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Topic: Food Costing

Reporter: Boticario, Abbie


Course&yr: BEED-IV

Food Cost- A definition

 food Cost is defined as the cost incurred to produce the food to be sold.
 hence, Food Cost % is Mathematically defined as the ratio of the cost of food
to the total sales
 it is Mathematically expressed as:

Food Cost= Cost of the Food x 100


Total sale

Food cost- Interpretation

 The Food Cost is directly proportional to the cost of the food.


-this implies that the higher the cost of the ingredients the higher will
be the food cost %
 The higher the Food Cost % the lower is your profit.
-Food cost is indirectly proportional to the total sales.
-this implies that the higher the sale, the lower the cost of the Food Cost
& and vice versa.

food Cost- Understanding impact on profit.


 The higher the cost of ingredients used prepare the dish the higher is the
Food Cost .
 The higher the Total sale, the lower is the Food Cost and vice versa.

Food Cost- Application and Practical Example


1. Compute cost per unit for each ingredients
Formula: (cost per unit/1000) x quantity used= total cost
Example A:
Salt = 15 g Cost = P 10/ kg

(10.00/1.000g) x 15 = total cost


.001 x 15= .015

Example B:
P.E bags = 3 pcs,, “6x8”
Cost = P45.00/100pcs

(45.00/100) x 3 = Total Cost


0.45 x 3 = P1.35
Cost of P.E bag used =1.35

2. Add total Cost of materials up to packaging for the grand total of direct
cost.
Example:
1 kilo onion 20.00
5 pcs PP bags (25/pack/100 pcs)=
5 pcs x . 025 = 12.50 1.25
1 cup sugar 45.00/kg (4 cups/kg) 11.25
TOTAL 32.5

3. Add Transportation cost up to contigency the grand of indirect cost


Estimated:

transportation cost P 5.00


labor cost(hrs used) 25.00/hrs P50.00
water P 5.00
electricity P 5.00
contigency 5 % of direct cost
32.5 x .5 = 16.25 P 16.25

TOTAL P81.25

4. To compute the Total production cost


(TPC)= direct cost + indirect cost

Direct cost = P 32.5


Indirect cost = P 81.25
TOTAL P113.75

5. To compute for the mark-up


Total Production Cost P 113.75
X Desired mark - up at 50% P 56.88
Amount with % mark up P 190.63

6. To compute for the selling price

(add TPC and desired mark up)


Yield ( 10 packs)

Example:
TPC P 113.75 + 56.88 = 190.63/10
Selling Price P 19.063 or 20 per pack.

Thank you and GODBLESS.