Project Topic: Determining The Cost of Product

Project Topic: Determining the cost of product
Submitted to: Abdus Shahed (AS2)
Submitted by:
Name ID
1.Sharmin Akter 1410343630
2.Faren Khan Muna 1420170030
3.Sharmin Akter Esha 1421416030
4.Sadia Risa Anika 1510819030
Course: ACT 2O2

Section: 04
Date: 26.07.2016
Mr. Abdus shahed
Lecturer
School of Business
North South University, Dhaka
Subject: Submission of the project report
Dear Sir
With due respect, we are glad to submit this report on determining the cost of product. This
report contains product details, production process and cost of product (DM, MOH& DL).
While preparing the report we learn the basics on how to determine the cost of product. We
thank you for your sincere cooperation throughout the study
We, therefore, would like to request you to accept our project report & oblige thereby
Sincerely,
1.Sharmin Akter (ID-1410343630)
2.Faren Khan Muna (ID-1420170030)
3.Sharmin Akter Esha (ID-1421416030)
4.Sadia Risa Anika(ID-1510819030)

Table of Contents:
1. Product details.02
2. Production Process...02
3. Cost of Product (DM, DL and MOH) 02-06
4. Calculation of Profit Margin.07
5. Calculation of Contribution Margin07
6. Calculation of Breakeven point.07
7. Calculation of Breakeven Revenue.08
8. Feedback08
1|Page
Product Details:
This project is about a teashop at tajmahal road, mohammadpur.MD Mustafa Ali is the owner of this
shop. He named it Bismillah Tea stall. He makes tea for customers.AS the shop is located near the
road; a lot of customers daily start their day having tea from the tea shop. Apart from selling tea, they
keep snack like biscuits, chips etc.
Production Process:
The tea stall named Bismillah only makes tea for the customers. They do not make any
other snacks except tea. For snacks they buy chips and biscuits from supplier. For making tea
they use milk, condensed milk, tea leaf and sugar.
Cost of Product
Production Budget for Bismillah tea stall
For the year 2016-2017
Production Budget
Q1 Q2 Q3 Q4 Total
Budgeted unit sales
20,000 30,000 40,000 50,000 140,000
Add: Ending inventory
6,000 8,000 10,000 12,000 12,000
Total needs
26,000 38,000 50,000 62,000 152,000
Less: units of beginning inventory
10,000 6,000 8,000 10,000 10,000
Required production in units
36,000 32,000 42,000 52,000 142,000
2|Page
Direct Material budget for Bismillah tea stall
Direct Material Budget

Q1 Q2 Q3 Q4 Total
Required production in units
3,800 3,800 3,800 3,800 15,200
Units of raw materials needed per
cup of tea 5 5 5 5 5
Units of raw materials needed to
meet production 19,000 19,000 19,000 19,000 76,000
Add: Ending Inventory
1,900 1,900 1,900 2,000 2,000
Total units of raw materials needed
20,900 20,900 20,900 21,000 78,000
Less: units of beginning inventory
10,000 1,900 1,900 1,900 10,000
Units of raw materials to be
purchased 10,900 19,000 19,000 19,100 68,000
Direct Labor Budget for Bismillah tea stall

Direct Labor Budget
Q1 Q2 Q3 Q4 Total
Required production in
units 20,000 30,000 40,000 50,000 140,000
Direct labor hour per
case 0.25 0.25 0.25 0.25 0.25
Total direct labor hrs.
needed 5,000 7,500 10,000 13,500 35,000
Direct labor cost per
hour 50 50 50 50 50
Total direct labor cost TK
TK250,000 TK375,000 TK500,000 TK625,000 1750000
3|Page
Manufacturing Overhead budget for Bismillah tea stall

Manufacturing Overhead Budget
Q1 Q2 Q3 Q4 Total
Budgeted Direct labor hrs.
15,200 15,200 15,200 15,200 60,800
Variable MOH rate
tk0.40 tk0.40 tk0.40 tk0.40 tk0.40
Variable MOH
6,080 6,080 6,080 6,080 24,320
Fixed MOH
20,000 20,000 20,000 20,000 80,000
Total MOH
26,080 26,080 26,080 26,080 104,320
Less: Depreciation
1,000 1,000 1,000 1,000 4,000
Cash disbursement from
MOH TK25,080 TK25,080 TK25,080 TK25,080 TK100,320
Selling & administrative expense budget for Bismillah tea stall

Selling & Administrative Expense
Q1 Q2 Q3 Q4 Total
Budgeted unit sales
20,000 30,000 40,000 50,000 140,000
Variable selling &
administrative rate tk0.50 tk0.50 tk0.50 tk0.50 tk0.50
Variable expenses
TK10,000 TK15,000 TK20,000 TK25,000 TK70,000
Fixed Expenses
Rent
5,000 5,000 5,000 5,000 20,000
Wage
2,000 2,000 2,000 2,000 8,000
Depreciation
1,000 1,000 1,000 1,000 4,000
Total fixed expense
8,000 8,000 8,000 8,000 32,000
Total selling & administrative
expenses Tk18,000 TK23,000 TK28,000 TK33,000 TK102000
4|Page
Cash Budget for Bismillah tea stall
Cash Budget
Q1 Q2 Q3 Q4 Total
Beginning Cash balance
10,000 40,000 73,000 106,000 10,000
Add: total cash receipts
50,000 55,000 58,000 59,000 222,000
Total cash available
60,000 95,000 131,000 165,000 232,000
Less: cash disbursement
20,000 22,000 25,000 35,000 102,000
Excess(deficiency)of cash
available 40,000 73,000 106,000 130,000 130,000
Financing:
Borrowing
Repaying
Interest
Total financing
40,000 73,000 106,000 130,000 130,000
Ending cash balance
TK40,000 TK73,000 TK106,000 TK130,000 TK130000
Income statement for Bismillah tea stall

Income Statement
Sales(140000x6) TK 840,000
Cost of goods sold(140000x5) 700,000
140,000
Less: total expenses 102,000
Net operating income TK 38,000
5|Page
Balance sheets for Bismillah tea stall
Balance sheet
Current Asset
Cash 10,000
Supplies:
Inventory 3000
Total current asset TK
1,300
Total equipment
Equipment 5000
Depreciation -4000
1000
Total Asset TK
14,000
Liabilities
Current liabilities:
A/P
14,000
Total liabilities TK14000
6|Page
Contribution Margin:
Contribution margin= Sales- Variable cost
=840000-70000
= TK770000
Break Even Point:
CM
CM Ratio=
Sales
770000
=
$840000
=0.92
Total Fixed Cost

Break-even point =
CM Ratio
$ 32000
=
0.92
7|Page
= TK 34782.6
Breakeven Revenue = 840000x0.92

= TK772800
Net Income
Profit Margin =
Net sales
38000
=
840000
= 4.52%
Feedback
This tea stall is located at the front site of the road. Here many customers come to enjoy their
morning tea including aged people. Apart from this now a days people are more health
conscious than before. So the owner needs to include mint tea, lemon tea with a little bit of
orange juice and should use milk without milk cream. On the other hand, diabetes people can
come to have tea at this stall. For this reason, the owner also needs to include diet sugar for
diabetes patient. They can also include snack item such as singara, somucha, cake and bread
for variation.
We think if the owner follow feedback properly then customers will be more attracted.
8|Page

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Project Topic: Determining the cost of product

Submitted to: Abdus Shahed (AS2)

Course: ACT 2O2

Mr. Abdus shahed

North South University, Dhaka

Subject: Submission of the project report

1.Sharmin Akter (ID-1410343630)

2.Faren Khan Muna (ID-1420170030)

3.Sharmin Akter Esha (ID-1421416030)

4.Sadia Risa Anika(ID-1510819030)

Production Budget for Bismillah tea stall

For the year 2016-2017

Direct Material Budget

Direct Labor Budget for Bismillah tea stall

For the year 2016-2017

Selling & administrative expense budget for Bismillah tea stall

Income statement for Bismillah tea stall

Break Even Point:

Total Fixed Cost

Breakeven Revenue = 840000x0.92

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