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TECHNOLOGY AND
LIVELIHOOD EDUCATION
COOKERY NC II
(EXPLORATORY)
Quarter 2 – Module 7:
Calculate Cost Production
TLE – Grade 7/8
Alternative Delivery Mode
Quarter 1 – Module 7: Calculate Cost Production
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COOKERY NC II
Quarter 1 – Measurements
and Calculations
Module 7: Calculate
Cost Production
iv
Lesson 7 Principle of Costing
Let Us Learn!
Welcome!
This module is prepared to help you achieve the required learning
outcome, Carry out measurements and calculations in a required
task. This will be the source of information that will enable you to
acquire the knowledge, skills and attitudes in this particular trade
independently at your own pace or with minimum supervision or
help from your instructor.
- Talk to your trainer and agree on how you will both organize the
training of this unit. Read through the learning guide carefully.
It is divided into sections which cover all the skills and
knowledge you need to successfully complete this module.
- Use the self-check questions at the end of each section to test
your own progress.
- When you have completed this module (or several modules) and
feel confident that you have had sufficient practice, your trainer
will arrange an appointment with you to asses you. The result of
your assessment will be recorded in your Competency
Achievement Record.
This module contains the following Lesson:
1. Principle of Costing.
2. Compute Cost of Production.
Learning Objectives:
After reading this information sheet, you are expected to learn and
understand how to Compute/Calculate Cost Production.
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Let Us Try!
Direction. Complete the following table.
Items Purchase Selling Price Peso Mark-Up Percentage
Cost/Buying Price Mark-Up
1. Bibingka 5.00 7.00 _____________ ______________
2. Cupcake 7.00 10.00 _____________ ______________
3. Pulvoron 3.00 4.00 _____________ ______________
4. Chicahron 25.00 35.00 _____________ ______________
5. Kutsinta 6.00 10.00 _____________ ______________
6. Puto 4.00 6.00 _____________ ______________
7. Palitaw 8.00 9.00 _____________ ______________
8. Mansanas 20.00 30.00 _____________ ______________
9. Dalandan 15.00 18.00 _____________ ______________
10. Suman 12.00 15.00 _____________ ______________
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Let Us Study
Learning Objectives:
After reading this information sheet, you are expected to learn the
principle of costing.
Introduction
What is food cost?
Food cost is the ratio of a restaurant’s cost of ingredients (food
inventory) and the revenue that those ingredients generate when the menu
items are sold (food sales). Food cost is almost always expressed as a
percentage known as food cost per Food cost per serving explained.
Before you determine the price of your restaurant’s meals, you have to
know how much they cost to make. Specifically, you need to figure out how
much it costs your restaurant to make one serving of each item on your
menu. In this section, we’ll cover how to calculate your food cost per serving.
Food cost per serving formula
To calculate your food cost per serving (or food cost per menu item), find the
sum of the ingredient cost per serving.
Food cost percentage explained
While some restaurateurs don’t take food cost percentage seriously, you
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shouldn’t be one of them. Maintaining as low of a food cost percentage as
possible (without sacrificing food quality) leaves more gross profit to pay for
other expenses and have revenue leftover.
• What food cost percentage is?
• What the ideal food cost percentage is?
• How to calculate food cost percentage?
• Examples of how to calculate food cost percentage.
What is food cost percentage?
Food cost percentage is the value of food costs to revenue expressed as a
percentage. The figure helps restaurants set menu prices.
What is a good food cost percentage?
To run a profitable restaurant, most owners and operators keep food costs
between 28 and 35% of revenue. With that said, there is no such thing as an
ideal food cost percentage; it varies depending on the type of food they serve
and the restaurant’s overhead and operating expenses.
Each restaurant should calculate their food cost percentage and not rely on
catch-all averages, but the general consensus is that the higher your
total restaurant expenses are (including food costs), the higher your menu
prices need to be.
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How to Calculate Food Cost Percentage?
To calculate food cost percentage, you need to first have values for the
following things:
1. Beginning inventory value.
2. Purchases.
3. Ending inventory
4. Total food sales
Food Cost Percentage Formula
To calculate your food cost percentage, first add the value of your beginning
inventory and your purchases, and subtract the value of your ending
inventory from the total. Finally, divide the result into your total food sales.
How to Calculate Ideal Food Cost Percentage
To find your ideal food cost percentage, you first need to know two values:
• Total food costs
• Total food sales
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How to Set Menu Prices
3 Ways to Lower Restaurant Food Costs
If increasing menu prices results in fewer people eating at your
restaurant, you can decrease your food cost percentage by reducing your
cost per serving. You can do this by:
• Find cheaper vendors.
• Reducing portion sizes.
• Use cheaper ingredients: While it can lower your food cost
percentage, this is usually a last resort. Customers will notice if
your food quality suffers and you risk losing their business as a
result.
Takeaways for Managing Food Cost Percentage
While it might seem like a hassle, carefully controlling your
restaurant’s food cost percentages assures that your restaurant is able to
pay its bills and turn a profit on each sale. In an industry with notoriously
low profit margins, every cent counts.
To recap, here’s how to price menu items at your restaurant for financial
success:
• Determine your food cost per serving for each menu item.
• Calculate your current food cost percentage.
• Find your ideal food cost percentage.
• Adjust menu items to match your ideal food cost percentage.
• Monitor how sales react to those adjustments.
• Explore alternatives to lowering food costs.
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How to calculate mark-up Percentage?
Mark-up is the difference between how much an item costs you, and how
much you sell that item for--it's your profit per item. Any person working in
business or retail will find the skill of being able to calculate mark-up
percentage very valuable.
Here are the instructions:
1. Calculate your peso mark-up. This is done by subtracting your buying
price from your selling price. Example
Selling price 15.00
Purchase cost/buying price - 10.00
Peso mark-up 5.00
2. Decide whether you want to calculate your percentage mark-up based on
cost or selling price. Once you choose which you will be using to calculate, it
is important you stick to the method you choose throughout all your
calculations, or you will end up with faulty data. If you decide to calculate
your percent mark-up based on cost, go on to Step 3. If you decide to
calculate your percent mark-up based on selling price, go on to Step 4.
3. Calculate percent mark-up based on cost. This is done by dividing the
peso mark-up by the cost.
Example
Peso mark-up 5.00
Purchase cost/buying price ÷10.00
Percentage mark up .5 or 50%
4. Calculate your percent mark-up based on selling price. This is done by
dividing the peso mark-up by the selling price.
Example
Peso mark-up 5.00
Selling price ÷15.00
Percentage mark up .33 or 33%
5. Make sure you consistently use either cost of the product or selling price
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to find the percent mark-up on an item. Even though the cost, selling price,
and peso mark-up will always be the same, the percentage mark-up will be
drastically different depending on if you calculate it using selling price or
cost. Using selling price will give you a lower percentage mark-up (assuming
you are making a profit), while using cost will give you a higher percentage
mark-up.
Formula:
Selling Price = Total Cost + Peso Mark-Up
No. of Yield
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Let Us Practice
Self-Check 1.1
Direction. Complete the following table.
Items Purchase Selling Price Peso Mark-Up Percentage
Cost/Buying Price Mark-Up
11. Bibingka 5.00 7.00 _____________ ______________
12. Cupcake 7.00 10.00 _____________ ______________
13. Pulvoron 3.00 4.00 _____________ ______________
14. Chicahron 25.00 35.00 _____________ ______________
15. Kutsinta 6.00 10.00 _____________ ______________
16. Puto 4.00 6.00 _____________ ______________
17. Palitaw 8.00 9.00 _____________ ______________
18. Mansanas 20.00 30.00 _____________ ______________
19. Dalandan 15.00 18.00 _____________ ______________
20. Suman 12.00 15.00 _____________ ______________
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Let Us Assess
Direction. Given the following recipe and its estimated cost, compute for the
total purchase cost and impose a 50% mark-up to determine the selling
price of your product. Yield 24 servings.
Item Unit Cost Total Cost Peso Selling Price
Mark-Up Per Serving
2 K Chicken 115/kilo __________
1 head of garlic 50/kilo __________
20pcs/kilo
4 Tbsp. Soy Sauce 15.00/bottle _________
Approx. 32T
1 tsp. ground black 1.00/small pack ________
Pepper ½ t/pack
½ cup vinegar 12.00/bottle ________
Approx. 2 C/bottle
1 Tbsp. Cooking oil 40.00/bottle _________
Approx. 32T
TOTAL _________ __________ _________
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Let Us Reflect
Mark up refers to the value that a player adds to the cost price of a
product. The amount of mark-up allowed to the retailer determines the
money he makes from selling every unit of the product.
Higher the mark-up, greater the cost to the consumer, and greater the
money the retailer makes.
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Let Us Try Let Us Practice 1.1 Let Us Assess
1. 2.00 - 29%
1. 2.00 - 29% 2. 3.00 - 30% TC PM SPPS
2. 3.00 - 30% 3. 1.00 - 25%
3. 1.00 - 25% 230.00
4. 10.00 - 29%
4. 10.00 - 29% 5. 4.00 – 40% 2.50
5. 4.00 – 40% 6. 2.00 – 33%
6. 2.00 – 33% 7. 1.00 – 25% 1.90
7. 1.00 – 25% 8. 10.00 – 33%
8. 10.00 – 33% 9. 3.00 – 17% 2.00
9. 3.00 – 17% 10. 3.00 – 20%
10. 3.00 – 20% 2.50
TOTAL 120.95 15.118
Lesson 7: Calculate Cost Production
Answer key to Activities
References
Amy Brown, Understanding Food, 2nd Edition, Thomson Woodworth
June Payne, Palacio, Monica Theis, INTRODUCTION TO FOOD SERVICE,
128-130
Mary Frey Ray. Evelyn Jones Lewis. Exploring Professional Cooking,
Revised, Chas A. Bennet Co., Inc., Peoria, Illinois 61614
Sonia Y. de Leon, Libia L. Chavez, Virginia S. Claudia, Matilde P. Guzman,
et al., BASIC FOODS FOR FILIPINOS, 95-100
http://www.ext.colostate.edu/pubs/foodnut/09329.html
http://www.ehow.com/how_4425471_calculate-markup-percentage.html
https://www.lightspeedhq.com/blog/how-to-calculate-restaurant-food-
costs/#:~:text=To%20calculate%20your%20food%20cost%20percentage%2C
%20first%20add%20the%20value,into%20your%20total%20food%20sales.
For inquiries or feedback, please write or call:
Department of Education – Division of Tagum City
Office Address: Energy Park, Apokon, Tagum City, 8100
Telefax: (084) 216-3504
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