) 3 breakfasts = 2 lunches and 3 snacks = 1 lunch. c) other food sales = 3 lunches and 3 snacks = 1 lunch. d) all food sales = 2 lunches. 5. The financial report most often used by school nutrition program directors to analyze whether the expenses of the operation are being managed within the revenues received is a) Statement of Net Assets. b) Statement of Revenues and Expenditures. c) Statement of Revenue. d) Budget. 6. School nutrition directors play a role in providing leadership to fulfill several responsibilities. Two of these responsibilities are a) to establish and maintain financial accountability and to maintain an on-going training program for school nutrition staff. b) to decrease productivity and resources. c) to plan a budget and decrease cost control measures. d) to encourage a team approach and practice bad financial management principles.
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7. There are several categories of expenditures. Three of them are a) accounts payable, accounts receivable, and budget. b) labor, supplies, and indirect costs. c) USDA foods, assets, and inventory. d) capital equipment, accounts payable, and productivity. 8. Three types of budgeting are a) zero, assets, and combination. b) assets, incremental, and combination. c) zero, incremental, and assets. d) zero, incremental, and combination. 9. The school nutrition program’s share of general school district costs incurred for joint purposes such as utility expenditures is called a) special property service costs. b) professional services costs. c) indirect costs. d) miscellaneous costs. 10. The three R’s of business ethics are a) respect, rebate, and revenue. b) rebate, reduced priced meals, and revenue. c) respect, responsibility, and results. d) responsibility, rebate, and revenue. 11. The three types of financial reports used in a school nutrition program are a) Statement of Revenue, Statement of Expenditures, and Budget. b) Budget, Fund Balance, and Statement of Net Loss. c) Budget, Statement of Net Assets, and Statement of Revenue and Expenditures. d) Statement of Assets, Liabilities, and Unreserved/Undesignated Funds. 12. The principles of right or good conduct are a) ethics. b) accountability. c) budget. d) cost controls.
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Review Pre- and Post-Quiz Lessons 6-9 1. ________ is a factor in evaluating productivity and staffing needs. a) Daily participation of students b) Daily participation of teachers c) Daily participation of contract meals d) Daily participation of parents 2. The formula for setting lunch base prices is a) average projected lunch cost + Section 4 reimbursement + USDA food value. b) average projected lunch cost – Section 4 reimbursement + USDA food value. c) average projected lunch cost – Section 4 reimbursement – USDA food value. d) average projected lunch cost + Section 4 reimbursement – USDA food value. 3. Improved computerization and software for financial recordkeeping, tracking purchase orders, and tracking student food selections would be considered a) an innovation. b) financial aspects. c) customer satisfaction. d) a trend. 4. There are three ways to analyze the revenue generated by the school nutrition program. One of those ways is a) to look at how revenue is dispersed. b) to calculate the average expenses per meal or meal equivalent. c) to calculate the average revenue per meal or meal equivalent. d) to look at how expenses are dispersed. 5. Analyzing financial reports can provide you with valuable information about a) patterns and trends and abuse or theft. b) equipment to buy and changes in expenditures. c) accounting errors and qualified employees. d) employees to hire and deviations from financial goals. 6. One thing to remember when using the formula to set meal prices is a) the food value and reimbursement amounts always stay the same. b) the food value and reimbursement amounts change each year. c) the food value and reimbursement amounts are different for each school district. d) only your state agency can tell you what your food value is. 7. How often should inventory of the food in the school nutrition operation be taken? a) annually b) when theft is suspected c) monthly d) inventory should never be taken
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8. The most important areas to consider when planning and budgeting fall under five categories. Three of these categories are a) trends, financial aspects, and the daily weather. b) innovations, internal organization, and the health inspection. c) innovations, customer satisfaction, and the price of adult meals. d) trends, innovations, and customer satisfaction. 9. Most school nutrition programs use the productivity index of _______ to monitor the efficiency of an operation. a) meal equivalencies b) school nutrition assistants c) overproduction of food d) meals per labor hour 10. If the total of all costs percentages is less than 100%, then the operating balance a) increases. b) decreases. c) breaks-even. d) is over budget.
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