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Are You Charging Enough? Understanding Your Costs in Processing and Production

Discover the critical elements of pricing your products correctly in this insightful guide by Jon Frohling of Frohling Meats, Inc. Learn how to accurately calculate the cost of processing and production, emphasizing that pricing should not rely on outdated figures. Understand the importance of up-to-date cost of goods, including labor costs — factoring in overtime hours. Equip yourself with the knowledge needed to ensure your pricing reflects the true cost of doing business.

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Are You Charging Enough? Understanding Your Costs in Processing and Production

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  1. Are you Charging Enough?

    Jon Frohling Hecla,SD Frohling Meats, Inc. Scott Pec, USA FIGURING COST OF PROCESSING/PRODUCTION
  2. WHAT BASIC INFORMATION DO I NEED TO KNOW? COST OF GOODS Not Last Year’s Prices!!! Not Last Week’s Prices!!! LABOR PER HOUR Don’t forget all of the OT hours Don’t forget the payroll taxes BASIC OVERHEAD PER HOUR? Do you know what the definition of overhead is? Your Overhead per hour is based on your hours in Production Only!
  3. In business, overhead or overhead expense refers to an ongoing expense of operating a business Overhead expenses are all costs on the income statement except for direct labor, direct materials, and direct expenses. The national average of a small business is aprox $60/hr RENT UTILITIES INSURANCE REPAIRS/MAINTENANCE REPAIRS AND MAINTENANCE OFFICE/CLEANING SUPPLIES TRAVEL EXPENDITURES AUTOMOBILE EXPENSES DUES/SUBSCRIPTIONS Ours is $73.84 WHAT ARE OVERHEAD EXPENSES?
  4. HOW DO I FIGURE HOURLY COST OF LABOR?
  5. HOW DO I FIGURE HOURLY COST OF LABOR/OVERHEAD? HOW MANY HOURS ARE YOU IN PRODUCTION? Total Hours Worked Per Day * Days Worked Per Week * Weeks in a Year 9 hours times 6 days worked 52 weeks per year ------------- 2808 hrs in Production TOTAL OVERHEAD LAST YEAR DIVIDED BY TOTAL PRODUCTIVE HOURS LAST YEAR TOTAL LABOR LAST YEAR DIVIDED BY TOTAL PRODUCTIVE HOURS LAST YEAR IF YOU CAN SEPARATE THESE INTO DEPARTMENTS IT IS EVEN BETTER (CUSTOM—SAUSAGE—FRESH MEAT CUTTING FOR RETAIL—ETC.)
  6. CUSTOM PROCESSING
  7. SNACK STICKS LIST ALL OF YOUR INGREDIENTS
  8. JERKY LIST ALL OF YOUR INGREDIENTS
  9. CATERING LIST ALL OF YOUR INGREDIENTS
  10. QUESTIONS QUESTIONS? QUESTIONS? QUESTIONS? QUESTIONS? ARE THERE ANY QUESTIONS?
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