COST & MANAGEMENT ACCOUNTING

Cloudy Bed
Now, You CAN SLEEP ON THE CLOUD

Section - B Group-4

Parul Rishika Rohit Shreya Sreeparna Yelukuri

Sinha Singh Karmakar Kedia Saha Amarnath
22PGDM110 22PGDM116 22PGDM120 22PGDM131 22PGDM141 22PGDM149
 Bonafide Certificate

Certified that this project report on “Cost & Management Accounting” is

bonafide work of “Parul Sinha, Rishika Singh, Rohit Karmakar, Shreya

Kedia, Sreeparna Saha, Yelukuri Amarnath” who carried out the work
under my supervision.

Department Supervisor

Dr M. Jeevananthan

2
 Table of Contents

Product Overview 4
Total Addressable Market (TAM) 4

Operating Capacity for the Production of Units Annually 5

Cost Sheet 5

Break-even Analysis 12

Budget for the Next 5 Years 13

3
 Product Overview

Our product floating cloud magnetic bed is a type of bed that levitates above the ground using
magnetic levitation technology. This technology works by using magnetic fields to counteract
gravity and lift the bed off the ground.

Our product is created such that it resembles a cloud and is primarily made to offer extreme
comfort and relaxation.

Features of our product:

1. Our product is innovative and ideal for any modern bedroom because it is cosy, sturdy,
supportive, and comfortable.

2. A quality floating bed can create an elegant and contemporary focal point for our
customers' bedrooms. Making even a small space feel bigger and roomier.

3. Our customers can purchase a luxurious floating bed from us in a variety of layouts, styles,
and cutting-edge designs. It will alter the bedroom's appearance and aesthetic.

Total Addressable Market (TAM)

The target audience for the floating cloud magnetic bed will be people belonging to the 25 to 44
age group. They comprise 64 percent of this overall audience.

The younger generation between 16 and 24 years old, also known as Generation Z. They’re
another big chunk of our target market.

Also, high-end use in the commercial sector comprising luxury hotels and lodges. Upper-class
customers prefer luxury items for household use.

4
 Operating Capacity for the Production of Units Annually

For the year 2022-23, we have started our production of 10,000 units from which we have sold
9,000 units only. Thus, we are having a closing stock of 1,000 units.

For the next year 2023-24, we are producing 12,000 units and selling 10,900 units. Thus, we are
left with 2,100 units as closing stock.

Then, for the year 2024-25, we are producing 13,500 units and selling 15,100 units. The closing
stock is 500 units.

For the year, 2025-26, the production levels will be at 15,000 units and be selling 14,250 units. The
closing stock will be coming to 1,250 units.

And for the 4th year of consideration, 2026-27, we will be producing 20,000 units and selling
18,450 units. The closing stock will be 2,800 units.

For the final year of consideration, the production levels will be at 25,000 units and selling 26,950
units. The closing stock is 850 units.

The selling price of the product is ₹23,421 for the first year, ₹22,923 for second year, ₹22,592 for
third year, ₹23,677 for fourth year and ₹23,096 for fifth year and finally, ₹22,933 for the last year
of consideration.

Cost Sheet

Key Notes:

Raw Material = We have a 10 year agreement with the supplier to supply goods at the same price
irrespective of changes in local/market price.

Taxable Amount = Sum of all Costs + Profit Margin (this is taken just for the sales tax purpose)

Sales Tax = As our product comes under Slab 2 the tax rate is 18%

Advertisement = We have fixed Advertisement Cost 50,000 per annum.

5
 Year 2022-6

6
 Year 2023-7

7
 Year 2024-8

8
 Year 2025-9

9
 Year 2026-10

10
 Year 2027-11

11
 Break-even Analysis

A breakeven analysis helps to know how many units are required to be sold to cover fixed
and variable cost of production so that we can set the prices accordingly and determine
when the business will become profitable.

Fixed Cost is ₹1,70,04,000.

Year 1: We are reaching break even point by selling 9,000 units @₹23,421 with variable cost
amounting to ₹18,298 per unit.

Year 2: We are attaining break even by selling 10,900 units @₹22,923 with variable cost
amounting to ₹21,783 per unit.

Year 3: We are able to reach break even point by selling 15,100 units @₹22,592 with variable cost
amounting to ₹27,322 per unit.

Year 4: We are reaching break even point by selling 14,250 units @₹23,677 with variable cost
amounting to ₹29,562 per unit.

Year 5: We are attaining break even point by selling 18,450 units @₹23,096 with variable cost
amounting to ₹38,640 per unit.

Year 6: We are able to reach break even point by selling 26950 units @₹22,933 with variable cost
amounting to ₹50,298 per unit.

12
Over the years, PV Ratio is increasing meaning high profit margin that is over the years, our
profits are rising.

Budget for the Next 5 Years

13
Graph showing profit over the years
PROFITS
y = 2E+07x
120000000

100000000

80000000

60000000

40000000

20000000

0
2022-23 2023-24 2024-25 2025-26 2026-27 2027-28

Graph showing Contribution & Profit

CONTRIBUTION & PROFIT

140000000

120000000

100000000

80000000

60000000

40000000

20000000

0
1 2 3 4 5 6

Contribution Profit

14