Formula Costs

To determine the cost of preparing a formula or recipe, we first determine the cost of each ingredient. Then we add the costs of all the ingredients to get the total cost of the formula.

When we have calculated the total cost, we can then determine the unit cost of the finished product. Units may be any measure we require: per ounce, per kilogram, or per serving portion (portion cost).

For the most accurate costing, you should determine the number of units actually sold, rather than the unit yield of the formula. Keep in mind that ingredients or product lost through spillage or other waste must still be accounted for and paid for. Using units sold or served accounts for these costs.