Recipe Cost Calculations

Cost Analysis

The recipe cost information noted below is displayed in the “Cost Analysis” box on the Modeling and Scaling tabs. On the Modeling tab, these costs are calculated for a single batch, using prices drawn from the selected market. On this tab, the "Quantity" and/or "Unit Cost" for any product can be changed manually, to see how these changes will affect the overall recipe cost and profit margin.

Scaled Market Costs

Market-specific costs are also displayed on the Scaling tab. These costs are calculated based on the number of batches being scaled for, using prices drawn from the selected market for each recipe component.

First, enter the appropriate values in the following fields for use in calculating the recipe costs, pricing, and batch margin:

Ideal Cost % - The target percentage of the price charged which will go toward food cost.
Ideal Price Per Portion – The price the consumer will be charged for a single portion when sold.

Then, the system will calculate and display the following values once you select a Market from the drop-down:

Total Cost = the sum of all component costs
Total Margin = [ (number of portions x price-per-portion) – total cost ]
Cost Per Portion = [ total cost ¸ number of portions ]
Cost % = [ total cost ¸ (price-per-portion x number of portions) ]
Ideal Cost per Portion Based on Price = [ price-per-portion x ideal food cost % ]; this represents what the cost per portion should be if selling for the ‘Ideal Price Per Portion’.
Ideal Price per Portion based on Cost = [ cost per portion ideal ¸ food cost % ]; this represents what the ‘Ideal Price Per Portion’ should be based on the ‘Ideal Cost %’.

Analyzing the cost data

Compare This	To This	Desired Result
(Actual ) Cost %	Ideal Cost %	You want the actual percentage to be ≤ to the ideal percentage.
(Actual) Cost Per Portion	Ideal Cost per Portion Based on Price	You want the actual cost amount to be ≤ to the ideal cost based on the price.
Ideal Price Per Portion	Ideal Price per Portion based on Cost	You want the ideal price per portion to be ≥ to the ideal price based on the cost.

Compare This

To This

Desired Result

(Actual ) Cost %

Ideal Cost %

You want the actual percentage to be ≤ to the
ideal percentage.

(Actual) Cost Per Portion

Ideal Cost per Portion Based on Price

You want the actual cost amount to be ≤ to the
ideal cost based on the price.

Ideal Price Per Portion

Ideal Price per Portion based on Cost

You want the ideal price per portion to be ≥ to the
ideal price based on the cost.