A blank, fillable worksheet that builds a product's true cost from your own numbers — materials at landed cost, direct labor, and allocated overhead — into a cost per batch and per unit, then shows the margin at a target price.
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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. This worksheet walks them in order: 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. Download a blank copy to fill in for your own products.
This computes cost — it does not set your price
The worksheet tells you what a batch costs and what margin a given price earns. It does not decide your price for you, and it is not tax or accounting advice. Reconcile the numbers against your own bookkeeping, and treat the result as one honest input to a pricing decision, not the decision itself.
is the honest unit cost of every ingredient and every piece of packaging. Build a landed unit cost for each material first, then multiply by the quantity the batch consumes. Do it for packaging too — jars, lids, labels, and cases are as real a cost as the food.
Work out the landed unit cost of a material like this, then carry the bottom line into the materials table:
| 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 |
List every material the batch consumes. The recipe drives the ingredient rows — keep them in step with the product's spec sheet — and your bill of materials drives the packaging rows.
| 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 is the crew time that turns materials into finished product, priced at a . The wage alone understates it; build the loaded rate once and reuse it.
| 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 |
Time one representative batch, task by task. Labor-hours is people times hours, and its total feeds the overhead step below, so carry it through.
| 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 |
Overhead is the real 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. You still have to carry a fair share of it into each batch, and the honest way is . 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 |
Match the rate to how you actually make things
A rate per direct labor hour fits a hands-on line where labor tracks with effort. 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 — the goal is a fair share, not a perfect one.
Add the three buckets to get the batch , 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, not the theoretical count. is what you can invoice, so it is what carries the cost.
| 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 |
The batch production record captures the ingredient lots consumed and the units yielded on a real run — the actual quantities that make this worksheet true instead of theoretical.
Once you know the cost per unit, a target price tells you what you keep. is measured against the price; is measured against the 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.
Once your price per unit is set, the price-list / margin-stack template carries it across the channel — your price, the distributor's, and the retail shelf.
Marking up cost by 40% is not a 40% margin
Adding 40% to a $3.60 cost gives a $5.04 price — but that price 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.
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 — a cost that has drifted is a margin you no longer have.
| 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 |