Northstar Café: Food Cost Accounting

Authors
Lindsay Meermans, Rachel Wilson, Greg Heine
Region
North America
Topic
Accounting & Finance
Strategy & General Management
Length
3 pages
Keywords
inventory
restaurant accounting
cost of goods sold
COGS
food cost
Copyright Holder
Journal of Critical Incidents
Student Price
$4.00
Target Audience
Undergraduate Students
Executive Education

This case explores the vital relationship between the measurement of inventory and income for the restaurant Northstar Café. The case centers on a new accounting intern, Greg, as he learns the intricacies of inventory accounting procedures and their effects on financial statements. After several weeks under the guidance of his informal mentor, Brian, Greg was now responsible for completing the weekly review of inventory count reports and the subsequent profit and loss statement for Northstar’s Beechwold location. With Brian’s help, Greg had already caught a few inventory errors. He was worried there might be more that he was missing. Was there a more efficient way to review these inventory count reports, he wondered?

Learning Outcomes
  1. Calculate food cost using the cost of goods sold model
  2. Analyze the relationship between the valuation of inventory and the measurement of income
  3. Identify ways in which accounting partners impact the operational success of a restaurant
  4. Evaluate the methods currently employed by Northstar Café for inventory accounting and develop additional or alternative procedures for inventory review