ASPECTS OF

PRODUCT COSTING
Group-6      Div-A          Roll No
 Amit Naphade            30
 Asit Anand                  31
 Ananya Sharma          32
 Aditya Andhale           33
 Shruti Andraskar          34
 Sidhant Andure           35
What is product Costing?
Product costing is the process of calculating the costs
incurred with manufacturing a single product.
What is product costing formula?

(Total direct labor+total direct material+consumable supplies +

total allocated overhead )÷ total number of units = product unit
cost
 THE CASE STUDY-Adidas Brand

 COMPANY BACKGROUND-founded in 1948 adolf dasler

along with his brother rudolf

 Networth is about 30.85 billion dollars

 Vision-
   Vision is on innovation and design leaders which will give great
facility to the athletes and which will consistently deliver financial
result
Adidas's Product Costing

 Adidas's Demographic Segmentation is Age group of

15-45 Years old
 Uses Skimming as competetive pricing
 Approach for upper middle class and upper class
 Never Uses Penetraative pricing 
 Higher Price and higher Quality approach for
Customers
 Adidas's Sale promotion and Marketing
Statergies

 Adidas promotes sales by conducting various sales and by

collaborating with celebrities
 Marketing Statergies 1)SPEED 2)CITIES 3)OPEN SOURCES
 Opportunities in Market
                          Increasing online shopping
                          New technology and Innovation
                         Collaborations
                          
Costing in Service based operation
Costing unit

• Simple cost unit-When only one characteristic feature is used for

determining the cost unit
• E.g. Kilometer, tonne, passenger ,etc.

• Composite cost unit-When two or more characteristic are considered

for cost unit
• E.g. Passenger Kilometer, Tonne Kilometer
 The service costs are usually collected under the
following headings:

• (1) Standing charges (fixed costs)

• (2)Maintenance charges
• (3) Operating charges (variable costs).
Example:
 Calculation:

Total cost(in a annum)=2,04,200 x12=24,50,400

Fare/Taking passenger Km=(Cost(Total takings)/Total Passenger Kms per annum )=
=24,50,400/14,40,00
=1.701
So cost per Trip (per Passenger)=1.701 x20 x2

=Rs 68.08
Costing In Different Phases Of
Product Life Cycle
 Accure Cost In Research and Development

 Manufacturing

 Marketing

 Distribution
 To maximize the product
profitability

 Design cost out of the Product

 Minimize The time of product

 Maximize the length of life cycle

 Do’s Don’ts
Involve all teams  Avoid Rushing in
Take Customer R&D
Perspective  Avoid Trating
Consider the natural capital as
Consumptiomn & Costless
Transformation of natural
capital
 Analyze the product Performance

Cost analysis:
• Determine the cost of production, including the cost of raw materials, labor, and overhead costs.
• Develop a cost structure to categorize costs by type (e.g., direct and indirect).
• Allocate costs to each product, using an activity-based costing approach if necessary.
• Evaluate the cost of each product, comparing it to industry benchmarks and considering the cost
impact of any potential improvements.
Minimizing cost:
•Identify areas where costs can be reduced, such as through process improvements or
supplier negotiations.
•Consider outsourcing non-core activities to reduce costs.
•Assess the impact of potential cost-saving measures, including any potential trade-
offs (e.g., reduced quality, increased lead time, etc.).
•Implement cost-saving measures with a focus on long-term sustainability.
Income analysis:
• Review sales figures for the product, including unit sales, revenue, and profit
margins.
• Evaluate pricing strategies, including the impact of discounts, promotions, and
pricing changes on sales and profit margins.
• Compare the product's performance to industry benchmarks and competitors.
• Identify any seasonality or other trends in sales.
• Consider adjusting pricing strategies or product features to increase
profitability.
Conclusion
 Importance
 Advantages
Importance
 Cost management is essential requisite for
success of any product.
 It becomes much easier to set the goals and
accordingly work towards it.
 Cost is a complex subject that reaches far beyond the
individual budget of any given project.
Advantages

 Different areas of the company use cost information in different

ways, and the information must be formulated to suit the company
area that it serves.
 In addition, an understanding of overall cost at a particular
company in a specific industry will help project managers create
budgets
 Take cost into proper consideration and deliver winning results.
 Knowledge of the different kinds of costs that the project will incur
is essential to successful budgeting
 REFERENCES
 Lifecycle of product costing
                  Lifecycle Costing( cgma.org )   

 Case Study
• www.studdocu.com
•  www.academia.edu

  Service costing 
• https://www.accountingnotes.net/cost-accounting/service-costing/service-
costing-definition-and-application-and-formula-cost-accounting/10509
• https://www.vskills.in/certification/tutorial/service-costing/

       
THANK YOU

WE ARE GROUP 6