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SNP Allocating Food Service Costs for RCCI's

Allocating food service costs for residential child care institutions.

School Nutrition Program (SNP) Residential Child Care Institutions (RCCIs) must apply one of two costing methods when allocating costs associated with operating their nutrition programs. These costs are reported annually on the June Claim for Reimbursement – School Nutrition Programs (CNFS 71-5). The methods as described below include Method A, Average Cost/Participation, which uses a costed menu and actual participation data, and Method B, Meal Equivalents, which uses meal equivalencies and actual participation data. The following text outlines each of these costing methods and how they should be applied when completing Part III (Cost Incurred) of the claim form:

Item 37

Method A – Average Cost/Participation

The following text instructs claim preparers about calculating food costs under item 37 - Method A.

Twice a year, calculate the cost of a two-week menu and determine (a) the average per-meal breakfast food cost; (b) the average per-meal lunch food cost; and (c) the average per-meal supplement food cost.

Determine the number of eligible meals for each type of meal served (breakfast, lunch, or supplements) for the year. Determine total breakfast, total lunch, and total meal supplement food costs by multiplying the per-meal food cost times the number of eligible meals served. For example, for breakfasts, multiply the per-meal breakfast food cost times the number of eligible breakfasts served.

Determine the fair market value of federally donated food received (refer to the bill of lading) and calculate the amount used during the year.

Determine purchased food costs for breakfast, lunch, and meal supplements by adding the total breakfast food costs, total lunch food costs, and total meal supplement food costs together. Add any additional handling charges for USDA commodities (donated food) received during the year, and subtract the fair market value of donated food used. The result is the amount claimed on item 37 of the claim form. An example cost-to-participation calculation for food is as follows:

Example Cost-To-Participation Calculation for Food Step 1

Meal Type
Average Food Cost/Meal
(Column A)
Number of Meals For the Year
(Column B)
Total Food Costs
(Column A
times Column B)
Lunch (NSLP)
$2.00
2790
$ 5,580
Breakfast (SBP)
$1.50
2790
$ 4,185
Supplements
$ .75
1000
$ 750
Total Cost    
$10,515

Steps to Calculate Fair Market Value - Federally Donated Food

Beginning
(Column A)
Received
(Column B)
Ending
(Column C)
Result
(Column A plus Column B minus Column C)
$4,500
$900
$3,500
$1,900

Average Food Costs Calculation

Food Costs
Total Purchased
(Column A)

Donated Food
Handling Charges
(Column B)

Donated Food
Fair Market Value
(Column C)
Total Average Food Costs
Reported on Item 23 of claim form
(Column A plus Column B minus Column C)
$10, 515
$100
($1,900)
$8,715

Item 38

Labor – Method A

Once a year, conduct a two-week time study on food service employees reflecting hours worked for the reimbursable nutrition programs (National School Lunch, School Breakfast, or Meal Supplements programs) and total hours for that period. Determine the percentage of labor for the reimbursable programs by dividing the total hours worked in the food service program into the number of hours worked for the reimbursable programs. Determine total labor costs for the year. Include all allowable costs. Determine the total reimbursable labor costs for the year by multiplying total labor costs for the year times the percentage of labor for the reimbursable programs. The result is the amount claimed on Item 38 of the claim form. An example cost of participation calculation for labor is as follows:

Step 1

Hours Worked for Reimbursable Nutrition Programs (2-week time study period)
(Column A)
Total Hours Worked in the food service program (2-week time study period)
(Column B)

Percentage of Total labor for NSLP, SBP, and Meal Supplements
(Column A divided by Column B equals percentage)

300
400
.75 (75%)

Step 2

Total Labor Cost for the Year
(Column A)
Percentage of Labor
(Column B)
Total Average Labor Costs to be reported on Item 38 of claim form
(Column A times Column B)
$4,000
.75
$3,000

Item 39

Other – Method A

Costs to be reported on item 39 include supplies, purchased services, equipment, and any other costs associated with the reimbursable nutrition programs that are not reportable under “Food” or “Labor.” To determine the total cost of supplies used, start with the inventory balance for your food service program at the beginning of the year, add all applicable purchases made during the year, and subtract any inventory remaining at the end of the year. Determine the cost of purchased services for the year, and add this cost to the total cost of supplies used. Multiply this total by the percentage of labor calculated above.

Refer to page 33 of the Printable School Nutrition Programs Reimbursement Instruction Booklet, Depreciation of Nonexpendable Food Service Equipment, to determine equipment depreciation costs. Multiply calculated equipment depreciation cost by the percentage of labor calculated above. An example calculation for Other costs is as follows:

Example Calculation of "Other" Costs

Cost Type Total Cost
(Column A)
Percent of Labor
(Column B)
Average Cost
(Column A times Column B)
Total Supplies and
Purchased Services
$800 .75 $ 600
Total Equipment Depreciation
$500 .75 $ 375
Total Average
"Other Costs to Be Reported on Item 39 of Claim Form
    $ 975

Method B

Meal Equivalents

Application of method B requires the assumptions that (1) the cost of two breakfasts equals the cost of one lunch; (2) the cost of one supper equals the cost of one lunch; and (3) the cost of four supplements equals the cost of one lunch. For method B, the share of total food service program costs attributed to each reimbursable program (National School Lunch, School Breakfast, or Supplements) is based on a comparison of the number of meals served for the specific reimbursable program to the total number of meals served for all the programs. This comparison establishes cost allocation percentages by reimbursable meal type that are applied to total costs for the food service program. This calculation produces the cost associated with the reimbursable meal programs.

To apply this method, determine the total number of adult and child breakfasts, lunches, meal supplements, and suppers served during the reporting period. Using assumptions described in (1), (2), and (3) above, calculate the “Lunch Equivalents” as follows: (i.e., 2 breakfasts = 1 lunch; 1 supper = 1 lunch; 4 supplements = 1 lunch)

Calculation of "Lunch Equivalents"

Meal Type Actual Number Served Lunch Equivalent
Child Breakfasts
200
100
Child Lunches
200
200
Child Supplements
200
50
Adult Breakfasts
20
10
Adult Lunches
20
20
Suppers
100
100
Total Lunch Equivalent  
480


Using "Lunch Equivalent" counts, compute the cost allocation percentages for National School Lunch, School Breakfast, and Meal Supplements. This computation is accomplished by dividing the lunch equivalent meal counts by program type by the "Total Equivalent" as follows. Note that adult meals and suppers are not reimbursable.

Calculation of Cost Allocation Percentages

Meal Type Actual Number Served Lunch Equivalent Reimbursable Meals Calculation Cost Allocation
Child Breakfasts
200
100
100
100 ÷ 480
.21 or 21%
Child Lunches
200
200
200
200÷ 480
.42 or 42%
Child Supplements
200
50
50
50÷ 480
.10 or 10%
Adult Breakfasts
20
10
0
n/a
n/a
Adult Lunches
20
20
0
n/a
n/a
Suppers
100
100
0
n/a
n/a
Total Lunch Equivalent n/a
480
n/a
n/a
n/a

Determine the total cost of purchased food, labor (direct and support), supplies and purchased services (direct and support), and equipment depreciation for food service. (For instructions on calculating equipment depreciation, see page 33, Depreciation of Nonexpendable Food Service Equipment.). By using the percentages calculated with the process described above, allocate food service costs among the National School Lunch Program, School Breakfast Program, and Meal Supplements program as applicable.

Calculation of Total Costs

Cost Items Total Cost Cost Allocation*
Breakfast 21%
Cost Allocation*
Lunch 42%
Cost Allocation*
Supplement 10%
Reported Costs by Line Item
Total Purchased Food
$400
$ 84
$168
$ 40
$ 292 (Item 37)
Total Labor
$200
$ 42
$ 84
$ 20
$ 146 (Item 38)
Total Supplies and Purchased Services
$100
$ 21
$ 42
$ 10
$ 73 (Item 39)
Total Equipment Depreciation

$100

$ 21
$ 42
$ 10
$ 73 (Item 39)
Total Cost for Food Services
$800
$168
$336
$ 80
$ 584 (Item 40)

*Cost Allocation by Reimbursable Program Type

Questions: Jackie Quenga | jquenga@cde.ca.gov | 916-322-8313 
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