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Cost Management &
Management Control Project
COSTING OF 100 PLATES OF LUNCH
MHRDM 2010-2013
1MHRDM 2010 – 2013 COST MGMT & MGMT CONTROL
SUBMITTED BY
NAME ROLL NO.
VAISHALI AMIN 123
DORREL GODINHO 136
SHWETA MAHADIK 144
SUDIP PARUI 151
VIRAL SOMAIYA 164
ONKAR DICHWALKAR 174
2MHRDM 2010 – 2013 COST MGMT & MGMT CONTROL
Acknowledgement
During the perseverance of this project we were supported by
different people, whose names if not mentioned would be inconsiderate
on our part.
We would like to thank the owner Mr. Prabhakar Salvi of Swapna
Caterers for helping us in completing the project and giving out
confidential information about the cost incurred by them for 100 plates.
We would like to express our sincere gratitude to Prof. S. L.
Chopde for giving us the opportunity to work on such an informative
project which proved to be a very good learning experience. We would
also like thank him for his valuable expertise and for guiding us
throughout our project.
We would also like to thank the MET Library staff for allowing us
to use the library for our reference purpose.
Finally, we would like to thank all those who have directly and
indirectly helped us throughout our project and motivated us for its
successful completion.
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Preface
This report consists detailed costing of 100 plates of Lunch. The
data for the same has been collected from various sources & the content
has been formulated accordingly.
The menu for the Lunch plates may vary from supplier to supplier
& may affect the costing accordingly.
However, the basic elements of cost statement would remain the
same.
The overhead costs considered are according to the quantity 100.
Further, as the quantity increases, overheads would further increase.
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Executive Summary
A cost statement is very important to be made with the help of
which complete understanding of its break up is made available.
The Cost Statement includes Direct Material, Direct Labour, Direct
Expenses and Overheads. For calculation of cost of 100 plates we need
to take into consideration all the costs incurred.
The total cost of Direct Material is Rs.10500 the total cost of Direct
Labour is Rs.5000 and the Total cost of Direct Expenses and Overheads
is Rs.3000 .The total cost of 100 plates is Rs.18500
If we consider profit of round about Rs.10000 then our selling price
for 100 plates of lunch will be Rs.28500 with a complete delicious food.
Thus charges per plate of lunch will be Rs.285/- (Rs. ⁄100 plates of
lunch).
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Contents
Sr. No Topics Page number
1 Introduction to costing 7
2 Direct Material cost 10
3 Labour cost 11
4 Overhead cost 12
5 Profit 13
6 Cost sheet for 100 plates 14
7 Cost sheet details 15
8 Bibliography 19
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Costing
The term COST indicates expenses. It can be regarded as the
price paid for attaining the objective. In fact, understanding the term of
costs needs an analysis of expenses or expenditure.
Costing is ascertainment of costs. It is different from cost
accounting. It is referred to as classifying, recording and appropriate
allocation of expenditure for determination of the costs of the products or
services.
Costing is a process of ascertaining costs. It consists of rules and
principles of ascertainment of costs of a product or service.
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Cost can be classified as:
1. ON THE BASIS OF BEHAVIOUR
FIXED :
In management accounting, fixed costs are defined as
expenses that do not change in proportion to the activity of a
business, within the relevant period or scale of production.
VARIABLE :
A cost that changes in proportion to a change in a company's
activity or business.
SEMI-VARIABLE :
A cost composed of a mixture of fixed and variable
components. Costs are fixed for a set level of production or
consumption, becoming variable after the level is
exceeded. Also known as a "semi-fixed cost."
2. ON THE BASIS OF ELEMENTS OF COST
DIRECT COST
A cost that can be directly traced to producing specific
goods or services.
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For example, the cost of meat in a hamburger can
be attributed directly to the cost of manufacturing that product. Other
costs, such as depreciation or administrative expenses, are more difficult
to assign to a specific product, and so are not considered direct costs.
Another example can be, the wages of an employee engaged in
producing a product can be attributed directly to the cost of
manufacturing that product.
Thus Direct Cost can be classified in three elements.
Direct Material
Direct Labour
Direct Expenses
INDIRECT COST:
A cost that is not directly related to the production of a specific
good or service but that is indirectly related to a variety of goods or
services. For example, the cost of administering a large company is
an indirect cost that must be spread over a number of products or
services. Also called overhead.
It is that portion of total cost, which can't be identified and
charged directly to the product. It has to be allocated, apportioned
and absorbed over the unit’s manufactured on a suitable basis. It
consists of following three elements:
Indirect Material
Indirect Labour
Indirect Expenses
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Direct Materials Cost
Direct material cost is that component of a product that has not yet
been placed into the product or into work in process inventory. This
account contains the cost or the standard cost (depending on the cost
accounting system) of the direct materials on hand. A manufacturer
must disclose in its financial statements the cost of materials on
hand as well as its cost of work in process and finished goods.
Thus, in case of lunch plates, the inventory would be the basic
food items (the material used for the same) & their computation would be
given as:
= Fixed Cost + Variable Cost
= Cost of Material + (Carrying Cost + Ordering cost)
In case of 100 food plates, flour, sugar, and vegetable oil are direct
materials of a company that manufactures dessert products.
In case of lunch, the direct materials include the costs of the food
or beverage items.
Food includes all kinds of vegetables, fruits, flour, cereals, paneer,
butter, oil, ghee, etc for the main course as well as for starters and salad.
It also includes water, cold drinks, etc.
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Labour Costs
Total labour costs are the sum of wages and salaries (pay) paid by
an employer to an employee, plus any other costs incurred by the
employer. As well as wages and salaries, total labour costs include
employer's social contributions (including national insurance,
contributions and pensions, paid on behalf of the employee) and other
non-wage costs including sickness, maternity and paternity costs,
vocational training costs, recruitment costs and benefits in kind. The
latter include company cars, mobile phones and accommodation.
In this case, Labour costs include the costs of food preparation and
service by the workers. Also included are Social Security taxes (FICA),
retirement and other benefits such as health or life insurance. To
determine labour costs per hour, keep a time log. When placing a value
on your time, consider the following:
Your skill and reputation
Wages paid by employers for similar skills
Location of Stay
Other pricing factors include image, inflation, supply and demand,
and competition. In case of preparation of 100 food plates, the
remuneration given to the cooks would contribute majorly as the labour
costs.
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Overhead Costs
Overhead costs may be variable or fixed expenses that must be
covered to stay in business.
Variable costs are those expenses that fluctuate including vehicle
expenses, rental expenses, utility bills and supplies.
Fixed costs include the purchase of equipment and service ware.
After overhead costs are determined, the total overhead costs are
divided among the total number of catering jobs expected.
In our case, the overhead costs would involve the following:
Cost incurred towards the cleaners
Cost of Utensils and Napkins
Rent and Electricity
Also includes expenditure made on tables
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Profit
It is a desired percentage added to ones total costs. You will need
to determine the percentage of profit added to each menu item or type of
event.
Determining a price is not easy. There is no one exact price. Base
your price on the type of event being catered, special services offered
and your competition.
To operate a profitable catering business, you need to decide on a
price that is appropriate for the services rendered. Determining the costs
of catering an event is the most important part of covering your
expenses and earning profits. Caterers price their services using
different methods. The pricing formula that covers your costs and
provides a profit is as follows:
Materials + Labour +Overheads + Profit = Price
Thus, in case of lunch plates:
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Cost Component
Materials Cost of food items
Labour Cost of cooks
Overhead Cost of utensils
Costing Of 100 Plates from Swapna Caterers
MENU
1. Aloo Chat2. Papad3. Paneer Makhanwala4. Veg Kolhapuri5. Dal Fry/Dal Tadka (any one)6. Pickle7. Sweet (Ltd): Gulab Jamun/Rasgulla/Sitafal Basundi8. Naan/Puri/Paratha9. Vegetable Pulav10.Raita11. Farsan Item: Cutlet, Cocktail Samosa / Harabhara Kebab
Note:
Taxes as applicable
Order will be taken for the numbers of persons fixed
At the time of the order and rate will be charged accordingly, Irrespective of
their presence at the occasion
50% advance with the order and balance after the function will be taken.
Minimum order should be for 25 persons
Parcels are not entertained after the function
All food prepared in refined sunflower oil only
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Statement of Cost for 100 Plates
NO. PARTICULARS WORKING NOTE NO.
AMOUNT (Rs.)
1 DIRECT MATERIAL 1 10500
2 DIRECT LABOUR 2 5000
3 DIRECT EXPENSES 3 1500
PRIME COST 17000
4 ADD: OTHER OVERHEADS 4 1500
TOTAL COST 18500
5 PROFIT 10000
6 SALES 28500
7 SELLING PRICE PER PLATE 285
The company initially attains the total cost by summing up the cost
items. Once this is done cost per plate is calculated.
The company then fixes the per plate price with the customer through
negotiations to reach the profit per plate and thus the profit margin.
Notes:
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1. Utensils & tables are on rent.
2. The labour is paid on a consignment basis.
Working Notes
1. DIRECT MATERIAL
NO INGREDIENTS QUANTITY PRICE PER KG/LTR
TOTAL
EXPENSE
1 Sitafal 5 kg 50 250
2 Tomato 15 kg 20 300
3 Carrot 3 kg 30 90
4 Papad 4kg 150 600
5 Peas 4 kg 40 160
6 Lemons 30 pcs 5 150
7 Onions 15 kg 18 270
8 Potatoes 10 kg 15 150
9 French beans 4 kg 50 200
10 Capsicum 2 kg 40 80
11 Oil 15 litres 90 1350
12 Sugar 4 kg 15 60
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13 Curd 12 kg 50 600
14 Kasuri Methi 100 gms 150 15
15 Dal 10 kg 45 450
16 Corriander 10 bundles 12 120
17 Chillies 500 gms 54 30
18 Mix masala 250 gms 400 100
19 Ghee 5 kg 150 750
20 Basmati Rice 10 kg 50 500
21 Maida 10 kg 35 350
22 Paneer 7 kg 120 840
23 Mava 2 kg 150 300
24 Cashewnuts 250 gms 400 100
25 Raisins 200 gms 250 50
26 Amchur 100 gms 100 10
27 Jeera 50 gms 100 10
28 Rai 20 gms 120 10
29 Palak 50 Bundles 7 350
30 Milk 30 litres 25 750
31 Wheat Flour 10kg 14 140
32 Assorted Mukhwas 1 Kg 230 230
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33 Pickle 1kg 135 135
34 Rasgulla 250 4/piece 1000
TOTAL 10500
2. DIRECT LABOUR
SERIAL NO. LABOUR NUMBER WAGES
1. Main Cooks 2 3000
2. Helpers 3 1500
3. Cleaners 2 500
TOTAL 7 5000
3. DIRECT EXPENSES
SERIAL NO. ITEMS NUMBER AMOUNT
1 GAS CYLINDER 4 1500
TOTAL 1500
4. OTHER OVERHEADS
SERIAL NO. ITEM AMOUNT
1. Utensils 540
2. Rent 400
3. Electricity 300
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4. Tables 200
5. Paper Napkins 60
TOTAL 1500
Bibliography
Cost Accounting by CHAWLA AND KAPOOR
Cost Accounting by Horngen , Datar ,Foster
Visit to Swapna Caterers
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