1) PRIME COST = DIRECT MATERIAL COST + DIRECT LABOUR COST 2) OVERHEAD EXPENCES = 20% OF PRIME COST 3) COST OF STANDARD

ITEMS 4) TOTAL MACHINING COST 5) FABRICATION COST = Total weight X rate 6) TOTAL HEAT TREATMENT COST = Total weight X rate 7) DESIGN CHARGES = No. of hours X rate 8) ASSEMBLY CHARGES = No. of hours X rate 9) INSPECTION CHARGES = No. of hours X rate 10) 11) TRY OUT CHARGES = No. of hours X rate TOTAL COST = prime cost + overhead expences + cost of standard items + total machining cost +

fabrication cost + total heat treatment cost + design charges + assembly charges + inspection charges + try out charges 12) PROFIT = 10% OF TOTAL COST

13) SELLING PRICE = TOTAL COST + PROFIT

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