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    Let Us See The Production Cost of National Cement

    Uploaded by

    Mulugeta Beza
    The document summarizes the production cost of National Cement. It estimates the company's annual cement production capacity at 1.2 million tons per year. The total annual cost of production is estimated at $108 million. The major cost elements are estimated as follows: power and fuel costs - 30% of costs ($32.4 million), raw material costs - 25% of costs ($27 million), selling and distribution expenses - 25% of costs ($27 million), and other expenses - 20% of costs ($21.6 million). The estimated annual profit is $59.05 million.

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    Let Us See The Production Cost of National Cement

    Uploaded by

    Mulugeta Beza
    18 views2 pages
    The document summarizes the production cost of National Cement. It estimates the company's annual cement production capacity at 1.2 million tons per year. The total annual cost of production is estimated at $108 million. The major cost elements are estimated as follows: power and fuel costs - 30% of costs ($32.4 million), raw material costs - 25% of costs ($27 million), selling and distribution expenses - 25% of costs ($27 million), and other expenses - 20% of costs ($21.6 million). The estimated annual profit is $59.05 million.

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    Let us see the production cost of National Cement

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    The document summarizes the production cost of National Cement. It estimates the company's annual cement production capacity at 1.2 million tons per year. The total annual cost of production is estimated at $108 million. The major cost elements are estimated as follows: power and fuel costs - 30% of costs ($32.4 million), raw material costs - 25% of costs ($27 million), selling and distribution expenses - 25% of costs ($27 million), and other expenses - 20% of costs ($21.6 million). The estimated annual profit is $59.05 million.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    18 views2 pages

    Let Us See The Production Cost of National Cement

    Uploaded by

    Mulugeta Beza
    The document summarizes the production cost of National Cement. It estimates the company's annual cement production capacity at 1.2 million tons per year. The total annual cost of production is estimated at $108 million. The major cost elements are estimated as follows: power and fuel costs - 30% of costs ($32.4 million), raw material costs - 25% of costs ($27 million), selling and distribution expenses - 25% of costs ($27 million), and other expenses - 20% of costs ($21.6 million). The estimated annual profit is $59.05 million.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Let us see the production cost of National Cement:

    a. Capacity = 3,000 tons of Clinker Per Day (4,200 ton cement)

    = 80,000 Bags of Cement Per Day (40,000 quintals)

    = 40,000 qui x 300 days

    = 1.2M tons Cement Per Year

    b. Cost of production = Capacity x cost of production/ ton

    = 1.2M ton x $90/ton

    = $108M

     Calculation of the major cost elements:

    1. Power and fuel costs

    The cement industry relies on power. Power and fuel costs account for 25-30% of the price of cement
    when it’s sold.

    Now the cost of Power and fuel become:

    30% x 108M =$32.4M

    2. Raw material cost

    The second major component in the production of cement is the cost of raw materials. The primary raw
    material that’s used is limestone. Raw materials account for 20%–25% of the cost of sales.

    Now the cost of raw material becomes:

    25% x 108M = $27.0M

    3. Selling & distribution expenses (Logistic cost)

    It constitutes 20-25% of the cost of sale.

    Now the Selling & distribution expenses become:

    25% x 108M = $27.0M

    4. Other expenses (Overhead cost)

    Other expenses include employee costs, administration expenses, and repair and maintenance charges.
    These account for 15%–20% of the cost of sales.

    Now the Other expenses become:

    20% x108M = $21.6M

     Hence the Total cost becomes:

    Total cost = 1+2+3+4


    = 32.4 + 27.0 + 27.0 + 21.6

    = $108.0M

    c. Selling price = 756.5 Br / quintal => 7565 Br/ton = $139.21/ton

    Total sell per year = 1.2M ton x $139.21/ ton

    = $167.05M

    d. Profit

    Now the profit becomes:

    Profit = Total Sell – Total Cost

    = 167.05 – 108.0

    = $59.05M

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