Theoretical vs. Actual (TvA) Reporting

The different sections of your Theoretical vs. Actual (TvA) Reporting reporting handle all of the products that are part of your food cost.

Navigate to Reports> Cost and Variance> TvA Store Summary

TvA Reporting

TvA is a financially driven report which shows variance on expected food cost versus the actual Food cost.

The calculation for TvA:

  • Beginning Inventory Dollar Amount + Purchases Dollar Amount -  Ending Inventory Dollar Amount =  Actual Usage Dollar Amount
  • Actual Dollar Usage - Ideal Dollar Usage =  the Dollar Variance Amount 
  • TvA reports are great for upper-level cost analysis and planning.
  • TvA reports all items that fall into your food cost are accounted for, but they fall into a different section of the report based on how you handle them within DL

Dimensions of TvA

  • Through the sections defined below, we are able to provide an overall picture of your company’s performance on Food Cost taking into consideration all products without any fictional “factors” in the calculations.
  • TvA reporting has drill-downs options for Recipe Cost, Non-Recipe Cost, Total Inventoried Purchases, Thoreatical COGS, Actual COGS, Variance, and Total sales.
  • Within each drill down you can view each ingredient cost, which reports a section for each of your COGS Account
  • You will see Theoretical, Actual, Variance, and Variance percent per ingredient. 

  • You can also see the Total Recipe cost per ingredient. 

Recipe Cost

  • Items that fall into this category are fully maintained in DL in that they are in recipes, they have all of their bid file information set up (inventory and recipe multipliers, ingredients mapped . . . etc), and they are also inventoried every cycle. 
  • These items are truly able to be tracked on a theoretical basis because of this level of setup.

Non-Recipe Cost  

  • Items that fall into this category are inventoried in DL each cycle, but either do not have a recipe multiplier set up in their bid file mapping or do not appear in recipes. 
  • These items are given the same credit as on your regular cost of goods as we cannot provide a true theoretical for them. 
  • If the POS ID that is tied to the Menu Item in Menu Maintenance is not used then you will not get Ideal reporting on you IvA reports and those Items will report under Non-Recipe Cost on your TvA report.
  • This can be the result of incorrectly using POS buttons for the menu item they are not assigned to.
  • We recommend only using POS buttons that were created for that menu item specifically and not reusing old numbers for new menu items to avoid this.

Formula

Theoretical Cost = Recipe Cost (Theoretical Costs of items that exist in a recipe) + Non-Recipe Cost (Actual Costs of Inventoried Items not in a recipe) + Non-Inventoried Purchases

Moving Items to Non-Recipe Cost

 Can be achieved by taking the following steps:

  • Removing an ingredient from all recipes
  • Setting the bid file Recipe Multiplier = 0 and running updates. 

Considerations when moving items into Non-Recipe Cost 

  • First, the system runs the theoretical cost based on recipes and prices
    • Any ingredient that exists in a recipe will show the theoretical cost in this bucket
    • Variance is shown on the drill-down but is not included in the total
  • Next, the system runs the actual cost of any item not in a recipe.
  • Because there is no recipe assigned, it uses actual costs (Beg Inv + Purchases – End Inv).
  • These two numbers (plus the rarely used non-inventoried purchases) are combined to get the overall theoretical cost
  • (warning)So, this means that removing an item from a recipe to place it in non-recipe costs should cause your theoretical cost to increase. 
  • With it in a recipe, only the theoretical counts, and any variance is captured as a difference between actual and theoretical. 
  • When it’s not in a recipe, the theoretical number essentially says Actual = Ideal and counts the whole cost on the theoretical line.
  • The recipe cost does go down, but the overall cost is moved to the non-recipe, which makes the overall theoretical go up.

Non-Inventoried Purchases  

  • Items that fall into this category are purchased under accounts that fall into your food costs but are not inventoried. 
  • They are given credit at the full purchased amount as there is no adjustment for inventory for these items. 

Data Points of Reference 

  • Theoretical COGS $ are based on the last received price on orders for each product
      • Theoretical COGS $ = Recipe Cost  $  + Non-Recipe Cost  $  + Non-Inventoried Purchases $ 
  • Theoretical Recipe Cost = Ingredient Recipe QTY * Menu Mix
  • Actual Recipe Cost = Ingredient Actual Usage * Last Received Price
  • Actual Usage = Ingredient Beginning Inventory $ + Purchase $– Ending Inventory $
  • Sales
    • Pulls NET Sales from POS Department Sales flagged as Type = Food
      • This is configured in POS Admin> Pos Set Up > Department > Type 
    • Sales should match the DSR TOTAL NET Sales by Department
      • Store Summary by POS Sales Department

Market Value 

Q. Where does COGS pull price using Market Value?

  •  Last ordered aka last 'received' price in DL.

  • Enter Order or Enter Manual Receive

    • Exception FDA will only extend bid file prices when Enter Order is used.

    • Manual receives at this site will always use the last received price.

    • When price changes are requested make sure to instruct the user to follow the Enter Order > Receive order process to see updated price in Cogs

FIFO

see FIFO First In First Out in Customer Knowledge Base for more info

Table of Contents

For additional questions or assistance, please submit a support ticket by visiting the Decision Logic Help Center.

All training videos are located in the /wiki/spaces/CKB/pages/1121779733