Cost Analysis of Chawla Construction Pvt. Ltd.

Relevant Cost Sheet (Cost Schedule with Analysis)

Sr. No. Particulars Amount in lacs Reason
1 Land 60 Incremental cost hence Relevant
2 Drawings and Design NIL Sunk Cost hence Irrelevant
3 Cement and Sand 30 Replacement Cost
4 Bricks and Tiles 20 Net Realisable Value
5 Steel 30 Incremental cost hence Relevant
Other material including 24 lac = Incremental Cost and 3 lac =
6 27
interior decoration Net Realisable Value
36 lac = Incremental Cost and 6 lac=
7 Skilled Labour 42 Opportunity Cost
8 Un-skilled Labour 24
9 Supervisor's Salary NIL An Unavoidable Cost hence Irrelevant
10 Generel Overheads 12
11 Depriciation NIL Sunk Cost hence Irrelevant
12 Hire charges for equipments 4 Incremental cost hence Relevant
Utilities and miscellaneous
13 expenses specific to this 6 Incremental cost hence Relevant
contract
14 Opportunity cost of equipment 7
15 Profit forgone from another pro 10 Opportunity Cost hence Relevant
Total Cost 272

Relevant Revenue 2.9 Cr

Relevant Cost 2.72 Cr
Relevant Profit 18 Lacs Relevant Cost < Relevant Revenue

So Project will be ACCEPTED.