Costing a Recipe & Conversion Chart – Lindas Bake and Pack

Costing a Recipe & Conversion Chart

Posted by Chris Reynecke on

COSTING & CONVERSION CHART

 Had a very interesting discussion with one of the many Linda’s family members recently. As per usual the discussion started with Eskom (Hello Darkness My Old Friend) and the influence of load shedding on the baking fraternity. 

Even with a generator or invertor they are in trouble as none of these can supply enough power to use the ovens and sustain their business. As was stated the power outages has a life changing effect on bakers and their families. They now have to plan around these power outages which entail different time zones for them to work in. Their total routine was/is changed with power out. However the rest of the family and friends routine stay the same as there hours do not change. This obviously place a massive burden on the family of those that bake for an income.

It however do not stop with time zones that change, planning need to change to accommodate deliveries to still be on time and so it goes on.

One major concern was that costs that they incur due to power outages, it do have an influence on their profit margins. Ran out of butter we cannot run to Linda’s to buy their 25kgs butter at their special price, they are closed so now they buy at the corner shop a kg at a much higher price and there goes the profit. As they state it is easy to say plan, plan, plan but this is not always possible as clients order mostly on short notice and although they add to their price they cannot scare clients on price because the next order is well in advance and then the client may feel cheated with the previous price.

So through this discussion the customer asked me – do you have a sort of “formula” to do a costing on recipes for baking? The request was because maybe too much guessing go into costs and although it was acceptable previously it is now of utmost importance to be absolutely correct in costing.

The correct costing is important for profits and for proper pricing in a very competitive environment. The price also needs to be fair to the customer.

With this discussion I decided to place on our blog-  how to cost a recipe as well as a conversion chart.

The Linda’s team hope that this will be of assistance to all our family members and those that consider to enter the Linda’s family circle.

 HOW TO COST A RECIPE

  • List all the ingredients in the recipe, allocating a real cost price per ingredient.
  • Write down the exact amount used (in grams - USAGE) next to the ingredient used.
  • Multiply the cost per g/kg by the amount required in the recipe. (this will equate to the total cost per ingredient).
  • Add the actual costs per ingredient to reach the total recipe/batch cost.
  • Sum the total amount used for every ingredient to attain the total batch weight. (usage total)
  • Divide the scaling weight (e.g. 35g) into the total batch weight to calculate the yield of the recipe
  • Divide the yield into the total batch cost to attain a cost per item

EXAMPLE OF COSTING A SPONGE CAKE (TO MAKE CUPCAKES)

INGREDIENTS      COST /Kg     USAGE   ACTUAL COST OF INGREDIENT

Butter                     20.00/500g       400g         (R20.00 ÷ 500 x 400 = R16.00)

Castor sugar          17.50/1000g     400g         (17.50 ÷ 1000 x 400 = R7.00 )

Eggs                       15.00/12           480g (8)    (R15.00 ÷ 12 x 8 = R10.00)

Self-raising flour      10.80/1000g     400g          (R10.80 ÷ 1000 x 400 = R4.32)

Oil                            15.00/750g        20g           (R15.00 ÷ 750 x 20 = R0.40)

 

TOTAL USAGE                     1.700g    R 37.72    TOTAL RECIPE COST

 

SCALING WEIGHT:   35g  (cupcake  (we use a no 10 cookie cup)

YIELD:  (1,700 ÷ 35) = 48 (total weight (usage) ÷ scaling weight)

COST PER ITEM: (CP) (37.75 ÷ 48)  = 79c  (total recipe cost ÷ yield)

SELLING PER ITEM: (SP)  (79c × 3) =2.3 (cost per item x 3 – includes electricity, labour & profit)

Excluding packaging and VAT

GROSS PROFIT: (GP)  1.58  (2.37 – 79c = 1.58 ÷ 2.37 x 100 = 66.6%)

GP %  (SP – CP = GP ÷ SP X 100)  66.6%

 This example of costing excludes VAT (add VAT @ 15% after the selling price)

THE SCALING WEIGHT AND YIELD FOR THIS RECIPE (1.700g) IS AS FOLLOWS:                           

SCALING WEIGHT:  35g  cupcake  (we use a no 10 cookie cup)

YIELD:  (1,700 ÷ 35)  = 48  (total weight (usage) ÷ scaling weight)

COST PER ITEM: (CP)   (37.75 ÷ 48) = 79c (total recipe cost ÷ yield)

SELLING PER ITEM: (SP) (79c × 3)  = 2.37 (cost per item x 3 – includes electricity/labour/profit)

 Excluding packaging and VAT

GROSS PROFIT: (GP)    1.58  (2.37 – 79c = 1.58 ÷ 2.37 x 100 = 66.6%)

GP %       (SP – CP = GP ÷ SP X 100)     66.6%

Test the costing and see if it help.

The Linda’s Team


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