Stock control
Regular inventories give you the cost of what was consumed and reveal shortages that would otherwise go unnoticed.
What inventories are for
- Working out the cost of goods consumed.
- Spotting shortages and their causes.
- Applying FIFO and reducing spoilage.
- Seeing what needs restocking and planning purchases.
The cost of what was consumed
Opening inventory + purchases in the period − closing inventory = cost of goods consumed. Both inventories are counted and valued with the same method.
A spreadsheet or accounting system gives you that figure, which then feeds the income statement and the pricing coefficient.
Spotting shortages
If you write down what was recorded in orders or invoices next to the consumption according to inventory, you can compare both. A difference means unrecorded shortages, stock leaks or billing errors.
Sometimes procedures need to change and sometimes action must be taken with staff or outsiders. Without stock control, you never find out what's going on.
Raw material yield
Choosing the right size of what you buy (a plant, a bird, a cut) is also cost control: the same product can yield perfectly for one dish or cause heavy losses if the size isn't right.
Formulas to practice
Cost of goods consumed
How much stock was used in the period, from the inventories and purchases.