TECHNOLOGY

7/8
AND LIVELIHOOD
EDUCATION

HOME ECONOMICS
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 7&8
COOKERY
EXPLORATORY COURSE
GRADE 7 AND GRADE 8

Module 5:
Calculate Cost of Production

Development Team of Modified Strategic Instructional Material

Author : MARIE JOIE B. YUVIENCO/ SST-II/ SAN SIMON H.S.

Editor : MARIA CARMEN M. EVANGELISTA Education Program Supervisor EPP/TLE/TVL/EsP
Layout Artist:Alzien S. Malonzo – MT-1 / Senior High School in Apalit
Princess Joy O. Bondoc – T1 / Suclaban Elementary School
Management Team:
Zenia G. Mostoles, EdD, CESO-Schools Division Superintendent
Leonardo C. Canlas, EdD-Assist. Schools Division Superintendent
Rowena T. Quiambao, Assist. Schools Division Superintendent
Celia R. Lacanlale, PhD, Chief, CID
Maria Carmen M. Evangelista – EPS – EPP/TLE/TVL/EsP
Ruby M. Jimenez, PhD, EPS-LRMS
June D. Cunanan, ADM Division Coordinator

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 WHAT I NEED TO KNOW

Cooking always comes with a price from the tools and equipment up to the list of
ingredients, all have corresponding cost. In our world where prices of commodities are
in a constant rise, we have to be practical and wise consumers. This lesson will be
beneficial to both consumers and aspiring food entrepreneurs.
Knowing the cost needed to produce a dish greatly helps in our decision making,
on which product to choose or which to avoid. Moreover, keeping a data on the
materials used together with their correct amount helps a consumer in buying the right
amount he or she needs. On the same note, someone who would wish to enter into
food business will be properly guided with the amount needed in order to produce the
products as well as the selling price.
Learning Competencies:

1. Discuss principles of costing

2. Compute cost of production

WHAT I KNOW

Now let us see how well you still remember our previous lessons. Determine the peso
mark up with the given details found in the table. Do this on your notebook.

Purchase
Peso Mark
Items Cost/ Buying Selling Price
Up
Price
Pandesal 1.00 2.00 1.
Chicharon 25.00 35.00 2.
Tocino 45.00 55.00 3.
Salted Egg 9.00 12.00 4.
Egg 4.00 6.00 5.
Milk Fish 120.00 140.00 6.

WHAT’S IN
Let me take you now to our exciting lesson. Meet the following characters who
will give you some ideas about ingredients that you can use as substitute in cooking.

Hi! I am Butter. When I am not around, you

can use Margarine as my substitute.

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 Hello there, I am 1 ounce square unsweetened
chocolate. People use me as a substitute ¼ cup of
Cocoa

They call me Lemon. If you need 1 teaspoon of

my juice but I am not around, you can use ½
teaspoon of vinegar instead.

I am Sour Cream and I am not easy to find. Should

you need me but you can’t find me, you can always
substitute me by adding 1 tablespoon of lemon juice
or vinegar to a cup of all-purpose cream.

WHAT’S NEW

Let us take the example below!

Princess wants to cook 2kg of chicken adobo and sell it to her colleagues. However, she
does not know how to compute her expenses in order to know how much she will sell
each serving of adobo. Her recipe yields 24 servings. In addition, she wants to apply 50%
mark up in her total cost. Help her in doing the computation on a sheet of paper.

To get the 50% markup...

Multiply the Total Cost by .50

Item Unit Cost Total Cost

2Kg Chicken P140.00 per kilo 1.
P120.00 per kilo (each kilo
1 head of garlic 2.
contains 20 pcs of garlic)
P45.00 per litter (each litter
2 cups soy sauce 3.
consist of 4 cups)
P2.00 per pack (each pack
1 tsp ground pepper approximately contains ½ 4.
tsp)
P40.00 per litter (each litter
½ cup vinegar consist of approximately 4 5.
cups)
P40.00 per litter (each litter
¼ cup cooking oil 6.
consist of 4 cups)
Total Cost: 7.
50% Peso Mark Up 8.

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 WHAT IS IT

CALCULATING COST OF PRODUCTION

Definition of Terms
Cost is commonly defined as “sacrificed resources” for a particular thing. It is anything
that can be measured in terms of money.

Costing is a process of determining the cost. It is the technique for ascertaining the cost
of production of any product or service in the business organization.

Cost of Production refers to the total sum of money needed for the production of a
particular quantity of output.
How to Calculate Mark-up Percentage

Mark-up is the difference between how much an item costs you, and how much you
sell that item for--it's your profit per item. Any person working in business or retail will find
the skill of being able to calculate mark-up percentage very valuable.

Instructions
1. Peso Mark-up is computed by subtracting your buying price from your selling price.

Example
Selling price 15.00
Purchase cost/buying price - 10.00

Peso mark-up = 5.00

2. Percentage Mark-up can be computed in two ways: based on buying price or based
on selling price.

Based on buying price or purchase Divide the Peso Mark-up value with
cost: the buying price.
Example:
Peso mark-up 5.00
Buying price ÷ 10.00
Percentage mark-up = .5 or 50%
Based on selling price: This is done by dividing the peso
mark-up by the selling price.
Example:
Peso mark-up 5.00
Selling price ÷ 15.00
Percentage mark-up = .33 or 33%
Note: 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.

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 WHAT’S MORE

Hi I am Pete, let me add more information to

what Tim has already taught you.

Importance of Documenting Cost of Production

1. It gives reference data on the materials used together with the correct magnitude
2. It determines the economic viability of the product
3. Records serve as a basis for planning of selling cost
4. Records greatly help in making decisions

Steps in Doing Cost of Production

1. Weigh or measure all materials and ingredients needed.
2. Make a necessary listing of all materials and ingredients used. It is important to
note how much or how many. This is step is called documenting.
3. Lastly, create a production cost with these data included: items, quantity,
equivalent measurement (wt, ml, gms), price per unit and cost.
Sample Cost of Production
Product: Scrambled Eggs ala King

Equivalent Price per

Items Quantity Cost
Measurement Unit
Cooking Oil 2 Tbsp 30 ml 45.00/
2.00
1000 ml
Eggs 4 Pieces 4 Pieces 6.00/
24.00
piece
Salt ½ tsp 2 grams 15.00 / ½
1.00
kilo

ENRICHMENT

A. Supply this table with the missing data. Use analogy and cost of production
calculation in answering this activity on your notebook.

Equivalent Price per Unit

Items Quantity Cost
Measurement
Pork 2kg 1. 2. 600.00
Lettuce 3. 4. 130.00/kilo 65.00
Soybean 1 Cup 5. 160.00/500ml 6.
Paste
Onions 2 pieces 100g 50.00/kilo 7.
(each kilo
contains
approximately
20 pieces)

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B. Match the items in column A with those in column B. Write the letter of your answer
on your notebook.

_________1. Cost A. This is commonly defined as “sacrificed resources”

for a particular thing

_________2.Cost of Production B. The difference between how much an item costs

you, and how much you sell that item for
_________3. Peso Mark-up C. It is a process of determining the cost

_________4. Mark-up D. It is computed by subtracting your buying price

from your selling price
_________5. Costing E. It refers to the total sum of money needed for the
production

C. Find the missing value in each problem. Write your answer on your notebook.
1. Trishia bought salted eggs for P7.00 per piece. She decided to sell for P13.00 each.
Peso Mark-up: __________

Percentage Mark-up based on buying cost: _________

Percentage Mark-up based on selling price: _________

2. Rein is selling chicken nuggets. She was able to produce 36 nuggets from P300.00
production cost. She intends to have at least 50% mark-up.
How much is the cost of production of each nugget? __________

How much should she sell her nuggets to get a 50% mark-up? __________
How much is the Peso Mark-up of her product? __________

3. JR is selling spaghetti. Each tab is sold at P30.00. The total of his expenses is P600.00.
And, he was able to produce 35 tabs of spaghetti.
Peso Mark-up: __________

Percentage Mark-up based on buying cost: _________

Percentage Mark-up based on selling price: _________
4. Abelee Marie is selling embutido. She was able to produce 50 embutido from P400.00
production cost. She intends to have at least 50% mark-up.
How much is the cost of production of each embutido? __________

How much should she sell her embutido to get a 50% mark-up? __________
How much is the Peso Mark-up of her product? __________

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 REFLECTION

Calculating cost of production helps aspiring

entrepreneurs, parents and home managers in keeping
track of their expenses. For entrepreneurs it will help you
in managing your budget and prices. For parents and
home managers, it will help you develop a proper
spending pattern; what to buy and how much to buy.

APPLICATION

Now, let us apply what you

have learned.

A. Your teacher asked you to make an income generating project. She wants you to
choose a product that you want to sell. However, before letting you sell your products,
she is asking for you to prepare a cost of production. Prepare your cost of production
on your notebook.
Prepare a Production Cost from the Given Format

Production Cost
Product: ___________________________________________

Raw Materials and Ingredients

Equivalent Price per

Items Quantity Cost
Measurement Unit

Total Cost

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 ASSESSMENT

Let us train your brain!

Choose the letter of the correct answer. Write your answer on your notebook.
_________1. Which of the following is the difference between how much an item costs
you, and how much you sell that item for--it's your profit per item?

A. Costing B. Cost of Production C. Mark-down D. Mark-up

_________2. What is the process of determining the cost?
A. Costing B. Cost of Production C. Mark-down D. Mark-up

________3. Peter was selling donuts. He had a 5 peso mark-up from his 10 peso purchase
price for each donut. How much is the selling price of each donut?

A. 5 B. 10 C. 15 D. 20
________4. Which of the following refers to the total sum of money needed for the
production of a particular quantity of output?

A. Costing B. Cost of Production C. Mark-down D. Mark-up

________5. Ohmar is computing the percentage mark-up of his empanadas based on
their buying price. The Peso mark-up is 5.00 while the buying price P20.00. What is the
percentage mark-up based on the buying price?
A. 25% B. 35% C.45% D. 55%

_________6. Ihrus was selling kakanin. He had a 15 peso mark-up from his 50 peso
purchase price for each kakanin. How much is the selling price of each kakanin?

A. 50 B.55 C. 60 D. 65
__________7. Which of the following is anything that can be measured in terms of
money?

A. Cost B. Cost of Production C. Mark-down D. Mark-up

__________8. Which of the following is NOT an importance of documenting cost of
production?

A. It gives reference data on the materials used together with the correct magnitude
B. It will not determine the economic viability of the product
C. Records serve as a basis for planning of selling cost
D. Records greatly help in making decisions
___________9. Abel is computing the percentage mark-up of his yema cake based on
their buying price. The Peso mark-up is 20.00 while the buying price P100.00. What is the
percentage mark-up based on the buying price?

A. 15% B. 20% C.25% D. 30%

__________10. Noel is computing the percentage mark-up of his fish lumpia based on
their selling price. The Peso mark-up is 50.00 while the selling price is P100.00 (per pack).
What is the percentage mark-up based on the selling price?
A. 25% B. 30% C.45% D. 50%

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 B. REFERENCES
C. Commercial Cooking K to 12 – Technology and Livelihood Education
D. https://www.eFinanceManagement.com (retrieved May 20, 2020)
E. https://www.google.com.ph/imghp?hl=en&tab=ri&authuser=0&ogbl (retrieved
May 23, 2020) and (July 16, 2020)
F. (Please follow this example in citing your reference)
G. Enlightesonline.com. (n.d.). Retrieved June 26, 2020 https://www.englishtestsonline.com/adverbs-test-
exercises-multiple-choice-questions-with-answers-advanced-level-24/

ANSWER KEY

P4.00 production. 10. D

6. P20.00 P12.00, cost of 9. B
8. P479.25 4. P8.00, understanding of
5. P2.00 8. B
43% their
7. P319.50
4. P3.00 75%, want to apply 7. A
6. P2.50 3. P12.86, product they
3. P10.00 6. D
P4.17 choose any
5. P5.00
2. P10.00 P12.50/13, students will
5. A
4. P4.00 2. P8.33/9, Note: The
1. P1.00 46% 4. B
3. P22.50 86%,
3. C
2. P6.00 1. P6.00, Application
Pretest C. 2. A
1. P280.00 5. C
1. D
4. B
3. D B.
What’s New 2. E
1. A Assessment
B.
7. P5.00
6. P80.00
5. 250ml
4. 1/2kg
3. 2kg
2. P300.00
1. 2kg
A.

Enrichment

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