INDEX

 ACKNOWLEDGEMENT 1

 INTRODUCTION 2

 SWOT ANALYSIS 3

 PRODUCT COSTING 4-10

 COST OF SALES 10

 ABSORPTION COSTING 10

 VARIABLE COSTING 11

 BREAKEVEN ANALYSIS 12

 TARGET COSTING 12

 RECOMMONDATIONS
 ACKNOWLEDGEMENT
We have taken efforts in this project. However, it would not have been possible without the
kind support and help of many individuals. We would like to extend our sincere thanks to all of
them.

We are highly indebted to our cost accounting’s teacher Professor Abdus Salam Shaikh for
their guidance and consistent supervision as well as for providing necessary information
regarding the project & also for their support in completing the project.

We would like to express special gratitude and thanks to individuals who provides us assistance
for collecting products cost. We are highly thankful to them for their kind co-operation which
help us in completion of this project.

The purpose of project is to learn practically about the cost procedures/methods learned in the
course during the semester and project was assigned to us by our teacher Sir Abdus Salam
Shaikh.
 SWOT ANALYSIS
Applick Ralli & Thread Work Chaddar
Strengths
o Need low capital investment
o Industry provides potential sources of employment
o Rally and thread work chaddar are culture oriented product’s, could be sold to those
who follow traditions.

Weakness
o Lack of infrastructure and communication facilities.
o Unawareness about international requirements and market.
o Lack of co-ordination between government bodies and private players.
o Inadequate information of new technology.
o Inadequate information of current market trends.
o Less interest of young people in culture oriented products.
o Lack of skilled labor.
o Still confined to rural areas and small cities and untapped market.
o Lack of promotion of products

Opportunity
o Rising demand for handicraft products in developed countries such as USA, Canada,
Britain, France, Germany, Italy etc.
o Developing fashion industry requires handicrafts products.
o Development of sectors like Retail, Real Estate that offers great requirements of
handicrafts products.
o Development of domestic and international tourism sector.
o E-Commerce and Internet are emerged as promissory distribution channels to market
and sell the products.

Threats
o Competition in domestic market.
o Balance between high demand and supply.
o Quality products produced by competing big brands.

Strength
 Located at the most highly demand place.
  Customers are highly satisfied.
 Fills the market gap.
 Supplies wooden cabinets to all areas including schools offices and home.

Weakness
 Electricity issue.
 Delivery problem on time.
 More and less wastage issues.

Opportunity
 Can increase sales by entering in new markets.
 Profit can be maximize by replacing with capital intensive methods.

Threats
 Existing competition
 Depend on consumer’s preference
 Better quality wooden stamps.

Thread of Clothes:
Strengths
 Cheap labor
 Raw material base
 Increase in export
 Increase in foreign exchange

Weaknesses
 Lack of research and development
 Lack of technology
 Financial Problem
 Energy Crises

Opportunities
 Increase in industrial product
 Increase in employment
 Reducing cost of production
Threats
 Lack of technical skills
 Lack of cooperation
 Competitors

SWOT Analysis of Cabinet:

Strength
 Located at the most highly demand place.
 Customers are highly satisfied.
 Fills the market gap.
 Supplies wooden cabinets to all areas including schools offices and home.

Weakness
 Electricity issue.
 Delivery problem on time.
 More and less wastage issues.

Opportunity
 Can increase sales by entering in new markets.
 Profit can be maximize by replacing with capital intensive methods .

Threats
 Existing competition
 Depend on consumer’s preference
 Better quality wooden stamps

PRODUCT COSTING
DIRECT MATERIAL
Cost per unit
 APPLICK RALLI (handmade)
Items Quantity Cost item total cost
per product
Charmeuse Silk Fabric 6m 85Rs/m 510

Plain Fabric 12 m 50Rs/m 600

Used Cloth 5m 5Rs/m 25
Thick Thread 1 roll 5Rs/roll 5
Cott on Thread 6 rolls 6Rs/roll 36
Sharp Needle (size 3) 2 needles 20Rs/packet 2
Embroidery Needle 1 needle 30Rs/packet 2
TOTAL Rs1180

THREAD EMBRIODERY CHADDAR

Items Quantity Cost Item total cost

per product
Plain fabric 2.5m 145/m 362.5
Thick thread 10 rolls 5/roll 50
Embroidery floss skeins thread 6 20/roll 120
Mirror 100 0.2/mirror 20
Sharp Needle (size 2) 5 needles 20Rs/packet 4
Embroidery Needle (size 11, 10 needle 30Rs/packet 15
12)
Total Rs572

Direct Labor
Products Hours Cost/hour Total
Applick Ralli 60 50 3000
Chaddar 84 24 2000
 Fixed Materials
Item Cost Useful period(month) Depreciation/month
Small sharp scissors 450 6 75
Large scissors (2) 1200*2=2400 9 267
Fan 4200 24 175
Embroidery hoop (set) 1200 3 400
Chair 3000 30 100
Total 11250 1017

Factory Overhead
Items Rent Electricity/Gas Total Amount
Applick Ralli 7000 1200 8200
Thread Work Chaddar 7000 1500 8500

CABINET

Items Quantity Cost Item total cost

per product
Cheap board 7 1700 11900
Kitchen pally 3 2300 6900
Wood 1*2 10 2100 21000
Kabza pati 4 150 600
Drawer sliders 4 140 560
PVC (patian) 3.4 inch 200ft 2 400
PVC (patian) 2 inch 100ft 6 500
Screw 2 packet 50/packet 100
Total 41960

Cost is accounted of 100 sq. feet

Direct Labor
Products Hours Cost/hour Total
Cabinets 100 sq: ft 300/sq: ft 30000
 Fixed FoH
Item Cost Useful period(month) Depreciation/month
Tool box 9300 12 775
Wood cutting machine 20,700 72 287
Total 30,000 1062

THREAD

Items Quantity Cost Item total cost

per product
Juit Bag 25 box 13500 per box 337500
Lorus 28 pound 15000 per pound 420,000
Roll and Tube 9 box 2000 per box 18000
P bag 12 kg 250 per kg 3000
Colour 2 kg 700 per kg 1400
Total 779,900

Direct Labor
Products Hours Cost/hour Total
Thread 234 667 156,000

Fixed Materials
Item Cost Useful period(month) Depreciation/month
Machine 600,000 120 5,000
Fan4 10500 30 350
Tool box 9200 60 154
Water cooler 1400 12 116
Weighing scales 32,000 84 380
Total 653,100 6000

WOODEN ROCKING CHAIR

ITEMS QUANITY COST ITEM TOTAL

COST PER
UNIT
Arm Support 2 224 448
Wooden Rims 3kg 315 945
Seat 5kg 315 1575
Wooden Strip Wire 150ft 10 1500
Gas 0.5kg 130/kg 65
Iron Nails 1 packet 300 300
Polish 1 packet 100 100
Total Rs4933

Direct Labor
Products Hours Cost/hour Total
Rocking chair 12 125 1500

Fixed foh
item Cost Useful period(month) Depreciation/month
Gas cylinder 9000 36 250

Tool box 6500 24 270

total 15,500 520

Sofa Seat
ITEMS QUANITY COST per ITEM’s TOTAL
quantity COST PER
UNIT
Partal Wood 37.5 feet 32/feet 1200
Nails 5 packet 40/packet 200
Revolving Ball Knobs 4 50/packet 200
Spring 6 200 1200
Chair Seat Foam 1 900 900
Back Seat Foam 1 700 700
Chair Fabric 4 meter 800 3200
Samad Bond 2 pack 250 500
Wooden stretcher (pai) 4 200 800
Thread 10 rolls 5 50
Steel Nail 4 packets 50 200
Glue 1 1 200
Total 9,350
 DIRECT LABOR
Products Hours Cost/hour Total
Sofa Seat Fabric labor=1450 9 2350
Wood frame labor=900

Fixed Material
Item Cost Useful period(month) Depreciation/month
Tool Box 8000 12 667
Total 667

FIXED OVERHEAD
Items Rent Electricity/Gas No: of Hours Total Amount
Cabinets 15000 1500 -- 16500
Thread 25,000 18,000+2,500 234 45,500
Sofa Seat 15,000 4,500 19,500
Rocking chair 17000 1800 18,800
 ABSORPTION COSTING

Applick Thread Cabinets Thread Sofa Seat Rocking

Ralli Embroidery Chair
Chaddar

Sales 56,000 (8) 36,000 (6) 510,000(300) 1,149,200 680,000(40) 225,000(25)

Less COGS (9,440) (2,712) (125,880) (779,900) (374,000) (123,325)

Fixed FoH (1,016) (1,016) (1062) (6,000) (667) (520)

Variable FoH (5,250)

Gross Profit 46,560 37,288 383,058 358,050 305,333 101,155

Less exp:

Rent 7000 7000 (15,000) (25,000) (15,000) (17,000)

Electricity (1200) (1500) (1500) (18,000+2,500) (4,500) (1800)

labour (24,000) (12,000) (90,000) (156,000) (94,000) (37,500)

Admin: (9,000) (8,000)

Expense
Selling expense (1500) (1,000) (2,000) (6,000) - (1500)

Transportation (2000) (1,500) (8,000) (13,000) (4,000) (3,000)

exp:

Net profit 10,352 9,788 266,558 137,550 178,353 32,355

VARIABLE COSTING
Applick Thread Cabinets Thread Sofa Seat Rocking
Ralli Embroidery chair
Chaddar

Sales 56,000 40,000 510,000 1,149,200 680,000 225,000

Less variable
cost
Direct (9,440) (2,712) (125,880) (779,900) (374,000) (123,325)
Material
Direct Labor (24,000) (12,000) (90,000) (156,000) (94,000) (37,500)

Contribution 22,560 25,288 294,120 213,300 212,000 64,175

margin

Less fixed cost 7,508 7,508 (16,062) (31,000) (15,667) (17,520)

Admin & (4,150) (3,300) (10,000) (69,750) (13,000) (9,500)

selling exp:
Net 10,902 14,480 268,058 112,550 183,333 37,155
profit

BREAKEVEN ANALYSIS
Fixed Cost Contribution Break even Selling Price Break even
Margin per (units) amount
unit
Applick 11,250 2820 4 7,000 28,000
Ralli
Chaddar 11,250 4214 3 6000 18,000

Cabinets 30,000 1,276 23.5 sq: ft 1700/sq: ft 39,950

Thread 653,100 127 5,175 kg 680/kg 3,519,000 Rs

4 month 22
days
Sofa Seat 15,677 5,300 3 17000 51,000

Rocking 17,520 2,567 7 9000 63,000

chair
 TARGET PROFIT
Fixed cost Target profit Contribution margin Units require for
TP

Applick Ralli 11,250 25000 2,820 13

Chaddar 11,250 36000 4,214 12

Cabinets 30,000 100,000 1,276 102 sq:ft

Thread 653,100 200,000 127 6,718 kg

Sofa Seat 19500 100,000 5,300 23

Rocking chair 17,520 75,000 2,567 36

Recommendations
Applick Ralli and thread work chaddar are made by hand, it took a lot of to manufacture a single
product. Technological usage could be helpful to reduce labor working hour on a product. Lack
of government supervision, less interest of people in these products are damaging this industry.
There is a need to put efforts to market these product in urban cities. Investment of national
brands such as Gul Ahmed, Khadi, J., can be very helpful to boost this handmade culture
oriented industry.