The document discusses the concepts of production cost, yields, and calculating the actual costs of products after processing. It defines production cost as the total expenses to produce a good or service, including materials, labor, and overhead. Yields refer to the amount of finished product remaining after accounting for losses during production. The document provides steps for testing yields by measuring raw and waste amounts. Using the yield percentage and original costs, businesses can determine the actual processed cost of products to ensure proper pricing.

2. What is Solution?
What are the
composition of
Solution?

3. COST OF PRODUCTION
Refers to the total cost incurred
by a business to produce a
specific quantity of a product or
offer a service.
It relates to the different
expenses that a firm faces in
producing a good or service.

4. Production costs can include a variety of
expenses, such as labor, raw materials,
consumable manufacturing supplies, and
general overhead.
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.

6. How to Calculate
the production of
Inputs and
Output

7. Steps in recording and documenting
production input
First, weigh all materials and ingredients
needed.
Second, make a necessary listing in your
notebook of all the materials and ingredients
used. It is important to note how much or how
many. This is what we call recording or
documentation.
Third, follow the correct format in documenting
and recording.

8. Actual Spoilage/Rejects
Actual spoilage rejects and their
corresponding percentage depends on
the product to be made.
Example, in mango jam, spoilage refers
to the peel of mango and seeds; for
spoilage refers to which are not included
or are left during packing.

9. Another example is on pickled fish,
spoilage is the skin of calamansi,
garlic and the intestinal organ of fish.
In smoked fish the reject is the
intestinal organ.
Lastly, in fermented fish and other
fishery product, small seashell, small
stone and seaweeds are the
spoilage.

10. Actual Yields and Recoveries
Yield refers to the number of
finished products after computing for
the production output and input.

11.  For example,
you may be preparing a recipe for
carrot soup. The recipe requires 1
kg of carrots, which you purchase.
However, once you have peeled
them and removed the tops and
tips, you may only have 800 grams
of carrots left to use.

12. In order to do accurate costing, yield
testing must be carried out on all
ingredients and recipes.
When looking at yields, you must
always consider the losses and
waste involved in preparation and
cooking.
There is always value that is
attached to vegetable peel, meat and
fish trim, and packaging like brines
and syrups.

13. Any waste or loss has been
paid for and is still money that
has been spent. This cost
must always be included in the
menu price.
All products must be
measured and yield tested
before costing a menu

14. Note: Sometimes, this “waste” can
be used as a by-product. Bones
from meat and fish can be turned
into stocks. Trimmings from
vegetables can be added to those
stocks or, if there is enough, made
into soup.

15. The procedure for testing yields
1. Record the original weight/volume of
your item. This is your raw weight or as
purchased (AP) weight.
-Whole tenderloin – 2.5 kg
2. Process your product accordingly,
measure and record the waste or trim
weight.
-Tenderloin fat, sinew, chain, etc. –
750g tenderloin trim

16. 3. Subtract the amount of trim weight from
the AP weight and you will have what is
referred to as your processed or edible
product (EP) weight. The formula is: AP
weight – waste = EP weight.
-2500 g − 750 g = 1750 g processed
tenderloin
4 Get your yield percentage by converting
the edible product weight into a percentage.
The formula is EP weight ÷ AP weight × 100
= yield %.

17. % Yield = 1750
2500
= 70% for the tenderloin

18. Yield percentage is important
because it tells you several
things: how much usable product
you will have after processing;
how much raw product to actually
order; and the actual cost of the
product per peso spent.

19. Using Yield to Calculate Food
Costs
Once you have your yield percentage, you
can translate this information into monetary
units. Considering the losses incurred from
trimmings and waste, your actual cost for
your processed ingredient has gone up
from what you originally paid, which was
your raw cost or AP cost. These
calculations will provide you with your
processed cost or EP cost.

20. Procedure for determining EP cost
1. Record the AP cost, what you paid for the
item
-Whole tenderloin – 340PhP/kg
2. Obtain your factor. This factor converts all
your calculations into percentages.
The formula is: 100 ÷ yield % = factor
100 ÷ 70 tenderloin = 1.42

21. 3. Once the factor has been
determined, it is now an easy process
to determine your EP cost.
The formula is: factor × as purchased cost
per (unit) = edible product cost per (unit)