I hired an accountant to keep track of all of my financial information. But I'm having trouble explaining to her that every cake I make is different and that it is hard to know specifically the amount of fondant, buttercream, colors, etc that are used on each cake. So after being iin business for almost 1 year I don't feel that my accounting system is working out. I'm wondering if anyone can shed some light on how you keep track of profits and what accounting system you use, I currently use Quickbooks.
How do you account for materials and ingrediants used on each order?
Help... I'm starting to loose trust in my accountant and faith in my ability to operate the financial side of my business

I can make cake but it was so much easier from my home.

Thanks for any information and experiences you can share with me

Rebecca
Sweet Cakes by Rebecca

Have you tried Cake Boss?

Yes, but when I'm starting to make my weekend orders I will mix up a large batch of buttercream (24 cups) and then it is difficult to know exactly how much went to each order. Also the fondant is hard to know how much I used.
I'm wondering if other decorators run into these issues.
I make on average about 10 cakes a weekend. They are multiple flavors of cake, fillings and buttercreams.
The only items I know exactly or the cake drums, cardboards and boxes! The rest is a mess to keep track of.

pulling my hair out and want to pull my accountants hair out! jk!

Hopefully Indydebi can chime in on this and a few others who own bigger businesses.

There are charts (Wilton has one) that gives you a amount of buttercream used on different cake sizes as well as fondant. That would be a good guide to follow. Yeah you may not use exactly what the chart says but it does give you a base line.

You also have to consider, yeah you may not have used every cup of icing, but you still had to make it, and to me that goes into the price. I usually figure at least a double batch of icing (2lbs of sugar) for every cake mix. On a cake that would take one cake mix then it usually takes me that much to icing and decorate the cake.

I'm currently using the wilton chart to estimate the amount used for buttercream and batter. We make our cakes from scratch, and that is an issue also, We foten have extra buttercream and batter at the end of a weekend. I guess I'm concerned becuase it is not an exact science. I also worried about over estimating. It will all affect my income taxes and I feel like it should be exact.

If you are doing that many cakes a week, as you order your ingredients look at the amount you ordered for that week. If you ran short you order more next time, if you ran over, you save and order less the next time. After awhile you will see a pattern in amounts ordered/used. You must keep detailed inventory information however. Looking at it by cake is way to difficult. Look at the bigger picture of your ingredient usage, that will help significantly. I know that climate can also change the amount of certain ingredients I use. If it is cooler I can get away with less cornstarch and powdered sugar in my icings, warmer means I use more, not an exact recipe on the icings - done to taste & texture. So it works out better if I look at ingredient usage from a weekly or monthly gross basis instead of a cake by cake basis.

I have been thinking that it might be easier to calculate profit on a per weekend basis as opposed to per cake, maybe even monthly. I just thought that if I knew my profit for each cake that I would know if I'm chargeing enough.

I don't keep track of ingredients by cake. I keep track of ingredients by month. I coulnd't BEGIN to try to figure out how to micro-manage every chocolate disk, every raisin for every cookie, every cut dowel rod, of every teaspoon of flour that fell on the floor, etc.

Every item I buy is expensed to a general account of "supplies" or "cost of goods sold". At the end of the month, I add up what I spent in supplies. I add up what I received in income. Hopefully the one of them (the RIGHT one!) is larger than the other!

Having worked in a manufacturing environment, I know there is software out there that will track your inventory and when an order is entered in the system, the software calculates and pulls from inventory the ingredients used, giving you an inventory and costing system. Don't know about you guys, but I'm no where NEAR that size yet.

TexasSugar makes a good point regarding leftover. There's a legitimate expense called "Scrap Factor". There is a certain amount of "scrap factor" that has to be costed out in any product made. (Which is why our smaller items cost more. Case in point: I had to pay $10 for a small jar of caviar yesterday. I only needed to use less than half of it, but the customer was billed (i.e. "costed out") the entire 10 bucks because that was the cost of the order. The store wouldn't sell me half of the jar. The "cost of goods sold" was $10.)

I guess I'm confused. Are you saying that you keep track of every tbsp of flour and sprinkle used per cake? There is no way I could do that.

I agree with Indydebi on how I keep track.

I also keep track of income and expenses in bulk, I track what is spent and tally it monthly hoping as Indydebi does that the bottom line stays black

Only determine what is used per cake to determine pricing (edible, electric, manpower...) and give yourself enough of a buffer to compensate for using more fondant/sprinkles/color if/when that may happen

I also track my expenses on a monthly basis. I list out all my purchases (ingredients, etc.) and all my income and subtract and hope the income is bigger I could never do it on a per cake basis. That would take me forever. Also, like some posters said, I may only need 1 tbsp. of something, but if I have to buy the whole thing then the whole thing goes into my expenses for that month. If I get to use it again a different month then it's just a freebie (sort of) Eventually it all evens itself out over the course of the month or year.

This is an excellent thread. I took an accounting class last year. I played around with the free version of Quickbooks and wondered just how people used it. Aha, Indydebi made things much easier to understand. It would make alot of sense to keep track of INVENTORY. Now, that accounting stuff is coming back to me! LOL!

OP, thanks for asking this question!

we are not tracking every tbsp or anything crazy like that, but we are trying to know the profit on a per cake basis. We now use Quickbooks which allows to enter customer info, invoice the order, and we can cost out items of inventory to each cake. So it is easy to track the paper goods, or if I use premade sugar flowers. If we buy something for a specific order and wouldn't normally use it or there is extra we will cost out the entire amount to the cake. We often use rhinestone accents for example and we cost the entire purchase to the order not just the number of rhinestones used. It is probably ok the way we are doing it, its mostly the buttercream that has us a little thrown. But I do understand the per month way of tracking profit.
It doesn't help that in my pre cake career I was an accountant! So there is a side of my brain that wants to know exactly, but in the end the amount of time it would take probably isn't worth it.

Right I am with Indydebi. I would never try to figure on a per cake basis. It would generally be impossible. Unless you measure out each cup, lbs, or ounce of buttercream, fondant, etc you use. I did accounting for years and the way I do mine now is basic. I sold and collected X amount of sales for the month. I subtract out what I purchased that month, utilities, rent, phone, website expenses, advertising, etc. That gives me my monthly profit.

Hi Rebecca,
I'm an entry level accountant, and at my place of work we use Quickbooks. I think what you need to do is call a Quickbooks representative and ask if they have a certified Quicbooks agent in your area that can help you set up the system correctly. It's going to take some time to set up so don't freak out if you receive a large bill. I'm thinking that it is possible to keep track but it's going to be a lot of work. I once did a cost expense on one of my cakes that I did just to have an idea of how much it to make one single cake. What I did for ex: I used 8 eggs on a cake. That day the carton of eggs was .78 cents so I divided the cost by 12 (there were 12 eggs in a carton) and multiplied by 8 and got my unit price. I did this with every single ingredient and got my actual cost. Now I don't know how you can incorporate that into the system so that you can keep track of every single cake. I know with Quickbooks you can keep track of inventory like Indy mentioned, but there are some items that you are going to have to estimate. Like I said call a representative from Quickbooks and maybe they can guide you in setting up your system the way you want. Hope this helps

I take my already made buttercream and weighed it...mine comes out to 4 oz. per cup.
then I weigh the whole batch of buttercream.....let's say it makes 3 pounds of buttercream....that would be 12 cups of buttercream. Then just divide the total cost of a batch of buttercream by the number of cups and you'll have a cost per cup.
Next time you cover a 6" round measure out the buttercream cup by cup that you use to ice the cake and decorate it and write it down for future reference and do that for all sizes (or just go by wilton's chart, it's fairly accurate I find)

i have cake boss and I have in my recipe section 8" round cake iced and boxed/10" round cake iced and boxed/ etc.

The recipe consists of everything I use to make an 8" round including ingredients for cake, icing, cake circle, and box.

If I use something else on the cake (say an x tra cup of red icing for roses) I add that in.

Then to account for all of the colors etc. I just have a section in the customer list and the customer is named "Inventory" I make out a new "order" everytime I shop for something that isn't accounted for in the cake orders (ie; cake pans, colors, air brush colors, even notebooks to job down phone orders, etc) They are all expenses and need to be counted

Then, because cake boss is so awesome.......I can always go and figure out what my total revenue was for a time period and subtract my "inventory" from that same time period and I know EXACTLLY how much I really made.

When I order sugar flowers, all the ones I'm not using on the cake they were ordered for go into inventory. The ones used on a particular cake, the price plus shipping is divided by the number of flowers.

HTH

I probably do it all wrong because I've never been taught but it seems to work

Oh and I keep receipts (i keep a separate little change purse in my wallet and everytime I make a purchase for "cakes" i put the receipt in that change purse) and then at the end of every month I take out all the receipts and sort them by date and staple them together and put a sticky on them that says "January 09" "february 09" etc. and keep them in a filing cabinet.

Then I always have an exact count of what i've spent that way too.

we have done the long hours to enter all the inventory we use, such as dowel rods, cake drums, etc. with a per unit cost. We also learned that in Quickbooks you can create whats called and "assembly" a compilation of other inventory items. So we have entered buttercream as a single recipe batch of 3 cups. It very labor intensive to enter all the inventory we use, but it was a one time thing. The system works great for most of the items. We also have a watse account, it is for when a cake just doesn't bake right or for instance one time I was tired and baked a square cake instead of round. We can also track profit per month and just make a memo list of items used on a cake to get an estimate of individual cake profit.

I'm a mid-level accountant, and agree with Indydebi. Add up all of your expenses, and all of your income. If your income is more than your expenses, you have profit. To get a basic income per cake, use a prorata formula to allocate the profit based on the sale price of each cake. It will be an average - your actual profit per unit may be higher or lower, and the profit margin will vary each month.

So, if your net income is $1000, and you sell cakes worth $250, $250 and $1500, then your profit per cake is $125, $125 and $750

KHalstead, it sounds like you are dping what we are doing. I do have to admit that it a lot of work and it was much easier the fewer cakes we made. But now we are making an average of 10 cakes per weekend in addition to our front counter. So I have to question the time.
But i will say thank you to everyone who has commented and shared their own methods. Just talking about has helped.

I follow a few custom cake decorators on Twitter. I cant remember who it was, but there was one designer who spoke highly of Bakesmart. I dont know much about them, but maybe you can check out their website (www.bakesmart.com) for more information to see if their system suits your needs.

We have Bakesmart and it is excellent, but it is a 4 to 5 thousand dollar software system.

You really DO need to know how much every cake costs you, which really isn't that difficult if you have professionally formulated recipes ( read that bulk by weight) There are things like baking powder or salt that you put into "Q factor" of 5 to 7 % so you know what your recipe costs. You should know your "panning weights" and so can calculate the cost of each cake. I know, for example, that our vanilla cupcake costs me 58 cents with standard decoration. We sell them for $3.25. You need to know what your profitability on each item so that when you change your menu, or when you are really busy and need to limit your offerings, you don't cut the things that make you the most money.

I didn't read the whole thread so maybe this was said but I do know what a tsp of vanilla cost. and I know what a cup of milk cost, and a cup of sugar and so on and so forth. I sat down in the begining and calculated it. There are online calculators that will break down how many cups in a gallon or how many tsps in an 8 oz jar of salt(not that salt is alot) You can also look up what it cost to run your oven. Take the price of a gallon of milk and divide it by how many cups per gallon. Blah blah blah. It would be nice if cake boss had this feature to just put in the cost of your milk and it would calculate all these things.

So I know what one batch of my chocolate cake costs, one batch of my vanilla cake costs and a batch of fondant. It's not like I have to sit and calculate it every single time I make the cake. Even if I add a new recipe I have my list of what things cost, so I pull out the list and total the ingredients and I'm done. Now, I know prices change every week but this gives me a good figure to go by. Also I always use the highest price available. If I can't get something at walmart and I have to go to publix I know it's going to be more, so I use that amount.

I know I'm not one of the big girls here but it's what's helped me. I hope it will help someone else.