What is the major benefit of EP costing method?

What is the major benefit of EP costing method?

• A. It is more accurate than AP costing method
• B. It is less expensive to implement
• C. It requires no data
• D. It produces identical results to AP costing

Answer: (A)

Edible-portion costing improves accuracy by assigning costs to the portion of each ingredient that actually becomes the dish. It accounts for shrinkage, trimming, bones, and other waste, so the cost you see for a recipe reflects what you can sell, not just what you bought. To use this method, you convert the as-purchased price into an edible-cost per unit by applying the edible yield percentage, then determine the recipe cost from the edible amount used. This makes pricing and profitability more precise than simply using the purchase price, which ignores yield differences and waste. That precision is why this method is favored. It does require data on yields and waste, so it isn’t data-free, and it will produce different results from the AP method because yields and waste differ; it isn’t inherently cheaper to implement.

Edible-portion costing improves accuracy by assigning costs to the portion of each ingredient that actually becomes the dish. It accounts for shrinkage, trimming, bones, and other waste, so the cost you see for a recipe reflects what you can sell, not just what you bought. To use this method, you convert the as-purchased price into an edible-cost per unit by applying the edible yield percentage, then determine the recipe cost from the edible amount used. This makes pricing and profitability more precise than simply using the purchase price, which ignores yield differences and waste. That precision is why this method is favored. It does require data on yields and waste, so it isn’t data-free, and it will produce different results from the AP method because yields and waste differ; it isn’t inherently cheaper to implement.