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SENIOR
Entrepreneurship HIGH
SCHOOL

Module

COSTING 8
Quarter 2

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Entrepreneurship
Quarter 1 – Self-Learning Module 18: Developing the Brand
First Edition, 2020

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Published by the Department of Education Division of Pasig City

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Writer: Froila F. Raymundo
Editors: Marivi T. Camacho
Reviewers: Name
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Management Team: Ma. Evalou Concepcion A. Agustin
OIC-Schools Division Superintendent
Aurelio G. Alfonso, Ed. D.
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Victor M. Javena, Ed. D.
Chief - School Governance and Operations Division
OIC – Chief Curriculum Implementation Division
Education Program Supervisors
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Printed in the Philippines by School

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E-mail Address
 SENIOR
Entrepreneurship HIGH
SCHOOL

Module
8

Quarter 2
=2

Costing
Introductory Message

For the facilitator:

Welcome to the Entrepreneurship with Grade 12 Self-Learning Module on

Costing
This module was collaboratively designed, developed and reviewed by educators from
Schools Division Office of Pasig City headed by its Officer-In-Charge Schools Division
Superintendent, Ma. Evalou Concepcion A. Agustin in partnership with the Local
Government of Pasig through its mayor, Honorable Victor Ma. Regis N. Sotto.
The writers utilized the standards set by the K to 12 Curriculum using the Most
Essential Learning Competencies (MELC) while overcoming their personal, social,
and economic constraints in schooling.

This learning material hopes to engage the learners into guided and independent
learning activities at their own pace and time. Further, this also aims to help learners
acquire the needed 21st century skills especially the 5 Cs namely: Communication,
Collaboration, Creativity, Critical Thinking and Character while taking into
consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to manage
their own learning. Moreover, you are expected to encourage and assist the learners
as they do the tasks included in the module.

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For the learner:

 Welcome to the Entrepreneurship Self Learning Module on Industry

Environment. The hand is one of the most symbolized parts of the human
body. It is often used to depict skill, action, and purpose. Through our hands
we may learn, create and accomplish. Hence, the hand in this learning
resource signifies that you as a learner is capable and empowered to
successfully achieve the relevant competencies and skills at your own pace and
time. Your academic success lies in your own hands!
This module was designed to provide you with fun and meaningful opportunities for
guided and independent learning at your own pace and time. You will be enabled to
process the contents of the learning material while being an active learner.

This module has the following parts and corresponding icons:

Expectations - These are what you will be able to know after

completing the lessons in the module.

Pre-test - This will measure your prior knowledge and the

concepts to be mastered throughout the lesson.

Recap - This section will measure what learnings and skills

that you understand from the previous lesson.

Lesson- This section will discuss the topic for this module.

Activities - This is a set of activities you will perform.

Wrap Up- This section summarizes the concepts and

applications of the lessons.

Valuing-this part will check the integration of values in the

learning competency.

Post-test - This will measure how much you have learned from
the entire module.

EXPECTATIONS
LEARNING OBJECTIVES: At the end of the module, the students are expected to:
1. Identify the different factors that affect the selling price of a product.
2. Differentiate Variable cost from Fixed cost.
3. Calculate product cost, unit cost, markup price, and selling price.

PRETEST
Match Column A with column B

Column A Column B
1. Variable Costs a. It refers to the costs incurred by a
business from manufacturing a
product or providing a service.
2. Selling Price b. This kind of cost is considered as
unchanging no matter how much a
business increases or decreases its
sales.
3. Fixed Costs c. These kinds of costs are considered
as relative or proportional to the
output produced by the business.
4. Product Cost d. This is the product cost relative to
the number of units produced. The
cost can be determined by dividing
product costs by units produced.
5. Markup Price e. This is the amount that the business
should sell its product. This can be
obtained by adding the unit cost of
the item and its markup price.
6. Unit Cost f. It is the amount added to the unit
cost so that the business will incur
profit in the long run.

RECAP

In our previous lesson, we discussed about Forecasting a business revenue.

This lesson has taught you some methods on how to forecast the revenue of a
business venture. To recall relevant ideas about this lesson, please answer the
questions below. Choose the letter of the correct answer.

Multiple Choice: Choose the correct answer

1. Which forecasting strategy doesn’t use assumptions, instead it relies on
the understanding of the causal relationship between activities and results
to determine what you need to do to reach revenue?
a. Market Based Forecast c. Funnel Based Forecast
b. Salesperson based Forecast d. Adword based Forecast
2. Which forecasting Strategy pertains to assumptions about the size of the
market, how fast it grows and what percentage of the market you will get
to arrive at forecasted revenue?
a. Market based Forecast c. Funnel Based Forecast
b. Salesperson based Forecast d. Adword based Forecast
3. Which forecasting strategy relies on industry benchmarks to figure out
what is possible for an individual salesperson and doesn’t make
assumptions?
a. Market based forecast c. Funnel based forecast
b. Salesperson based forecast d. Adword based forecast
4. Which forecasting strategy is for companies that sell primarily through the
internet?
a. Market based forecast c. Funnel based forecast
b. Salesperson based forecast d. Adword based forecast
5. What is the important thing you must know before you start forecasting
your revenue?
a. Your target market c. Your business model
b. Your go-to market strategy d. All of the above

L E S S ON

https://www.metrodeal.com/deals/Metro_Ma
nila/Brothers-Burger/184737557

Guide Questions:

1. Can you guess the price of the Brothers Burger’s burger?

2. How did you come up with your price?
 A price is the quantity of payment or compensation given by one party to
another in return for one unit of goods or services. A price is influenced by production
costs, supply of the desired item, and demand for the product. A price may be
determined by a monopolist or may be imposed on the firm by market conditions.

The selling price is the sum total of the cost price and the profit margin set
by the seller. Selling price is the price at which a product or service is sold to the
buyer. However, cost price is the price that is incurred to produce a product or
provide a service to the buyer.

FACTORS AFFECTING PRICE

1. How the Competition prices the goods and services you plan to provide.
2. Expectations about sales and expenses.
3. How much money the owner wants or needs to make.
4. Market tolerance. It is a measure of how much of a loss an investor is willing
to endure within their business.
5. Suppliers pricing terms and inventory costs. Some suppliers have
established pricing for their goods and services which are often pre-priced.
Some franchisers also set the price of their products.

Current prices should be the basis of costing, thus the need to do a price
check from time to time. With this in mind, there are several factors that a
business considers in order to compute for the selling price of the products that
they create as well as how much the business will earn upon selling the products.
These are fixed costs, variable costs, product cost, unit costs, markup price,
and selling price.
1. Fixed Costs – These kinds of costs are considered as unchanging no matter
how much a business increases or decreases its sales. Fixed costs are
expenses that a business has to pay even though there are no sales or
activities. Examples of fixed costs may include rent, utilities, and salary
expense.
2. Variable Costs – These kinds of costs are considered as relative or
proportional to the output produced by the business. It may decrease or
increase depending on the decided units that will be produced during at a
specific time. Examples of variable costs may include raw materials, direct
labor, and delivery fees.
3. Product Cost – Production or product costs refer to the costs incurred by a
business from manufacturing a product or providing a service. Production
costs can include a variety of expenses, such as labor, raw materials,
consumable manufacturing supplies, and general overhead. This is the result
of adding the fixed costs and variable costs.

Product Cost = Fixed Costs + Variable Costs

4. Unit Cost – This is the product cost relative to the number of units produced.
The cost can be determined by dividing product costs by units produced.

Product Cost
Unit Cost =
Units Produced
 5. Markup Price – Is the amount of difference between the selling price and unit
cost. Often times, this is expressed in percentage. Markup is the amount
added to the unit cost so that the business will incur profit in the long run.
But in order to obtain that amount to be added to the unit cost to make the
business profitable, we follow this formula;

Markup Price = Unit Cost ∗ Desired Rate of Return

Where:
Unit Cost = is the amount obtained by dividing product cost and units
produced
Desired Rate of Return = A subjective minimum rate (percentage) of profit
that an owner wants to gain from selling the product relative to the risk.

6. Selling Price – This is the amount that the business should sell its product. This
can be obtained by adding the unit cost of the item and its markup price.

Selling Price = unit cost + markup price

Example of a Product Costing Computation

Maximus is planning to produce cassava cake that will be sold to various
consumers. Below is the recipe for Maximus’ cassava cake producing 18 slices
(3pcs of 8” x 8” trays).

Ingredients Toppings
1 kilo grated cassava 2 tablespoons flour
2 cups coconut milk 2 tablespoons sugar
1 can evaporated milk 1/2 cup condensed milk
3 pieces egg 2 tablespoons grated cheddar cheese
1/4 cup melted butter 2 cups coconut milk

Given the recipe above, the table below shows the prices of each raw materials.

Ingredients Price Toppings Price

Cassava Php 40/Kilogram Flour Php 40.00 / Kilogram
Coconut milk Php 10/cup Sugar Php 58.00 / Kilogram
Evaporated Php 28.00 / Can Condensed Php 38.00 / Can
Milk Milk
Egg Php 8/ pc Cheddar Php 45/cup
Cheese
Butter Php 40.00 / Cup

In addition to these raw material prices, the LPG cost of making Cassava Cake is at
Php 8.00 and Php 1 /gal of water, while Maximus charges Php 50.00 as labor cost.
Given the prices above, compute for the raw material costs relative to the recipe.

Important Conversions!
1 kilo flour = 16 tbsp. = 7 cups
1 kilo White sugar = 4 cups
1 bar butter/ cheese = 1 cup 1 stick = 8 tbsp. = ½ cup
1 kilo of coconut milk = 4 cups
Solve for the Selling price of the Cassava cake

1. Compute for the Total Raw materials.

Ingredients
1 kilo Cassava 40 /k 40.00
2 cups Coconut milk 10 /cup 20.00
1 can Evaporated Milk 28 /can 28.00
4 pcs Egg 8 /pc 24.00
¼ cup Butter 40 /bar 10.00

Toppings
2 tbs Flour 40 /k 5.00
2 tbs Sugar 58 /k 7.25
½ cup Condensed Milk 38 /can 19.00
2 bts Cheddar Cheese 45 /bar 5.63
2 cups Coconut Milk 10 /cup 20.00
Total Raw materials Php 178.88
Labor cost 50.00

2. Add the labor cost to the Total raw material to get the variable cost

Variable Raw material + Labor

cost cost Php 228.88

3. Compute for the fixed Cost.

Fixed
cost Water 1 /gal 1.00
LPG 8.00
Total fixed cost Php 9.00

4. Get the sum of variable and fixed cost to get the product cost, then
divide the product cost to the number of product produced to get the
unit cost.

Product Variable cost + fixed

cost cost 237.88 18 slices
Unit Cost Product Cost/ Product produced 13.22 per slice

5. Multiple the unit cost to the desired rate of return to get your mark
up.

Unit Cost*Desired Rate of

Mark up Return 75% 9.91
Maximus decided to have a 75% increase since the product is easy to
sell.
 6. Add the Unit Cost and mark up to get the selling price.

Selling or Php 24.00

Price Unit Cost + Mark Up 23.13 / slice

The selling price per slice of Maximus Cassava cake is Php 24.00 multiplied by 18
slices will result to Php 432.00. If we subtract the product cost of Php 237.88 from
Php 432.00 our profit will result to Php 194.12. It can be said that the profit gained
is 45% relative to the cost.

Costing helps you to understand the way your competitor price their product
against an industry benchmark. It also helps in identifying how much cost is
incurred on each product. It helps you to determine when to reduce cost. And
lastly, it helps you understand how to properly price your product and give you a
clear view of how much you can earn per product to achieve a target profit. Profit is
the blood life of every business.

ACTIVITIES

ACTIVITY 1: Directions: True or False.

1. When supplier increases price, selling price decreases.

2. Forecast the possible sales and expenses.
3. Once you failed, better stop.
4. Learn how your competitors price their products.
5. Mark up must be reasonable for the product.

ACTIVITY 2: Directions: Given the different expenses, classify each item if it is a

fixed cost or variable cost.

Variable Cost Fixed Cost

Rent Meralco Bill Salary of the Office Employees

Packaging Materials Manila Water Bill Raw Meat

Delivery Charge Internet Bill Egg

Vegetables
Activity 3: “Price Mo to”

Directions: Following the same procedures above, compute for the selling price of
the following product.

1. Egg Pie
total raw material cost & Labor Cost = Php 450.00
Electricity = Php 5.00
Desired Rate of Return = 70%
Yield = 24 slices

2. Special EJ Burger

Burger
1pc Burger Bun 32.00 6 pcs
100 g Burger Patty 180.00 /k
1 pc Slice cheese 55.00 10 slices
25 g Onion 70.00 /k
25 g Lettuce 240.00 /k
20 ml Oil 130.00 /L
35 ml Dressing 220.00 /L
LPG 5.00 / burger
Labor Cost 550.00 /day (Ave. production of 100 burger)
Mark Up 20%

WRAP UP

My Take Away: Directions: Write at least 5 take-aways you have learned from the
discussion above.
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
____________________________________

VALUING
 In your own words, kindly summarize the essence behind the
understanding and practicing costing activities as a budding entrepreneur.
Given the space provided write your answer.
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________ .

POSTTEST

Identification
1. The cost can be determined by dividing product costs by units produced.

TTNUSOIC

2. It is the amount added to the unit cost so that the business will incur profit
in the long run. But in order to obtain that amount, this must be added to
the unit cost to make the business profitable.

P A R K U M

3. This is the amount that the business should sell its product. This can be
obtained by adding the unit cost of the item and its markup price.

G I N L C E S L R E P I
4. It may decrease or increase depending on the decided units that will be
produced at a specific time. Examples may include raw materials, direct labor,
and delivery fees.

B A S T I R O V E L A C

5. These are expenses that a business has to pay even though there are no
sales or activities. Examples may include rent, utilities, and salary expense.

D O S T I X E C F
6. These include a variety of expenses, such as labor, raw materials, consumable
manufacturing supplies, and general overhead. This is the result of adding
the fixed costs and variable costs.
T O P U C S D C O R T
 products
http://www.gov.vc/index.php/visitors/28-business/92-costing-pricing-your-
https://www.slideshare.net/charlesrplant1/4-methods-for-forecasting-revenue
https://panlasangpinoy.com/filipino-food-dessert-holiday-cassava-cake-recipe/
ring%20supplies%2C%20and%20general%20overhead.
cost.asp#:~:text=Production%20or%20product%20costs%20refer,manufactu
https://www.investopedia.com/terms/p/production-
WEBSITE
Englewood Cliffs, NJ: Prentice-Hall.
Curry, D. W., & Horngren, C.T. 1982. Cost Accounting: A Managerial Emphasis.
BOOKS
R E F E R E N CE S
ACTIVITY# 3.1 ACTIVITY# 3.2 EJ BURGER
Egg pie Total Raw Materials 46.88
Activity 1
Raw material 450.00 Labor Cost 5.50 1. FALSE
Variable cost 450.00 Variable Cost 52.38 2. TRUE
Fixed Cost Fixed Cost LPG 5.00 3. FALSE
electricity 5.00 Product/Unit 4. TRUE
Product Cost 455.00 Cost 109.77 5. TRUE
Unit Cost 18.96 Mark Up 20% 21.95
Mark up 13.27 Selling Price 131.72
Selling Price 32.23
Activity #2
PRETEST POSTTEST Variable Cost Fixed Cost
RECAP 1. UNIT COST Delivery Charge Rent
1. C 1. C 2. MARK UP
3. SELLING PRICE
Packaging Materials Salaries of the office employees
2. E 2. A
3. B 3. B 4. VARIABLE Vegetables Meralco Bill
4. A 4. D COST
5. FIXED COST
Egg Internet Bill
5. F 5. D
6. D 6. PRODUCT COST Raw Meat Manila Water Bill
TO CORRECTION KEY