Jennifer Caratini has recently accepted the job as the Foodservice Director for

Question

Jennifer Caratini has recently accepted the job as the Foodservice Director for Techmar Industries, a corporation with 1000 employees. As Foodservice Director, Jennifer’s role is to operate a company cafeteria, serving 800 to 900 meals per day, as well as an Executive Dining room, serving 100 to 200 meals per day. All of the meals are provided “free of charge” to the employees of Techmar. One of Jennifer’s first jobs is to prepare a budget for next year’s operations.

Since employees do not pay for their food directly, what will Jennifer use as the “revenue” portion of her budget? How do you think this number should be determined?

Explanation / Answer

Any expenses incurred by the employer for the benefit of employees should be considered as perquisites and taken in payroll. Here employees are provided with the meals 'free of cost' and employees do not pay for their food directly.

Hence revenue portion of the budget is the perquisite given by the company.

The employer is not giving allowance but is not charging for the meals provided. Therefore the meals provided should be treated as perquisite.

The value of perquisite should be calculated based on the number of employees and rate per meal.

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