Old system

Round tri ticket cost/ ticket 900

Comission % from United airlines 10%
Variable cost ( sales comission & bonus)/ Ticket 20
Fixed cost / Month 14000

Revenue / ticket 90
Variabvle cost / ticket 20
Contribution margin/ ticket 70

No of tickets to break even / month 200

Operating income target 7000
NO of tickets to achive operating income 300
New System

But capped to 50$ max

14000

50
20
30

467

700
 Basic Lamp Designer lamp
Direct materia/ lamp ($) 5 19
Direct manufacturing labour/lamp (hours) 0.4 0.5
Direct labour rate/hour ($/hour) 30 30
Units ( no of lamps) 24640 6250

Indirect cost ($) 220677

Direct material cost ($) 123200 118750

Direct Labour hours 9856 3125
Direct maufactruing cost ($) 295680 93750

Over head cost split ($) 167552 53125

Toatl cost 586432 265625

Cost/ unit ($/ lamp) 23.8 42.5

Awasthi, Amit
NAM-UPO/T/OD:
/ cannot be easily linked with the
different cost bases ( prodcuts)
 Basic Lamp
Direct materia/ lamp ($) 5
Direct manufacturing labour/lamp (hours) 0.4
Direct labour rate/hour ($/hour) 30
Units ( no of lamps) 24640

Indirect cost ($) 220677

Batch level cost Set up Cost ($) 130800
Lamps/ batch 320
Setup hour per batch (hours) 1
number of batches 77
Total hours of setup (hours) 5929

Facility sustaning cost Hieherachy General Manufacturing over head 89877

Direct material cost ($) 123200

Direct Labour hours 9856
Awasthi, Amit Direct maufactruing cost ($) 295680
NAM-UPO/T/OD:
/ cannot be easily linked with the
different cost bases ( prodcuts) Setup cost 35980.0

General Manufacturing over head ($) 68240

Toatl cost 523100

Cost/ unit ($/ lamp) 21

Designer lamp
19
0.5
30
6250

50
2
125
15625

118750
3125
93750

130800.0

21637

364937

58
 Soft Drinks Fresh Produce Pacjaged food
Revenue 317400 840240 483960
COGS 240000 600000 360000
Cost of retruned bottles 4800 0 0
Purcahse orders 144 336 144
deloveries 120 876 264
Hou os shel stockig time 216 2160 1080
Item sold 50400 441600 122400
Cost of retruned bottles
Ordering cost 62400
delivery cost 100800
shelf stocking cost 69120
Sustomer support cost 122880
Total Overhead 355200

Simple costing system

Cost TAG
Revenue 317400 840240 483960
Direct COGS 240000 600000 360000

Direct Cost of retruned bottles 4800 0 0

Indirect Overhead ( Allocation based on COGS) 71040 177600 106560
Total cost 311040 777600 466560
Operating income 1560 62640 17400
Operating income /revenue 0.5% 7.5% 3.6%
Ordering cost/ order 100
cost /delivery 80
shelstocking cost/time 20
customer support/ item sold 0.2

ABC based system

Soft DrinksFresh Prod
Revenue 317400 840240
COGS 240000 600000
Cost of retruned bottles 4800 0
Ordering cost 14400 33600
delivery cost 9600 70080
shelf stocking cost 4320 43200
Sustomer support cost 10080 88320
Total cost 283200 835200
Operating income 34200 5040
Operating income /revenue 10.8% 0.6%
Pacjaged food Soft DrinksFresh ProdPacjaged food
483960 19% 51% 29%
360000 20% 50% 30%
0 100% 0% 0%
14400 23% 54% 23%
21120 10% 70% 21%
21600 6% 63% 31%
24480 8% 72% 20%
441600 18% 54% 28%
42360 42% 6% 52%
8.8%