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Friday, July 23, 2010

Question on Batch Recipe Costing

Hello Joe

My name is Tay. I just purchased a bakery in Minnesota and I would like to know if you can teach me how to estimate the cost of a croissant. Without knowing the formula, I'm afraid not to place the right price. Please give a example. Is there any software on the market?

Thank you very much!


Thanks for the question Tay.

Gather all the ingredients you need to make a batch of croissants. Write down the amounts of each ingredient required for the batch. This is your recipe.

Using purchase data (use invoices or go to a store if necessary), calculate the cost of each ingredient. You need the cost of the amount used in the recipe not the cost of the entire purchase unit (for example, pound vs. case). Add all the costs to find the batch cost. Once you complete this analysis, you are done with the cost of the batch.

[NOTE: The step above is the trickiest and the most important. For each ingredient, you are asking yourself how many batches you could produce from the common purchase unit of measure (for example, a bag of flour). In the long run, this data is used the most. Prices will change over time but the ingredient quantities will remain the same. Don't rush this exercise. Most recipe software programs call the answer to this question the "Conversion Factor" and it is very important.]

Carefully portion the croissants. Count the croissants. You now have the recipe yield. The formula follows:

Portion Cost = Batch Cost divided by Batch Yield. For example, if you had a batch cost of $45 and you were able to produce 100 croissants, your cost per croissant is $0.45. If you charge $1.50 per croissant, your cost % is 30%.

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