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    Determining Selling Price of Food Products

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    12 GAS Solamillo Ma. Nicole C.

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    Determining Selling Price of Food Products

    Uploaded by

    12 GAS Solamillo Ma. Nicole C.
    5 views9 pages

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    © © All Rights Reserved

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    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    5 views9 pages

    Determining Selling Price of Food Products

    Uploaded by

    12 GAS Solamillo Ma. Nicole C.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
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    DETERMINING SELLING

    PRICE OF FOOD
    PRODUCTS
    How is priced determined?
    Two commonly used cost based methods
    are:
    Cost Percentage and
    Mark-up methods
    Food Cost Percentage Method
    • The food cost percentage method is a pricing method that uses a
    standard cost as percentage of sales that ensure profitable operation.
    SELLING PRICE = RECIPE COST
    FOOD COST%
    • The food cost percentage represents the amount
    of material expenses incurred to produce sales
    (food cost x 100/sales)
    • This food cost percentage may vary for different
    establishments. The standard industry percentage
    ranges between 30-40%.
    • Percentage higher than 50% may point out that
    the operations won’t be in business for too long.
    • The goal is to maintain the food cost% as low as
    possible without sacrificing quality.
    the recipe for Chicken ala Kiev has a yield of 4 servings. The total recipe
    cost is P357.50 and the food cost% is 35%. The selling price for each
    serving would be:
    cost per serving = total recipe/Yield
    = P 257.50/ 4
    = P 64.37
    selling price = cost per serving/ food cost%
    = P64.37/.035
    = P 183.93
    = P 184
    • The food cost % method can also be expressed as mark-up factor to
    make computing simpler specially when there are a lot of food items
    to be prices.
    The recipe cost of Chicken ala Kiev is P64.37 . The food cost % is 35%.
    The selling price would be:
    mark-up factor = 1/food cost %
    = 1/.35
    = 2.86
    selling price = cost per serving x mark-up
    = P64.37 x 2.86
    = P184.00
    Mark-up Method
    • The mark-up method or also known as cost-plus.
    • Mark-up is the money added to the recipe cost to
    obtain selling price.
    • Mark-up varies from one establishment to another.
    • The rate of the mark-up is usually based either on the
    prices of competitors, industry standard or the profit
    the owners wanted.
    mark-up = recipe cost x mark-up rate
    selling price = recipe cos + mark-up

    The lamb ragout cost per serving of P58.60. the


    mark-up factor is 2.5
    The selling price would be:
    Step 1: determine Mark-up
    mark-up = cost per serving + mark-up rate
    = P 58.60 x 2.5
    = P 146.50
    Step 2: determine selling price
    selling price = cost per serving + mark-up
    = P 58.60 + P 146.50
    = P 205.10
    = 205.10

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