# COGS / Recipe-Cost Worksheet

This is where you find out what a batch actually costs you — not the ingredient
price you remember, but the full cost with freight, labor, and overhead in it —
and whether the price you charge clears the margin you need. Fill one out per
product, and re-run it whenever a supplier price, your labor rate, or the recipe
changes.

Costing is arithmetic, not a regulation — no agency owns it and there is no
single right method. But every honest version of it rolls up the same three
buckets and divides by what the batch actually yields: direct materials at
landed cost, direct labor at a fully loaded rate, and a share of the overhead
that keeps the plant running. Add the three, divide by good sellable units, and
you have a cost per unit you can price against.

Pull each number from the record that owns it: materials from your purchase
invoices, labor from your payroll and a timed batch, and overhead from your
books. The example values in every table are illustrations to keep the fields
legible — replace all of them with your own. This worksheet computes cost; it
does not decide your price, and it is not tax or accounting advice. Reconcile the
numbers against your own bookkeeping.

---

## Direct materials at landed cost

Landed cost is the total cost to get a material in your door — its purchase price
plus inbound freight, duties, brokerage, and handling — not just the price on the
supplier's line. Build a landed unit cost for each ingredient and each piece of
packaging first, then multiply by the quantity the batch consumes.

| Landed cost of one material | Example (tomatoes) | Your entry |
| --- | --- | --- |
| Supplier price (per unit) | $0.85 /lb | |
| Inbound freight, allocated (per unit) | $0.13 /lb | |
| Duties, brokerage, handling (per unit) | $0.02 /lb | |
| Landed unit cost | $1.00 /lb | |

| Material | Quantity in batch | Landed unit cost | Line cost |
| --- | --- | --- | --- |
| (example) Tomatoes | 40 lb | $1.00 | $40.00 |
| (example) Onions | 16 lb | $0.75 | $12.00 |
| (example) Jalapeño peppers | 8 lb | $1.50 | $12.00 |
| (example) Tomato paste | 6 lb | $2.00 | $12.00 |
| (example) Distilled vinegar | 4 lb | $0.50 | $2.00 |
| (example) Salt, garlic, spices | 1 batch | $10.00 | $10.00 |
| (example) Glass jar, 16 oz | 120 ea | $0.45 | $54.00 |
| (example) Lid | 120 ea | $0.08 | $9.60 |
| (example) Label | 120 ea | $0.07 | $8.40 |
| (example) Shipping case, 12-count | 10 ea | $1.20 | $12.00 |
| | | | |
| | | | |
| Direct materials subtotal | | | $172.00 |

## Direct labor

Direct labor is the crew time that turns materials into finished product, priced
at a fully loaded rate — the base wage plus payroll taxes, workers' compensation,
and benefits. The wage alone understates it; build the loaded rate once and
reuse it. Labor-hours is people times hours, and its total feeds the overhead
step below.

| Fully loaded hourly rate | Example | Your entry |
| --- | --- | --- |
| Base wage | $15.00 /hr | |
| Payroll taxes + workers' comp | $1.80 /hr | |
| Benefits (health, paid time off) | $3.20 /hr | |
| Fully loaded rate | $20.00 /hr | |

| Task | People | Hours each | Labor-hours | Loaded rate | Labor cost |
| --- | --- | --- | --- | --- | --- |
| (example) Prep, roast, cook | 2 | 2.0 | 4.0 | $20.00 | $80.00 |
| (example) Fill, cap, label, case | 2 | 2.0 | 4.0 | $20.00 | $80.00 |
| | | | | | |
| Direct labor subtotal | | | 8.0 | | $160.00 |

## Allocated overhead

Overhead is the cost of running the plant that no single batch can be traced to —
rent, utilities, insurance, equipment wear, and the indirect people who never
touch one product. Total the pool for a period, divide by the direct labor hours
you worked in that same period to get a rate, then charge the batch by its own
hours.

| Overhead item (per month) | Amount |
| --- | --- |
| (example) Facility rent | $4,000 |
| (example) Utilities (power, water, gas) | $1,500 |
| (example) Equipment depreciation | $1,200 |
| (example) Insurance | $800 |
| (example) Indirect labor (QA, sanitation, supervision) | $4,000 |
| (example) Repairs, small tools, consumables | $1,000 |
| | |
| Overhead pool (monthly) | $12,500 |

| Overhead rate | Example | Your entry |
| --- | --- | --- |
| Overhead pool (the month) | $12,500 | |
| Direct labor hours worked (the same month) | 1,000 | |
| Overhead rate (pool ÷ labor hours) | $12.50 /labor-hour | |

| Allocate to this batch | Example | Your entry |
| --- | --- | --- |
| Batch direct labor hours (from above) | 8.0 | |
| Overhead rate | $12.50 /labor-hour | |
| Allocated overhead (hours × rate) | $100.00 | |

A rate per direct labor hour fits a hands-on line. If your process is
machine-paced, a rate per machine hour or per unit may spread overhead more
fairly. Pick one rule, apply it to every product, and revisit it when your mix or
volume shifts.

## Cost per batch and per unit

Add the three buckets to get the batch COGS (cost of goods sold) — direct
materials plus direct labor plus allocated overhead — then divide by what the
batch actually yields.

| Cost element | Batch cost |
| --- | --- |
| Direct materials (landed) | $172.00 |
| Direct labor (loaded) | $160.00 |
| Allocated overhead | $100.00 |
| Total batch cost (COGS) | $432.00 |

Divide by good sellable units — the units you can actually invoice after short
fills, rejects, and QA holds — not the theoretical count.

| Yield | Example | Your entry |
| --- | --- | --- |
| Units filled | 122 | |
| Rejected, short-fill, or on QA hold | 2 | |
| Good sellable units | 120 | |

| Cost per unit | Example | Your entry |
| --- | --- | --- |
| Total batch cost | $432.00 | |
| ÷ good sellable units | 120 | |
| Cost per unit | $3.60 | |

## Margin at your target price

Gross margin is the share of the selling price left after the cost of the goods —
margin dollars divided by price, not by cost. Markup is how much you added on top
of cost, as a percentage of cost. They are not the same number, and confusing
them quietly underprices a product.

| Margin at a target price | Example | Your entry |
| --- | --- | --- |
| Cost per unit (from above) | $3.60 | |
| Your target price per unit | $6.00 | |
| Gross margin per unit (price − cost) | $2.40 | |
| Gross margin % (margin ÷ price) | 40.0% | |
| Markup % (margin ÷ cost) | 66.7% | |

To run it the other way — from a margin you need to the price it demands — divide
the cost by one minus the target margin. A 45% margin on a $3.60 cost needs a
price of $3.60 ÷ (1 − 0.45) = $6.55, not a 45% markup.

Marking up cost by 40% is not a 40% margin: adding 40% to a $3.60 cost gives a
$5.04 price, which is only a 28.6% margin, because the margin is figured against
the price, not the cost. If you price to a margin, divide by one minus the
margin; if you price to a markup, multiply cost by one plus the markup. Decide
which you mean, and use it the same way for every product.

## Sign-off

Number and date every version so the floor, purchasing, and whoever sets price
all work from the same costing. Re-run the worksheet whenever a supplier price,
your labor or overhead rate, the recipe, or the yield changes.

| Field | Example | Your entry |
| --- | --- | --- |
| Product and pack size | Roasted tomato salsa, 16 oz jar | |
| Batch size (good units) | 120 jars | |
| Worksheet version | Rev. 1 | |
| Prepared by (name, role) | Sam Ortiz, Operations Lead | |
| Date prepared | 07/15/2026 | |
| Next review (or trigger) | On supplier price change | |