INTRODUCTION

This project is about determining the cost, and budgeting and analysing our break-even point.
According to the requirement, the business organization selected here is Ayura Tea.
Likewise, among the products of Ayura tea, only milk tea is picked.
Ayura Tea is a typical tea stall established in 2019 at Sodepore, West Bengal. This is a family
owned partnership business founded, owned and conducted by two brothers. Although both
of the owners work there they still have a staff for the operational activities. In addition, with
a wide variety of products, it sells different types of tea as well all day long. In fact, tea is
their highest seller. This tea stall serves twelve different types of tea. Among all the products
of AyuraTea, this project has selected milk tea as the topic. Sodepore is usually crowded by
the young people, especially, the students of nearby St Xaviers Institution and Techno India
College. That is why; Ayura Tea everyday sells a massive number of cups of tea easily. This
project report is mainly on determining the cost, and budgeting and analysing our break-even
point, Moreover, this also incorporates product details, price of the product, as well as profit
margin. This is expected that the findings of this report would help Ayura Tea in future to
operate the business more efficiently.

PRODUCT DETAILS
As mentioned previously, the selected product for this project is Ayura Tea’s milk tea.
According to Ayura Tea, it is its most popular and highest selling product.
The tea being discussed is similar to the typical milk tea available in Hoogly commonly.
However, this tea is served with small amount of coffee beans added with it. This tea is made
of tea leaf, condensed milk, sugar, water, and coffee beans.
 COST SHEET (YEAR 1)
YEAR 1 (INCEPTION YEAR)
PARTICULARS AMOUNT (In AMOUNT (In
Rs) Rs)
  Opening Stock of raw materials 0  
Add: purchase of raw materials 511000  
Less: closing stock of raw materials 0  
  RAW MATERIALS CONSUMED 511000  
  Direct wages 43800  
  Direct expenses 30000  
  PRIME COST   584800
       
Add: FACTORY OVERHEAD    
  Rent 96000  
  Power 50000  
  Gas cylinder price 28800  
  Cylinder Delivery price 1680  
  Cleaning cost 11400  
  Insurance 10000  
  TOTAL FACTORY OVERHEAD 197880  
  GROSS FACTORY COST   782680
       
Add: ADMINISTRATIVE OVERHEAD    
  Office Rent 50000  
  General charges 40000  
  Manager salary 300000  
  Other Miscellaneous office expenses 10000  
  TOTAL ADMINISTRATIVE OVERHEAD 400000  
  COST OF PRODUCTION   1182680
Add: Opening stock of finished goods 0  
Less: Closing stock of finished goods 20000  
  COST OF GOODS SOLD (COGS)   1162680
       
Add: SELLING & DISTRIBUTION OVERHEAD    
  Salesman commission 60000  
  Salesman salary 200000  
  Travelling expenses 50000  
  Advertisement 150000  
  TOTAL SELLING & DISTRIBUTION OVERHEAD 460000  
  COST OF SALES   1622680
       
Add: PROFIT ON COST (20%)   324536
  SALES   1947216
       
  per day milk tea production   500
  milk tea production per year   182500
  per unit cost   10.66967671
  Roundoff   11
 COST SHEET (YEAR 2)
YEAR 2 (INCREASE IN 5% OF
COST)
PARTICULARS
AMOUNT (In AMOUNT (In
Rs) Rs)
  Opening Stock of raw materials 0  
Add: purchase of raw materials 536550  
Less: closing stock of raw materials 0  
  RAW MATERIALS CONSUMED 536550  
  Direct wages 45990  
  Direct expenses 31500  
  PRIME COST 0 614040
    0  
Add: FACTORY OVERHEAD 0  
  Rent 96000  
  Power 52500  
  Gas cylinder price 30240  
  Cylinder Delivery price 1764  
  Cleaning cost 11970  
  Insurance 10000  
  TOTAL FACTORY OVERHEAD 207774  
  GROSS FACTORY COST 0 821814
    0  
Add: ADMINISTRATIVE OVERHEAD 0  
  Office Rent 50000  
  General charges 42000  
  Manager salary 300000  
  Other Miscellaneous office expenses 10500  
  TOTAL ADMINISTRATIVE OVERHEAD 420000  
  COST OF PRODUCTION 0 1241814
Add: Opening stock of finished goods 20000  
Less: Closing stock of finished goods 21000  
  COST OF GOODS SOLD (COGS) 0 1220814
    0  
Add: SELLING & DISTRIBUTION OVERHEAD 0  
  Salesman commission 63000  
  Salesman salary 200000  
  Travelling expenses 52500  
  Advertisement 157500  
  TOTAL SELLING & DISTRIBUTION OVERHEAD 483000  
  COST OF SALES   1703814
       
Add: PROFIT ON COST (20%)   340762.8
  SALES   2044576.8
       
  per day milk tea production   500
  milk tea production per year   182500
  per unit cost   11.20316055
  Roundoff   12
 COST SHEET (YEAR 3)
YEAR 3(DECREASE IN 3% OF
YEAR 4 (INCREASE
COST)IN 10% OF COST)
PARTICULARS
PARTICULARS AMOUNT (In
AMOUNT (In Rs) AMOUNT(In
AMOUNT (In Rs)
  Opening Stock of raw materials Rs) 0 Rs)
 
Add:
  purchase of raw materials
Opening Stock of raw materials 572498.85 0   
Less:
Add: closing stockofofraw
purchase rawmaterials
materials 520453.50   
  Less RAW MATERIALS CONSUMED 572498.85  
  : Direct wages
closing stock of raw materials 49071.33 0   
    Direct expenses
RAW MATERIALS CONSUMED 520453.5   
33610.5
    PRIME
DirectCOST
wages 44610.30   655180.68
      Direct expenses 30555  0  
Add:
  FACTORY
PRIME COSTOVERHEAD 00   595618.8
    Rent
  960000    
  Add: Power
FACTORY OVERHEAD 56017.50   
    GasRent
cylinder price 32266.08
96000   
    Cylinder
PowerDelivery price 1882.188
50925   
    Cleaning cost
Gas cylinder price 12771.99
29332.8   
    Insurance
Cylinder Delivery price 10000   
1711.08
    TOTAL FACTORY
Cleaning cost OVERHEAD 221694.858
11610.9   
    GROSS FACTORY COST
Insurance 100000   876875.538
      TOTAL FACTORY OVERHEAD 201540.780   
Add:
  ADMINISTRATIVE
GROSS FACTORYOVERHEAD COST 00   797159.58
    Office
  Rent 500000   
  Add: General charges
ADMINISTRATIVE OVERHEAD 448140   
    Manager salary
Office Rent 300000
50000   
    Other Miscellaneous
General charges office expenses 11203.5
40740   
    TOTAL ADMINISTRATIVE
Manager salary OVERHEAD 448140   
300000
    COST
OtherOF Miscellaneous
PRODUCTION office expenses 101850   1325015.538
Add:
  Opening
TOTALstock of finished goods
ADMINISTRATIVE OVERHEAD 20370   
407400
Less:
  Closing
COSTstock of finished goods
OF PRODUCTION 224070   1204559.58
  Add: COST OF GOODS
Opening stock ofSOLD (COGS)
finished goods 210000   1302608.538
  Less   0  
Add:
: SELLING
Closing&stock
DISTRIBUTION
of finishedOVERHEAD
goods 203700   
    Salesman
COST OFcommission
GOODS SOLD (COGS) 672210   1184189.58
    Salesman
  salary 2000000   
  Add: Travelling expenses
SELLING & DISTRIBUTION OVERHEAD 56017.50   
    Advertisement
Salesman commission 168052.5
61110   
    TOTAL SELLING
Salesman salary & DISTRIBUTION OVERHEAD 200000   
515361
    COST OF SALES
Travelling expenses   50925   1817969.538
      Advertisement   152775    
Add:
  PROFIT
TOTAL ON COST (20%)
SELLING & DISTRIBUTION OVERHEAD   468510   363593.9076
    SALES
COST OF SALES     2181563.446
1652699.58
             
  Add: perPROFIT
day milk
ONteaCOSTproduction
(20%)    330539.916500
    milk tea production per year
SALES    182500
1983239.496
   
   
per  unit cost
Roundoff
COST SHEET (YEAR 4)
per day milk tea production
  
  
  11.9537723
50012
  milk tea production per year   182500
  per unit cost   10.86706573
  Roundoff   11
 COST SHEET (YEARYEAR5)5 (INCREASE
COST)
IN 5% OF
PARTICULARS
AMOUNT (In AMOUNT (In
Rs) Rs)
  Opening Stock of raw materials 0  
Add: purchase of raw materials 601123.7925  
Less: closing stock of raw materials 0  
  RAW MATERIALS CONSUMED 601123.7925  
  Direct wages 51524.8965  
  Direct expenses 35291.025  
  PRIME COST 0 687939.714
    0  
Add: FACTORY OVERHEAD 0  
  Rent 96000  
  Power 58818.375  
  Gas cylinder price 33879.384  
  Cylinder Delivery price 1976.2974  
  Cleaning cost 13410.5895  
  Insurance 10000  
  TOTAL FACTORY OVERHEAD 232779.6009  
  GROSS FACTORY COST 0 920719.3149
    0  
Add: ADMINISTRATIVE OVERHEAD 0  
  Office Rent 50000  
  General charges 47054.7  
  Manager salary 300000  
  Other Miscellaneous office expenses 11763.675  
  TOTAL ADMINISTRATIVE OVERHEAD 470547  
  COST OF PRODUCTION 0 1391266.315
Add: Opening stock of finished goods 22407  
Less: Closing stock of finished goods 23527.35  
  COST OF GOODS SOLD (COGS) 0 1367738.965
    0  
Add: SELLING & DISTRIBUTION OVERHEAD 0  
  Salesman commission 70582.05  
  Salesman salary 200000  
  Travelling expenses 58818.375  
  Advertisement 176455.125  
  TOTAL SELLING & DISTRIBUTION OVERHEAD 541129.05  
  COST OF SALES   1908868.015
       
Add: PROFIT ON COST (20%)   381773.603
  SALES   2290641.618
       
  per day milk tea production   500
  milk tea production per year   182500
  per unit cost   12.55146092
  Roundoff   13
Based on the information provided in the above tables, it appears that the company is anticipating
an increase in cost per unit in almost each year, with a corresponding increase in profit margin. The
cost per unit is increasing over the years and the selling price per unit is also increasing but at a
much lower rate than sales, which is leading to an increase in profit per unit and profit margin. The
company is also investing in new delivery vans in year 1, but not in the following years. Also, it is
planning for the increase in costs of rent, power, and wages in factory, administration, and selling
and distribution overheads. Overall, the company seems to be in a good financial position and is
making strategic investments to increase its profits in the future.