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TLE
COOKERY
Module 4:
CALCULATE COST OF
PRODUCTION
QUARTER 1: WEEK 4
JACKIELOU S. BALASUELA

(SUPPORT MATERIAL FOR INDEPENDENT LEARNING ENGAGEMENT)

A Joint Project of
SCHOOLS DIVISION OF DIPOLOG CITY
and the
DIPOLOG CITY GOVERNMENT

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TLE – Grade 8
Alternative Delivery Mode
Quarter 1 –Module 4: CALCULATE COST OF PRODUCTION
First Edition, 2020

Development Team of the Module

Writer: JACKIELOU S. BALASUELA

Editor: JACKIELOU S. BALASUELA

Reviewer: LYNNE B. GAHISAN

Illustrator: LYNNE B. GAHISAN

Layout Artist:

Management Team:
Virgilio P. Batan Jr. - Schools Division Superintendent
Jay S. Montealto - Asst. Schools Division Superintendent
Amelinda D. Montero - Chief, CID
Nur N. Hussien - Chief, SGOD
Ronillo S. Yarag - EPS PVR – LRMDS
Leo Martinno O. Alejo - PDO II - LRMDS

Printed in the Philippines by ________________________

Department of Education – Region IX – Dipolog City Schools Division

Office Address: Purok Farmers, Olingan, Dipolog City

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of
the module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your
answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.

If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are not
alone.

We hope that through this material, you will experience meaningful learning and
gain deep understanding of the relevant competencies. You can do it.
 What I Need to Know

This Module is an exploratory and introductory course which leads you to

Cookery National Certificate Level II (NC II). It covers 4 common competencies that
a Grade 7/Grade 8 Technology and Livelihood Education (TLE) students like you
ought to possess, namely:

equipment;

health.

After going through this module, you are expected to:

1. Identify the cost of production according to standard procedure;

2. Compute the total cost of production; and
3. Display patience in calculating the cost of production

What I Know
.

Directions: Read each item carefully and write your correct answer on your
notebook to write your answers. Complete the following table.

Items Purchase Selling Price Peso Mark-up Percentage

cost/buying mark-up
price
1. Hotcake 4.00 7.00
2. Puto Cheese 5.00 10.00
3.Banana Cake 8.00 10.00
4.Lumpia 7.00 10.00
5.Buko Shake 10.00 15.00
6.Siopao 15.00 21.00
7. Sandwich 12.00 20.00
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Lesson
CALCULATE COST OF
4 PRODUCTION

The cost principle is an accounting principle that requires assets,

liabilities, and equity investments to be recorded on financial records at
their original cost. According to the cost principle, transactions should be
listed on financial records at historical cost – i.e. the original cash value at
the time the asset was purchased – rather than the current market value.
The cost principle is also known as the historical cost principle and the
historical cost concept.

What’s In

Direction: As a review of the previous lesson, answer the items below. Write your
answer on your notebook.

1. 2000 milliliters (mL)= __________ Liter (s)

2. 30 pounds (lbs) = __________ Kilogram (kg)

3. 3 teaspoons = __________ tablespoon (s)

4. 2 gallons = __________ pints

5. 1 cup = ___________ ounces

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 What’s New

Direction: List down the cost of ingredients used in making a simple vegetable
lumpia. Write your answer on your notebook. You may also ask your
parents/guardians and list down the cost of a meal ingredients prepared at home.

Items /ingredients Purchase cost/buying price

What is It

The important fundamental Principles of Costing are as follows:

1. Cost is always related to its cause: It has been noticed that a cost is related as
closely as possible to its cause. The figures of costs are collected and analyzed
according to the nature and are allocated or apportioned on a basis of cause
relationships.

2. Abnormal costs are charged in costing: A cost incurred to meet the loss by fire,
riot, theft or accident is called an abnormal cost. This cost is not charged to
production as it has nothing to do with the production part. Therefore, the normal
cost incidental to production or service is charged to cost centre and not the
abnormal ones.
3. Cost is charged after it is incurred: If the cost has been incurred it is considered
no cost and it cannot be charged to a cost centre. For example – normal loss or
wastage is to be borne by that unit only where loss has incurred. Such loss is not
imposed on those units which are yet to pass or which are yet to come for
production.

4. Past costs are not taken into consideration to future costs: It is generally the
system that the cost of any period should be met in that period itself. If the costs of

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the past period are taken to a future period for recovery it would be a wrong step,
because the future period costs will be unnecessarily over burdened with the load
of the past costs and it may lead to misunderstanding. Exception to this
consideration is advertisement. Advertisement expenses are being treated as a
deferred revenue expense, therefore, it can be charged during the period of benefit.
5. Keeping of accounts for cost is also based on Double entry principle: The Cost
Ledgers and other cost control accounts are kept on the double-entry principle. The
same principle is also adopted in financial accounting. Costing no doubt requires a
greater use of cost-sheets and cost statements for the purpose of cost
ascertainment, cost control and guidance to management.

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. Calculate your peso mark-up. This is done 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. Decide whether you want to calculate your percentage mark-up based on

cost or selling price. Once you choose which you will be using to calculate, it
is important you stick to the method you choose throughout all your
calculations, or you will end up with faulty data. If you decide to calculate
your percent mark-up based on cost, go on to Step 3. If you decide to
calculate your percent mark-up based on selling price, go on to Step 4.

3. Calculate percent mark-up based on cost. This is done by dividing the peso
mark-up by the cost.

Example:

Peso Mark-up = 5.00

Purchase Cost/ Buying Price = ÷10.00

Percent Mark-up = 0.5%

4. Calculate your percent mark-up based on selling price. This is done by

dividing the peso mark-up by the selling price.

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 Peso Mark-up = 5.00

Selling Price = ÷15.00

Percent Mark-up = .33 %

5. Make sure you consistently use either cost of the product or selling price to
find the percent mark-up on an item. Even though the cost, selling price,
and peso mark-up will always be the same, the percentage mark-up will be
drastically different depending on if you calculate it using selling price or
cost. 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.

Cost of production refers to the total cost incurred by a business to produce a

specific quantity of a product or offer a service. Production costs may include
things such as labour, raw materials, or consumable supplies. In economics, the
cost of production is defined as the expenditures incurred to obtain the factors of
production such as labour, land, and capital that are needed in the production
process of a product.
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.

One of the greatest weapons against profit loss is to know your food costs.
Food cost determines a restaurant's profitability. Production cost is important to
the supply side of the market. Sellers base supply decisions on the cost of
production. In that production cost generally increases as more of a good is
production, the supply price also tends to rise with the quantity supplied.

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 What’s More

Direction: In this topic, we identify the cost of production In order to understand

deeper. Let us put an amount or the buying and selling price, peso mark-up and
percentage mark-up in your notebook.

Let’s do this for fun! Put your own price as far as you remember.

Items Purchase Selling Price Peso Mark-up Percentage

cost/buying mark-up
price
1. Ice Candy 4.00 5.00 1.00 20 %
2. Sweet Corn
3. Mango
4. Curls

1. Why it is important to identify the cost of production?

2. Compute your peso mark-up and the total percent mark-up based on the cost.

What I Can Do

Direction: Read each item carefully and fill in the blank(s) on the item cost and
selling price with the correct answer. Calculate percent mark-up based on cost.
This is done by dividing the peso mark-up by the cost. Write it in your notebook
with the solutions.

Items Purchase Selling Price Peso Mark-up Percentage

cost/buying mark-up
price
1. Ice Candy 5.00 7.00
2. Sweet Corn 12.00 15.00
3. Mango 30.00 50.00
4. Curls 7.00 10.00
5. Rambutan 20.00 25.00
6. Lansones 25.00 30.00

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 Assessment

Direction: Complete the table below. Calculate your percent mark-up based on
selling price. Write your answer in your quiz notebook.

Items Purchase Selling Price Peso Mark-up Percentage

cost/buying mark-up
price
1.Hotcake 5.00 7.00
2. Cuproons 12.00 15.00
3. Bukopie 30.00 50.00
4.Banana cue 7.00 10.00
5. Coffee 20.00 25.00
6. Lansones 25.00 30.00

Additional Activities

Directions: Given the scrambled letters below, unscramble them to get a word or a
group of words related to principles of costing and the cost of production in
cookery. Write your answer opposite each item.
1. LACUCTORLA -

2. PUKRAM -

3. TIGNCOS _-
4. CHEASURP-

5. ESNGILL ICEPR-

6. OPES KRAMUP-
7. CNETREP –

8. UCTIONPROD-

9. PORTIF-
10. SERNGIVS-

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 Answer Keys

What’s In
1. 2 liters
2. 13.63 pounds
3. 1 tbsp.
4. 16 pints
5. 8 fluid ounces

What’s New
- Answers may vary

What’s More
- Answers may vary

What I Can Do

Items Purchase Selling Price Peso Mark-up Percentage

cost/buying mark-up
price
1. Ice Candy 5.00 7.00 2.00 .28/28%
2. Sweet Corn 12.00 15.00 3.00 0.2/20%
3. Mango 30.00 50.00 20.00 0.4/40%
4. Curls 7.00 10.00 3.00 0.3/30%
5. Rambutan 20.00 25.00 5.00 0.2/20%
6. Lansones 25.00 30.00 5.00 0.16/16%

Assessment

Items Purchase Selling Price Peso Mark-up Percentage

cost/buying mark-up
price
Hotcake 5.00 7.00 2.00 .28/28%
Cuproons 12.00 15.00 3.00 0.2/20%
Bukopie 30.00 50.00 20.00 0.4/40%
Banana cue 7.00 10.00 3.00 0.3/30%
Coffee 20.00 25.00 5.00 0.2/20%
Lansones 25.00 30.00 5.00 0.16/16%

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