Income Budget

Forecasted meal equivalents Forecasted patient meals Forecasted promotional meals Sales Price $5.50 $2.30 $3.50 Total # of meals served 225000 200000 7800 432800 Revenue from meals $1,237,500.00 a $460000 $27300 b $1,724,800.00

Food Expenses
Forecasted beginning inventory Forecasted purchases Savings on new recipes Forecasted ending inventory Cost of food used $34,737.12 $1,270,260 ($165,000) c $58,566 d $1,046,694 e

Operating Budget
Employees Dietitian, Admin Dietitian, Relief Supervisor I Supervisor II Supervisor III AM Cook PM Cook Relief Cook Foodservice worker B 8 employees 5 employees 2 employees Foodservice worker A 7 employees 4 employees 12 employees Total Seniority 6 years 1 year 15 years 4 years 2 years 3.5 years 17 years 2 years Hourly Wage $27.50 $19.80 $16.35 $14.75 $14.25 $14.95 $15.85 $12.50 Hours Worked/Pay Period 80 40 80 80 32 80 80 80 Number Pay Periods 26 26 26 26 26 26 26 26 Projected Inflation Salaries/Wages

1.02 1.02 1.02 1.02 1.02 1.02

$34,688.16 $31,293.60 $12,093.12 $31,717.92 $33,627.36 $26,520

5 years 1 year 8 years

$10.75 $9.35 $12.45

80 80 80

26 26 26

1.02 1.02 1.02

$22,807.20 $19,836.96 $26,413.92

2.5 years 1 year 2 years

$8.90 $8.60 $7.90

80 40 20

26 26 26

1.02 1.02 1.02

$18,882.24 $9,122.88 $4,190.16 $271,193.52

Operating Budget
Employees Dietitian, Admin Dietitian, Relief Supervisor I Supervisor II Supervisor III AM Cook PM Cook Relief Cook Foodservice worker B 8 employees 5 employees 2 employees Foodservice worker A 7 employees 4 employees 12 employees Total Hours of Overtime/ Pay Period Forecasted Overtime f Social Security Health Insurance Total Amount Paid PTO Benefits Retirement

$2,601.61 $2,347.02 $906.98 2 2 1 $1,189.42 $1,261.03 $497.25 $2,378.84 $2,522.05 $1,989

3000 3000

$40,289.77 $36,640.62 $13,000.10 $38,286.19 $40,410.44 $32,006.25

$4,925.72 $3,348.42 $3,234.91 $3,393.82 $4,775.09 $2,837.64

$2,601.61 $2,347.02 $906.98 $2,378.84 $2,522.05 $1,989

3000 3000 3000

8 3 2

$3,421.08 $1,115.83 $990.52

$1,710.54 $1,487.77 $1,981.04

24000 15000 6000

$51,938.82 $37,440.56 $35,385.49

$19,522.96 $10,612.77 $6,233.69

$1,710.54 $1,487.77 $1,981.04

7

$2,478.29

$1,416.17 $684.22 $314.26 $20,339.51

21000 12000

$43,776.70 $21,807.10 $4,504.42 $395,486.46 g

$14,142.80 $3,904.59 $5,380.17 $82,312.59

$1,416.17 $684.22 $314.26 $20,339.51

$10,953.42

93000

Supplies
Cost of supplies Savings on paper supplies Total $16,580.10 ($33.80) h $16,546.30

Minor Equipment
Minor equipment cost $12,571.50

Continuing Education
Denver, CO 10 hrs Salt Lake City 5 hrs Total $300 $120 $420 I

Total

$12,571.50

Budget

Income Forecasted cafeteria sales Forecasted patient meals Forecasted promotional meals Total Operating Expenses Employee Salaries/Wages Social Security Health Insurance Miscellaneous (employee incentives) Food purchases Supplies Total Other Expenses Major equipment cost Minor equipment cost Continuing Education General administrative cost Marketing Total Total Expenses Final Balance

$1,237,500.00 $460,000 $27,300 $1,724,800 ($282,146.94) ($20,339.51) ($93,000) j ($300) ($1,270,260) ($16,546.30) ($1,682,592.76) ($10,984) k ($12,571.50) ($420) ($1,000) l ($6,000) m ($30,975.50) ($1,713,568.26) $11,231.74

Operating Statistics
Food cost per meal Labor cost per meal Total cost per meal Meals per labor hour FTE Food Cost Percentage Labor Cost Percentage $2.42 n $0.92 o $3.34 p 21 q 32.4 r 60.70% s 31.10% t

A. Mission Statement

To provide appealing and nutritious food and achieve excellence in customer service and patient care. B. Goal To improve performance of the department by correcting deficiencies in the operation that contributes to growth and development. C. Long-term objectives 1. To increase employee satisfaction by awarding excellent performance and providing an organized work environment. 2. To increase departmental growth and improvement by increasing revenue and good will. 3. To increase patient satisfaction through improving patient meal experience. D. Short-term objectives 1. To increase employee morale by holding monthly in-service meetings for employees and offering additional employee incentives. 2. To increase revenue and goodwill by implementing a new promotional sale item, recipe standardization and cost comparison of recipes used. 3. To improve patient meal experience by augmenting menu appearance and standardization of food quality.

Explanations All forecasted costs have been adjusted for 2% inflation rate and all other changes have been noted below. a. Increased meal equivalent from $4.95 to $5.50 for a $0.55 increased revenue for an ending positive balance. b. We decided to increase revenue and good will through promotional sales. We will hold a weekly four-hour crepe bar. We said that the cost to make crepe is $0.70. Labor is included as one percent of total labor cost as $0.51. We are serving 150 of these crepe meals per month. c. We did food cost comparisons and found that twenty percent of our recipes could be produced with less cost. We saw that existing recipes needed standardization and were changed accordingly. In this manner production waste decreased. Standardization of our recipes increased the quality of our meals. We forecast a savings of $165,000 from these changes. d. Forecasted ending inventory was projected based on data from previous years. e. Beginning inventory + purchases = cost of food available – ending inventory = cost of food used. The food purchases are adjusted for the $165,000 savings mentioned for letter c. f. We projected fifty hours of overtime per pay period in 2012. We reduced overtime per pay period by fifty percent in 2013. This means that the hospital was spending $21906.84 per pay year on overtime. We reduced these costs by fifty percent, saving the hospital $10953.42. We reduced overtime by standardizing recipes, increasing morale, and inservice trainings specific to production time management. g. Includes salaries and wages, social security, health insurance, and overtime. h. The staff has been using paper towels to clean up messes in the kitchen (spilt food, fluid spills) instead of using a mop and reusable rags. We offered an in-service to teach appropriate sanitation and addressed this problem directly. The foodservice was using twelve rolls a month now they only use eight rolls a month. The price of a roll is $0.70. We save four rolls per month at a savings of $33.80 per year. i. The manager will attend fifteen hours of continuing education. The department will pay entrance fees for continuing education events. This year ten hours are planned for a conference in Colorado, and five hours are planned in a local city. j. To the employee of the month we award a $25 gift card for differing department stores and food places. Supervisor II has the responsibility to award the employee of the month as they are in close observation of employee work performance. k. Refer to the capital budget. l. We purchased Serv Safe booklets for each employee. Each month we hold an in-service meeting and highlight a chapter of the booklet each month. This costs us $630 for the booklets. The remaining $370 we use to purchase teaching supplies. m. To make our menu more appealing to our clients we will produce new and more exciting menus with a budgeted $1000. The remaining $5000 will cover the minor cafeteria renovation costs to improve ambiance and good will. n. Cost of food used/number of meals o. Total labor cost to produce meals/number of meals p. Food cost per meal + Labor cost per meal q. Number of meals/total hours worked to produce meals r. Total hours worked/2080 hours per year. FTE is important for our facility to know because we are trying to decrease overtime, for which we need to know the exact number of fulltime employees.

s. Cost of food used/sales. We need to know this percentage to help us to fulfill our objective to keep our food and labor costs fewer than 95%. t. Total labor cost/sales. We need to know this percentage to help us to fulfill our objective to keep our food and labor costs fewer than 95%. Analysis We have made several assumptions that we expect to remedy the existing problems with our facility. The employee morale was low; therefore we boosted their morale by offering them incentives and by slowly making physically appealing upgrades to the cafeteria, hence a more appealing work ambiance. Menus were re-engineered to increase patient satisfaction. This change occurred by the end of 2013. We increased revenue and decreased costs in several ways. First, we introduced a promotional crepe day. This brought an influx in customers, which increased our revenue by June 2013. We standardized poorly written and balanced recipes to decrease production waste and labor production time by the end of fiscal year 2013. We also reduced overtime costs by the first four months of the fiscal year. We purchased new equipment, which increased production capacity. Meal price was increased by $0.45, which brought in revenue October of 2013. Our performance increased in Joint Commission surveys by 30% by the end of 2013. This was in relation to provision of Serv Safe booklets to employees in coordination with monthly in-service trainings regarding food safety topics.

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