TLE G7 Cookery Feb. 3, 2021

Q2W5-TLE G7 Cookery

CALCULATE COST OF PRODUCTION

CALCULATE COST OF PRODUCTION

In this Lesson, you will learn the principles of costing and compute cost of production whenever you want to put up your cookery business

MARKUP

difference between how much an item costs you and how much you sell that item for---its your profit per item.

FIXED COST

 business costs, such as rent, that are constant whatever the quantity of goods or services produced (include rent, mortgage, salaries, loan payments, license fees, and insurance premiums.)

These costs are easier to budget for when opening a restaurant because they don't fluctuate much each month.

VARIABLE COST

• include food, hourly wages, and utilities.

• corporate expense that changes in proportion to production output

• Variable costs increase or decrease depending on a company's production volume; they rise as production increases and fall as production decreases.

• 
  

TOTAL FOOD COST

• Food cost is the ratio of ingredient cost to revenue generated from food sales using those ingredients.

• To calculate food cost for a recipe, add the total cost per item purchased then divide by the amount called for in the recipe

• IMPORTANCE: Maintaining the proper food cost ratio will help you price your items correctly and maximize profit

1. Calculate your peso markup. This is done by subtracting your buying price from your selling price.

Example:

Selling price 15.00

purchase cost/buying price 10.00

_______________________________

Peso markup = 5.00

Decide whether you want to calculate your percentage mark up based on cost or selling price.

If you decide to calculate your percent markup based on cost... use the following formula:

Peso Markup 5.00

Purchase cost/buying price /10.00

_______________________________

Percentage markup = 0.5 or 50%

If you decide to calculate your percent markup based on SELLING PRICE... use the following formula:

Peso Markup 5.00

Selling Price /15.00

_________________________________

Percentage Markup = 0.33 or 33%

Make sure you consistently use either COST OF THE PRODUCT or SELLING PRICE

And peso Markup will always be the same

Using SELLING PRICE will give you LOWER PERCENTAGE MARKUP while using COST will give you a HIGHER PERCENTAGE MARKUP

WHAT IS COST PRINCIPLE?

accounting principle that requires assests, liabilities and equity investments to be recorded on financial records at their original cost

ADVANTAGE OF COST PRINCIPLE

• users of financial statements could know exactly the original value of Assets or Liabilities in the financial statements as it requires NO ADJUSTMENT.

• less affected by counting assumption. Verifying the value of assets or liabilities based on a cost absis is much easier than market value.

DISADVANTAGE OF COST PRINCIPLE

• does not reflect the real value of assets or liabilities in the current market.

• using this, users will get confusing especially when the market value of assets or liabilities are significantly different from original cost.

SAMPLE 1. Calculate the Peso Markup (Php) and Percentage markup given the following data:

Items __________Purchase cost/buying price______ Selling Price

1. Bibingka_______________5.00_______________7.00

2. Cupcake____________8.00________________11.00

3. Turon________________10.00________________14.00

4. Hotcake______________15.00__________________20.00

For #1. For Bibingka, with purchase/buying cost of 5.00 and selling price of 7.00, Peso Markup (Php) is computed as follow:

Peso Markup=selling price - purchase/buying cost

Peso Markup = 7.00-5.00 = Php2.00

Percentage Markup (using buying cost)= peso markup/purchase cost

Percentae markup = 2.00/5.00

Percentage Markup = 0.4 or 40%

For #1. For Bibingka, with purchase/buying cost of 5.00 and selling price of 7.00, Peso Markup (Php) is computed as follow:

Peso Markup=selling price - purchase/buying cost

Peso Markup = 7.00-5.00 = Php2.00

Percentage Markup (using selling price) = peso markup/purchase cost

Percentage markup = 2.00/7.00

Percentage Markup = 0.29 or 29%

For #2. For Cupcake, with purchase/buying cost of 8.00 and selling price of 11.00, Peso Markup (Php) is computed as follow:

Peso Markup=selling price - purchase/buying cost

Peso Markup = 11.00-8.00 = Php3.00

Percentage Markup (using buying cost) = peso markup/purchase cost

Percentage markup = 3.00/8.00

Percentage Markup = 0.375 or 37.5%

For #2. For Cupcake, with purchase/buying cost of 8.00 and selling price of 11.00, Peso Markup (Php) is computed as follow:

Peso Markup=selling price - purchase/buying cost

Peso Markup = 11.00-8.00 = Php3.00

Percentage Markup (using selling price) = peso markup/purchase cost

Percentage markup = 3.00/11.00

Percentage Markup = 0.27 or 27%

For #3. For turon, with purchase/buying cost of 10.00 and selling price of 14.00, Peso Markup (Php) is computed as follow:

Peso Markup=selling price - purchase/buying cost

Peso Markup = 14.00-10.00 = Php4.00

Percentage Markup (using buying cost)= peso markup/purchase cost

Percentage markup = 4.00/10.00

Percentage Markup = 0.4 or 40%

For #3. For turon, with purchase/buying cost of 10.00 and selling price of 14.00, Peso Markup (Php) is computed as follow:

Peso Markup=selling price - purchase/buying cost

Peso Markup = 14.00-10.00 = Php4.00

Percentage Markup (using selling price)= peso markup/purchase cost

Percentage markup = 4.00/14.00

Percentage Markup = 0.29 or 29%

For #4. For hotcake, with purchase/buying cost of 15.00 and selling price of 20.00, Peso Markup (Php) is computed as follow:

Peso Markup=selling price - purchase/buying cost

Peso Markup = 20.00-15.00 = Php5.00

Percentage Markup (using buying cost)= peso markup/purchase cost

Percentage markup = 5.00/15.00

Percentage Markup = 0.33 or 33%

For #4. For hotcake, with purchase/buying cost of 15.00 and selling price of 20.00, Peso Markup (Php) is computed as follow:

Peso Markup=selling price - purchase/buying cost

Peso Markup = 20.00-15.00 = Php5.00

Percentage Markup (using selling cost)= peso markup/purchase cost

Percentage markup = 5.00/20.00

Percentage Markup = 0.25 or 25%

LET'S TRY THIS... On your scratch paper, try to answer the following:

#1. Halo-Halo with purchase/buying cost of 20.00 and selling price of 35.00. Compute for the Peso Markup (Php) and Percentage Markup. For Percentage Markup, compute for both using buying cost and selling price.

ANSWER:

Peso Markup=selling price - purchase/buying cost

Peso Markup = 35.00-20.00= Php15.00

Percentage Markup (using buying cost)= peso markup/purchase cost

Percentage markup = 15.00/20.00

Percentage Markup = 0.75 or 75%

Percentage Markup (using selling cost)= peso markup/purchase cost

Percentage markup = 15.00/35.00

Percentage Markup = 0.43 or 43%

#2. Waffle with purchase/buying cost of 15.00 and selling price of 25.00. Compute for the Peso Markup (Php) and Percentage Markup. For Percentage Markup, compute for both using buying cost and selling price.

ANSWER:

Peso Markup=selling price - purchase/buying cost

Peso Markup = 25.00-15.00= Php10.00

Percentage Markup (using buying cost)= peso markup/purchase cost

Percentage markup = 10.00/15.00

Percentage Markup = 0.67 or 67%

Percentage Markup (using selling cost)= peso markup/purchase cost

Percentage markup = 10.00/25.00

Percentage Markup = 0.4 or 40%

#3. Habhab with purchase/buying cost of 10.00 and selling price of 15.00. Compute for the Peso Markup (Php) and Percentage Markup. For Percentage Markup, compute for both using buying cost and selling price.

ANSWER:

Peso Markup=selling price - purchase/buying cost

Peso Markup = 15.00-10.00= Php5.00

Percentage Markup (using buying cost)= peso markup/purchase cost

Percentage markup = 5.00/10.00

Percentage Markup = 0.5 or 50%

Percentage Markup (using selling cost)= peso markup/purchase cost

Percentage markup = 5.00/15.00

Percentage Markup = 0.33 or 33%

#4. Buko Pandan with purchase/buying cost of 25.00 and selling price of 50.00. Compute for the Peso Markup (Php) and Percentage Markup. For Percentage Markup, compute for both using buying cost and selling price.

ANSWER:

Peso Markup=selling price - purchase/buying cost

Peso Markup = 50.00-25.00= Php25.00

Percentage Markup (using buying cost)= peso markup/purchase cost

Percentage markup = 25.00/25.00

Percentage Markup = 1 or 100%

Percentage Markup (using selling cost)= peso markup/purchase cost

Percentage markup = 25.00/50.00

Percentage Markup = 0.5 or 50%

#5. A bowl of sopas with purchase/buying cost of 15.00 and selling price of 25.00. Compute for the Peso Markup (Php) and Percentage Markup. For Percentage Markup, compute for both using buying cost and selling price.

ANSWER:

Peso Markup=selling price - purchase/buying cost

Peso Markup = 25.00-15.00= Php10.00

Percentage Markup (using buying cost)= peso markup/purchase cost

Percentage markup = 10.00/15.00

Percentage Markup = 0.67 or 67%

Percentage Markup (using selling cost)= peso markup/purchase cost

Percentage markup = 10.00/25.00

Percentage Markup = 0.4 or 40%

Multiple Choice

1. These costs are easier to budget for when opening a restaurant because they don't fluctuate much each month.

• Variable Cost

• Fixed Cost

• Total Food Cost

• Markup

Multiple Choice

2. These costs increase or decrease depending on a company's production volume; they rise as production increases and fall as production decreases.

• Variable Cost

• Fixed Cost

• Total Food Cost

• Markup

Multiple Choice

3. This refers to the ratio of ingredient cost to revenue generated from food sales using those ingredients.

• Variable Cost

• Fixed Cost

• Total Food Cost

• Markup

Multiple Choice

4. This is the difference between how much an item costs you and how much you sell that item for---its your profit per item.

• Variable Cost

• Fixed Cost

• Total Food Cost

• Markup

Multiple Choice

5. X= Selling price-purchase cost/buying price. X refers to:

• Variable Cost

• Fixed Cost

• Peso Markup

• Total Food Cost

Multiple Choice

6. _________ is the accounting principle that requires assests, liabilities and equity investments to be recorded on financial records at their original cost

• Cost Principle

• Peso Markup

• Total Food Cost

• Assets and Liabilities

Multiple Choice

7. For #1. For Bibingka, with purchase/buying cost of 5.00 and selling price of 7.00, Peso Markup (Php) Value is _______.

• Php1.00

• Php2.00

• Php3.00

• Php4.00

Multiple Choice

8. A plate of pansit Habhab with purchase/buying cost of 12.00 and selling price of 15.00 has a Peso Markup of ______ and Markup percentage of (buying cost) of _____.

• Php 3.00, 0.25 or 25%

• Php 4.00, .33 or 33%

• Php 5.00, 0.083 or 8.33%

• Php 6.00, 0.5 or 50%

Multiple Choice

9. A bowl of sopas with purchase/buying cost of 20.00 and selling price of 25.00. Compute for the Peso Markup (Php).

• Php 20.00

• Php 15.00

• Php 10.00

• Php 5.00

Multiple Choice

10. What is the percentage markup if the peso markup is Php5.00 and the buying cost is 10.

• 0.4 or 40%

• 0.5 or 50%

• 0.6 or 60%

• 0.7 or 70%