7/8

Technology and Livelihood Education

Home Economics

Cookery
Exploratory Course
Quarter 1 Module 5
TLE – Grade 7/8
Alternative Delivery Mode
Quarter 1 – Module 5: Calculate Cost of Production
First Edition, 2020

Republic Act 8293, section 176 states that: No copyright shall subsist
in any work of the Government of the Philippines. However, prior approval of
the government agency or office wherein the work is created shall be
necessary for exploitation of such work for profit. Such agency or office may,
among other things, impose as a condition the payment of royalties.
Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand
names, trademarks, etc.) included in this module are owned by their
respective copyright holders. Every effort has been exerted to locate and seek
permission to use these materials from their respective copyright owners. The
publisher and authors do not represent nor claim ownership over them.
Published by the Department of Education
Secretary: Leonor Magtolis Briones
Undersecretary: Diosdado M. San Antonio

Development Team of the Module

Writer: Cherelyn E. Lagundino

Editors: Ma. Pacencia G. Dancel
Ailene L. Omadto
Annabel L. Guardian
Reviewers: Helen N. Flora, EPS, TLE/TVL
Ma. Nimfa R. Gabertan, EPS, English
Jeffrey D. De Guzman, PSDS
Illustrators: Cid Eduardo A. Equibal Jr., Melani R. Santos
Layout Artists: Cid Eduardo A. Equibal Jr./ Melani R. Santos
Management Team:
DR. JENILYN ROSE B. CORPUZ, CESO VI, SDS
DR. FREDIE V. AVENDAÑO, ASDS
MR. JUAN C. OBIERNA, Chief, CID
DR. HEIDEE F. FERRER, Education Program Specialist
HELEN N. FLORA, Education Program Specialist, TLE/TVL
Printed in the Philippines by Schools Division Office - Quezon City

Department of Education – National Capital Region

Office Address: Nueva Ecija St., Bago-Bantay, Quezon City

Telefax: 3456-0343
E-mail Address: [email protected]
 What I Need to Know

This module was designed and written with you in mind. It is here to help you
master the Calculate Cost of Production in Cookery. The scope of this module
permits it to be used in many different learning situations. The language used
recognizes the diverse vocabulary level of students. The lessons are arranged to follow
the standard sequence of the course. But the order in which you read them can be
changed to correspond with the textbook you are now using.

The module comprises the following lesson:

Lesson 2.1. Principles of Food Costing

After going through this module, you are expected to:

1. discuss the principles of costing;

2. explain the key concepts involved in costing;
3. identify the factors that affect the food cost;
4. perform basic food costing calculation and finding usable yield percentage;
and
5. value the importance of knowing how to calculate cost of production.

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 What I Know

Directions: Read and analyze the statements carefully. Choose the letter of your
answer and write it in your notebook.
1. It is defined as the difference between how much the item costs
and how much it is sold for.
A. Cost C. Yield Test
B. Mark-up D. Standard recipe
2. It is defined as the price at which the products or services are sold to the
purchaser by the seller
A. Buying Price C. Selling Price
B. Recipe Percentage D. Usable Yield Percentage
3. This is the result of the test of yield expressed as a percentage.
A. Cost C. Recipe Percentage
B. Markup D. Usable Yield Percentage
4. The actual cost of the portion served to the guest.
A. As Purchased Cost C. Recipe Percentage
B. Edible Portion Cost D. Usable Yield Percentage
5. It refers to the total cost incurred by a company
to produce a specific quantity of a product or to offer a service.
A. As Purchased Cost C. Edible Portion Cost
B. Cost of Production D. Usable Cost Percentage

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Module
Calculate Cost of Production
5
This lesson contains information and suggested learning activities for
Exploratory Course in Cookery. It covers the fundamental knowledge about the
principles and key concepts of costing and computing the cost of production.

What’s In

Activity 1: Fill Me - In
Directions: Complete the crossword by “filling in” the word using the statement
clue below. Write your answers in your notebook.

Key Concepts of Food Cost

Across Down
2. purchased price Down
4. how much a recipe makes 1. the products price given to
customers
5. profit for each item 3. total cost of food net inventory

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 What’s New

Activity 2: Read, Feel, and Adore Me!

Directions: Read and analyze the poem, then answer the guide questions below.
Write your answer in your notebook.

Haste Makes Waste

(Hasmukh Amathalal)

“Haste turns into waste”

More salt in food spoils the taste
“Hurry up” brings no result
It adds salt into pinch

Understand the depth of sea

Then jump and try to see
The careless venture may cost life
Life journey is like sharp edge of knife

Keep steady behavior in business

That shall earn you honor on the face
People will call you by name and prefer
To purchase all items with nice offers

No work is impossible if pursued with skill

Only care should be taken to stay still
Little mistake may spoil the chance of success
Life has to be steady with changing phase

Nothing can be learnt over night

You have to struggle and fight
It takes long time to acquire skill
All loop holes are to be nicely filled

Make no mistake in pursuing goal

Merely dreams may not invite call
Slow and steady race may yield result
As the foundation may be strongly built

Guide Questions:
1. What is the imagery in the poem?
2. What is the mood of the poem?
3. Who is the speaker of the poem?
4. What is the message of the poem?
5. How do you relate the message to the current lesson?

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 What is It

Lesson 2.1 Principles of Food Costing

Cost of production refers to the total cost incurred by a company to

produce a specific quantity of a product or to offer a service. It may include things
such as labor, raw materials or consumable supplies.
In cooking, food costing is one of the important considerations which greatly
help for effective budgeting.
If you are opening a restaurant or other food business,
where food is being sold, you will always incur costs for food production.
You can determine your food cost as the percentage of your total restaurant sales
that are spent on food products. Food costing is important to know because it
has a direct effect on the profitability of the restaurant.Food costing affects the fina
ncial health of the food business.

How can you figure out the cost of food?

Food cost is the ratio between how much it costs you to make a dish
in raw materials and how much revenue you generate from that dish. Some
of the factors that could contribute to high food and beverage costs include poor
portion control, excessive food costs, theft, waste, and even spoilage.

Here is a very simple and recognized formula:

Food Cost % = (Beginning Inventory + Purchases) – Ending Inventory)

Total Food Sales
For example:
Food Cost % = (3,000.00+ 2,500.00)-800.00
8,000.00
= .59 or 59%

Steps:
1. Take a physical count of the stock in your kitchen.
2. Add your new stock purchases: if you already have a stock in the kitchen
and have also purchased additional stock during the week, you should
add the two together by combining last week's closing stock with this
week's purchases.
3. Subtract your final inventory, after all sales for the period have
been completed.
4. Divide the value by the sales amount.

KEY CONCEPTS OF FOOD COSTING

As Purchased (AP)
Product state when delivered before manufacturing or fabrication.

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Fabrication
The process of bringing product to its functional state from
the "as purchased" stage. A manufactured product is one which was
"broken down" for use in a recipe.

Remember:
Scrap & trimmings are the natural result of the manufacturing process.

Yield Test
It is performed during the manufacturing process to find out
how much product can be served to the guests? The critical factors in determining
a product’s yield are the amount received (AP weight)
and fabricated amount (EP weight).

Usable Yield Percentage

The result of the yield test is expressed as a percentage.

Edible portion weight

Usable Yield Percentage = x 100
As purchased weight

Example:
Given: Delivery weight of pineapples -3 kg.
Price -Php 150.00/ kg.
After fabrication or manufacturing- 500 g of scrap
300 g of trimmings
2,200 g of segments for service
What’s the usable yield % for the pineapples?

Edible portion weight

=X 100
As purchased weight

2.2 kg
= x 100
3 kg

= 0.73 x100 = 73%

What is the As Purchased (AP) cost per unit of measure?

Example: The chef purchased a total of 3 kg of pineapples for a total of
450.00.

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AP cost per unit = Total AP cost = Php 450.00 = Php 150/kg
Total Quantity Purchased 3 kg.

Edible Portion (EP) Cost

The actual cost of the portion served to the guest. In this amount, it reflects
the value of scrap and trimmings.

AP COST Php 450.00

Edible Portion Cost = = = Php 616.44
Usable Yield % 73 %

While the chef only charged Php 450.00, the real effect on the
restaurant is Php 616.44, after the loss of the product is considered.
When costing a particular recipe, the cost of the Edible Portion (EP)
must be calculated as per unit figure.
The Edible Cost per unit shall represent a unit of measure specific to
the quantity in the recipe.

EP Cost per unit = EP cost for total purchase

Total Quantity Purchased

Example:
EP Cost (total purchase): Php 616.00 = Php 205.33/kg
Total Quantity Purchased: 3 kg

Q-Factor
A Q-factor is the cost of everything extra needed in the development
and service of the menu item. Typical Q-Factors add about 10% to the food cost.
It is a mark-up applied to the cost of a product. It should reflect the
cost of seasonings and other small percentage cost products.
Calculating an actual Q-factor requires specific financial data from the
businesses monthly or quarterly records.

Examples of Q-factor Costs:

Paper = 2.8%
Waste = 3.0%
Condiments = 1.2%
Accompaniments = 1.5%
Cooking Medium = 1.5 %
TOTAL Q-Factor = 10%

Q-factor = Food cost x 10 %

For Example:
Q-factor = Php. 500 x 10%
= Php. 50.00

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Or another formula:
Q-factor = Total Cost of Q Items during a period of Time
Gross Food Sales during a Period of Time

= Php. 50.00
Php. 1000. 00

=.05 or 5%

Things You Can Do To Help Manage Food Costs

1. Monitor the food prices.

It helps to keep track of food prices and to know whether they are going
to rise or fall.

2. Conduct inventory regularly.

Conduct an inventory of your food, beverages and supplies at least
once a week. This helps you keep track of your costs. When you do regular
inventory, you have a better idea of what is being used, lost, or even stolen.
You can use your usage rate to decide the cost of the menu item and
profit line.

3. Join a Purchasing Group

Enter the purchasing group to enjoy lower food prices. Why? Due to the
amount of buying power, manufacturers frequently bid lower prices.

4. Spend time in planning work preparation.

Food that comes packaged is more costly than food that isn't packaged.
For example, instead of buying chopped cabbage or carrots, buy the cabbage or
carrots in piece and cut them. And, instead of buying pre-made
hamburger pies make your own.

5. Study Product Specifications

You know what you're paying for. For example, if you're making a mango
shake, do you really need a product No. 1 or product No. 2 mango?

6. Manage Waste
Keep track of all the waste that the restaurant creates.
Using a waste map to write down all of the following:
1. The food returned because it was improperly made.
2. Food spilled in the kitchen or on the floor.
3. The food was burned in the oven.
4. Additional part sizes that are thrown away.

7. Portion the food properly.

Food waste will easily eat up your bottom line. Your aim is to serve just
the right amount of food to the customer.

8. Price your item correctly

Menu pricing is an essential aspect of controlling the food prices.
With reasonable price of your menu items, your customers are more likely to
visit again and again, and you make a profit.

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 Cost of Production

Standardized recipe that has been developed, tested and proven to

produce a consistent product using the same ingredients and to yield a given
quantity or portion of a single preparation. In food costing, recipe standardization is
important because it helps you to manage your cost of production.
The food cost percentage is calculated by taking into account the cost of
the goods sold and dividing it by the revenue or sales of the finished product.
Typically, food cost can range from 25% to 35 % depending on the type of business,
dish, etc. Knowing the food cost percentage of your restaurant will help you
make good business decisions, such as how much to charge for products on your
menu for optimum profitability or when it is time to search for new suppliers.
The term selling price' is defined as the price at which the products or
services are sold to the purchaser by the seller. In other words, it is the market
value or the negotiated exchange value that allows the customer to purchase goods
or services. It is also known as list price, quoted price, sales price or sale price.

How to Calculate Mark-up Percentage

Mark-up is the difference between how much an item costs and how
much you sell it for. In short, your profit for each item. The concept of percentage
is used to measure the tendency of the value in relation to the original value.
This has a major business application when measuring profit and loss percentage.
Any person working in a business or retail sector will find the ability to calculate
a mark-up percentage very valuable.

Directions:
1. Calculate your peso mark-up. This is done by subtracting your
purchase price/ cost from your sales/ selling price.

Example:
Selling Price = Php 50.00
Purchase cost/ buying price = Php 35.00
Peso mark-up = Php 15.00

Peso mark-up = Selling Price – Purchase Cost or Buying Price

= Php 50.00- Php 35.00
= Php 15.00

2. Decide whether you want to calculate your percentage mark-up

based on your cost or sales price. It is important to stick to the
method you have chosen for all your calculations, or you will end up with
faulty data. If you decide to calculate your percent cost-based mark-up,
go to step 3. If you decide to calculate your percent mark-up based on
the selling price, go to Step 4.

3. Calculate the percent mark-up based on the cost. This is done by

dividing the peso mark-up by the cost.

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 Example:
Peso Mark-up Php 15.00
Purchase Cost/ buying price Php 35.00
Percentage mark-up .30 or 30 %

Peso Mark-up
Percentage mark-up =
Purchase Cost/ buying price

4. Calculate your mark-up based on selling price. This is done by dividing the peso
mark-up by the selling price.
Peso mark-up - Php 15.00
Selling Price - Php 50.00
Percentage Mark-up - .30 or 30%

Peso Mark-up
Percentage mark-up =
Selling Price

5. Make sure that you consistently use either cost of the product selling
or selling price to find the percent mark-up of 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
how 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.

What’s More

Activity 3: Solve Me Now, Check Me Later!

Directions: Given the following recipe and its estimated cost, compute for the total
purchased cost and imposed 35 % mark-up to determine the selling price of your
product. Copy and write the answer in your notebook. Yield = 30 servings
Note: Use two decimal places in rounding off numbers.

Ingredients Unit Cost Total Cost Peso Mark- Selling Price

up/serving per Serving
3 k chicken Php 130.00/kilo
2 heads of Php 60.00/ kilo
garlic 20 heads/ kilo
7 Tbsp. soy Php 18.00/bottle
sauce Approx. 32 Tbsp.

2 tsp. ground Php 1.00/small pack ½

black pepper tsp. per pack

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 ½ cup Php 15.00/bottle
vinegar Approx. 2 cups / bottle
3 Tbsp. Php 60.00/bottle
cooking oil Approx. 32 T
TOTAL

What I Have Learned

Activity 4: It’s good to be True!

Directions: Answer the following questions honestly. Choose Happy Face if you
agree with the statement and Sad Face, if not. Copy and put your answer in your
notebook.

Question
1. Have you learned something today?
If yes, what is it?
2. How do you feel about the lesson?
3. Are you happy with the activities given?
4. Is accuracy and honesty essential to food costing?
5. Do you want more to improve
your costing skills and knowledge?
6. Is there any part of the lesson that you feel
confused? If yes, what is it?

Assessment

Directions: Match the statement in Column A with the answer in Column B. Write
the letter of your answer in your notebook.

Column B Column A

1. Food Cost a. buying price

2. Mark- up b. actual cost of the portion served to guest.
3. Purchased Cost c. result of yield test expressed in percentage
4. Cost of Production d. the difference between how much an item costs
5. Standardized Recipe you and how much you sell it for.
e. recipe that has been developed, tested and proven
f. total cost incurred by a company to produce a
specific quantity of a product or service
g. cost of everything extra needed in the service or
menu item.

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 h. ratio between how much raw materials cost and
generate revenue

What I Can Do

Activity 5: Think, Solve and Write!

Directions: Read and analyze the situation below, and then answer the following
guide questions below. Copy and write the answer in your notebook.
Case Study Number 1

You bought 2 kilograms of mangoes, the price per kilo is Php. 160.00.
After fabrication, you had 500 grams of scrap, 100 grams of trimmings and 1,400
grams of segments for service.
Guide Questions:
1. What is the usable yield percentage for the mangoes?
2. What is the as purchased (AP) cost per unit measure?
3. What is the edible portion (EP) cost?
4. What is the edible portion (EP) cost per unit?

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 Additional Activities

Activity 6: Count on Me, Stand by Me!

Directions: Compute the peso mark-up and percentage mark-up. Copy and put
your answers in your notebook.
Note: Use two decimal places in rounding off numbers.

Items Purchase Selling price Peso Percentage

cost/buying mark-up mark-up
price
Kutsinta Php 3.00/pc. Php 5.00/pc.
Cup Cake Php 7.00/pc. Php 10.00/pc.
Leche Plan Php Php100.00/mold
75.00/mold
Maja Blanca Php 8.00/slice Php 10.00/slice
Pancit Bihon Php Php
15.00/serving 20.00/serving

ADDITIONAL ACTIVITIES!
Items Purchase Selling price Peso mark- Percentage
cost/buying up mark-up
price
Kutsinta Php 3.00/pc. Php 5.00/pc. Php 2.00 .67 or 67%
Cup Cake Php 7.00/pc. Php 10.00/pc. Php 3.00 .43 or 43%
Leche Plan Php Php100.00/mold Php 25.00 .33 or 33%
75.00/mold
Maja Blanca Php Php 10.00/slice Php 2.00 .25 or 25%
8.00/slice
Pancit Bihon Php Php Php 5.00 .33 or 33%
15.00/serving 20.00/serving

WHAT’S MORE!

Ingredients Unit Cost Total Cost Peso Mark- Selling Price

up per Serving
3 k chicken Php 130.00/kilo Php 390.00
2 heads of garlic Php 60.00/ kilo Php 6.00
20 heads/ kilo
7 Tbsp. soy Php 18.00/bottle Php 3.92
sauce Approx. 32 Tbsp.

2 tsp. ground Php 1.00/small Php 2.00

black pepper pack

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 N 15
WHAT’S NEW! WHAT CAN I DO!
CASE STUDY NO. 1
ANSWERS GIVEN:
MAY VARY…. purchased mangoes - 2 kg.
price - Php 160/kg
after fabrication:
500 g scrap
WHAT I HAVE 100 g of trimmings
LEARNED! 1,400 g segments of service
ANSWERS 1. Usable yield % of mangoes = 1.4 kg/2kg * 100 = 70%
MAY VARY…. 2. AP Cost per unit measure= Php 320.00/ 2kg = 160/kg.
3. Edible portion cost=
Php 320.00/ .70= Php 457.14
4. Edible cost per unit =
Php 457.14/2kg.=Php228.57
WHAT’S IN! ASSESSMENT! WHAT I
I. MATCHING KNOW!
Across TYPE
MULTIPLE
2. Buying Price CHOICE
1. H
4. Yield 2. D
1. B
3. A
5. Mark-up/Markup 4. F 2. C
5. E
Down 3. D
1. Selling Price 4. B
3. Food Cost 5. B
Answer Key
serving serving 411.37
Php 18.71/ Php4.80/ Php. TOTAL
Approx. 32 T oil
Php 5.70 Php 60.00/bottle 3 Tbsp. cooking
bottle
Approx. 2 cups /
Php. 3.75 Php 15.00/bottle ½ cup vinegar
½ tsp. per pack
References
 Commercial Cooking Exploratory 7/8 K to 12 by DepEd
 Rondilla, Aida H., et. Al. Cookery Technical-Vocational-Livelihood Track: Home
Economics Strand K-12, Volume 1. Adriana Printing Company, Inc., Quezon City,
2017.
 Rafael, Editha T. Technology and Livelihood Education III. Phoenix Publishing
House, Inc., Quezon City, 2005.
 Caballero, Xandra Mae E. Career pathways in TLE K t0 12 Grade 7.Sunshine
Interlinks Publishing House, Inc., Quezon City, 2013.
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 https://www.slideshare.net/Kborgman1/tle-commercial-cooking-2
 https://www.theculinarypro.com/calculating-food-cost
 https://www.slideshare.net/cathiprofitko/food-costing-57433581
 https://upserve.com/restaurant-insider/4-things-know-food-cost-percentage/
 https://corporatefinanceinstitute.com/resources/knowledge/finance/cost-of-
production/
 https://www.hotelschool.co.za/basic-principles-costing-food-restaurants/
 https://psu.pb.unizin.org/hmd329/chapter/ch7/
 https://www.slideshare.net/cathiprofitko/food-costing-57433581copyright 2015-
International Culinary Center
 https://www.poemhunter.com/poem/haste-makes-waste/
 https://www.almostanauthor.com/understanding-poetry-5-questions-to-ask/
 https://clipartlibrary.com
 https://wilipedia.com
 www.chegg.com
 http://puzzlemaker.discoveryeducation.com/CrissCrossSetupForm.asp
 http://puzzlemaker.discoveryeducation.com/code/BuildCrissCross.asp
 https://restaurantengine.com/help-manage-food-costs/
 https://www.lightspeedhq.com/blog/how-to-calculate-restaurant-food-costs/

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Telefax: (632) 8634-1072; 8634-1054; 8631-4985

Email Address: [email protected] * [email protected]

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