Feature Overview: COGS Module

Feature Overview: COGS Module

What is the COGS Module?

The COGS module will allow Food & Beverage Clients to track a basic food cost without having to have recipes fully built out. The COGS accounts themselves should be thought of as buckets to hold cost adjustments. The accounts can be assigned to levels or individual items, and any time an item is invoiced, transferred, returned to the vendor, or manually adjusted the cost related to those actions will be assigned to the related account. When users perform Physical Inventories, they will establish starting and ending on-hand and costs for a period. If the user is performing all recommended purchasing tasks, the variance in their Physicals should represent their usage rather than a discrepancy.

If users' end goal is to utilize Actual vs Theoretical reporting, a COGS setup will allow them to start tracking food cost while recipes are being built out and mapped.

Why Use it?

To achieve a basic food cost for product 

Requirements 

  1. COGS accounts must be mapped in POS Item map so that revenue can be tracked
    1. Items without COGS accounts assigned in POS Item map will not have revenue assigned which will prevent cost from being reported accurately
    2. Because the ingredients for most POS Menu Items will be assigned to multiple COGS categories (i.e., a burgers ingredients could include items assigned to Dairy, Protein, and Produce) users can only map COGS Departments in POS Item map. The system then divides each categories cost by the total department revenue individually.
  2. Physical Inventories must be performed regularly
    1. Most COGS reporting pulls data between two physical inventories
  3. Purchasing
    1. Invoices must be entered consistently
    2. Transfers should be created as needed
    3. Returns to Vendor should be created as needed 

Recommendations 

  1. Batch Recipes – utilizing batch recipes for a COGS setup is strongly recommended. This will allow users to include batched items in their physical inventories as well as perform waste adjustments as needed.
  2. Manual Adjustments for waste are not required but strongly recommended.
    1. If manual adjustments for waste are made the variance in Physical Inventories will be closer to representing Revenue. Without performing waste adjustments the variance in a Physical Inventory will represent total usage

Key Features 

  1. Yellow Dog has basic COGS accounts preloaded for clients, but users can add or edit accounts as needed
    1. Typically, Yellow Dog recommends assigning COGS accounts to levels. This will ensure that when items are assigned to levels the correct COGS account will be set automatically. However, if there are items that are outliers COGS accounts can be assigned to specific items as needed
  2. Corresponding Reporting – Yellow Dog provides a variety of reporting to go along with the COGS module.
    1. The COGS detail report will provide a snapshot of activity regarding Sales Cost, Physical Inventory adjustment cost, and purchasing activity cost without having to select two physical inventories as filters
    2. The COGS by item, department or category reports will provide a cost percentage based on activity between two physical inventories.
    3. ‘Not Set’ in COGS reporting indicates that there are items without COGS accounts assigned.

How it Works 

  1. When Physical inventories and purchasing are regularly performed and COGS accounts are assigned in POS Item Map to track revenue the system will be able to calculate a basic food cost.
    1. COGS Formula = (Beginning inventory + Purchasing) – Ending inventory
    2. Food Cost Formula = (Beginning inventory + Purchasing – Ending inventory)/Revenue 

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