Cost Management & Management Control Project

COSTING OF 100 PLATES OF LUNCH

MHRDM 2010-2013

1 MHRDM 2010 2013 CONTROL COST MGMT & MGMT

SUBMITTED BY
NAME VAISHALI AMIN DORREL GODINHO SHWETA MAHADIK SUDIP PARUI VIRAL SOMAIYA ONKAR DICHWALKAR ROLL NO. 123 136 144 151 164 174

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Acknowledgement
During the perseverance of this project we were supported by different people, whose names if not mentioned would be inconsiderate on our part.

We would like to thank the owner Mr. Prabhakar Salvi of Swapna Caterers for helping us in completing the project and giving out confidential information about the cost incurred by them for 100 plates.

We would like to express our sincere gratitude to Prof. S. L. Chopde for giving us the opportunity to work on such an informative project which proved to be a very good learning experience. We would also like thank him for his valuable expertise and for guiding us throughout our project.

We would also like to thank the MET Library staff for allowing us to use the library for our reference purpose.

Finally, we would like to thank all those who have directly and indirectly helped us throughout our project and motivated us for its successful completion.

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Preface

This report consists detailed costing of 100 plates of Lunch. The data for the same has been collected from various sources & the content has been formulated accordingly.

The menu for the Lunch plates may vary from supplier to supplier & may affect the costing accordingly.

However, the basic elements of cost statement would remain the same.

The overhead costs considered are according to the quantity 100. Further, as the quantity increases, overheads would further increase.

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Executive Summary
A cost statement is very important to be made with the help of which complete understanding of its break up is made available.

The Cost Statement includes Direct Material, Direct Labour, Direct Expenses and Overheads. For calculation of cost of 100 plates we need to take into consideration all the costs incurred.

The total cost of Direct Material is Rs.10500 the total cost of Direct Labour is Rs.5000 and the Total cost of Direct Expenses and Overheads is Rs.3000 .The total cost of 100 plates is Rs.18500

If we consider profit of round about Rs.10000 then our selling price for 100 plates of lunch will be Rs.28500 with a complete delicious food.

Thus charges per plate of lunch will be Rs.285/- (Rs. 100 plates of lunch).

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Contents
Sr. No 1 2 3 4 5 6 7 8 Topics Introduction to costing Direct Material cost Labour cost Overhead cost Profit Cost sheet for 100 plates Cost sheet details Bibliography Page number 7 10 11 12 13 14 15 19

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Costing
The term COST indicates expenses. It can be regarded as the price paid for attaining the objective. In fact, understanding the term of costs needs an analysis of expenses or expenditure.

Costing is ascertainment of costs. It is different from cost accounting. It is referred to as classifying, recording and appropriate allocation of expenditure for determination of the costs of the products or services.

Costing is a process of ascertaining costs. It consists of rules and principles of ascertainment of costs of a product or service.

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Cost can be classified as:

1. ON THE BASIS OF BEHAVIOUR

FIXED:
In management accounting, fixed costs are defined as expenses that do not change in proportion to the activity of a business, within the relevant period or scale of production.

VARIABLE:
A cost that changes in proportion to a change in a company's activity or business.

SEMI-VARIABLE:
A cost composed of a mixture of fixed and variable components. Costs are fixed for a set level of production or consumption, becoming variable after the level is exceeded. Also known as a "semi-fixed cost."

2. ON THE BASIS OF ELEMENTS OF COST

DIRECT COST
A cost that can be directly traced to producing specific goods or services.

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For example, the cost of meat in a hamburger can be attributed directly to the cost of manufacturing that product. Other costs, such as depreciation or administrative expenses, are more difficult to assign to a specific product, and so are not considered direct costs. Another example can be, the wages of an employee engaged in producing a product can be attributed directly to the cost of manufacturing that product. Thus Direct Cost can be classified in three elements. Direct Material Direct Labour Direct Expenses

INDIRECT COST:
A cost that is not directly related to the production of a specific good or service but that is indirectly related to a variety of goods or services. For example, the cost of administering a large company is an indirect cost that must be spread over a number of products or services. Also called overhead. It is that portion of total cost, which can't be identified and charged directly to the product. It has to be allocated, apportioned and absorbed over the units manufactured on a suitable basis. It consists of following three elements: Indirect Material Indirect Labour
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 Indirect Expenses

Direct Materials Cost

Direct material cost is that component of a product that has not yet been placed into the product or into work in process inventory. This account contains the cost or the standard cost (depending on the cost accounting system) of the direct materials on hand. A manufacturer must disclose in its financial statements the cost of materials on hand as well as its cost of work in process and finished goods. Thus, in case of lunch plates, the inventory would be the basic food items (the material used for the same) & their computation would be given as: = Fixed Cost + Variable Cost = Cost of Material + (Carrying Cost + Ordering cost)

In case of 100 food plates, flour, sugar, and vegetable oil are direct materials of a company that manufactures dessert products.

In case of lunch, the direct materials include the costs of the food or beverage items.

Food includes all kinds of vegetables, fruits, flour, cereals, paneer, butter, oil, ghee, etc for the main course as well as for starters and salad. It also includes water, cold drinks, etc.
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Labour Costs
Total labour costs are the sum of wages and salaries (pay) paid by an employer to an employee, plus any other costs incurred by the employer. As well as wages and salaries, total labour costs include employer's social contributions (including national insurance, contributions and pensions, paid on behalf of the employee) and other non-wage costs including sickness, maternity and paternity costs, vocational training costs, recruitment costs and benefits in kind. The latter include company cars, mobile phones and accommodation.

In this case, Labour costs include the costs of food preparation and service by the workers. Also included are Social Security taxes (FICA), retirement and other benefits such as health or life insurance. To determine labour costs per hour, keep a time log. When placing a value on your time, consider the following: Your skill and reputation Wages paid by employers for similar skills Location of Stay

Other pricing factors include image, inflation, supply and demand, and competition. In case of preparation of 100 food plates, the remuneration given to the cooks would contribute majorly as the labour costs.

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Overhead Costs
Overhead costs may be variable or fixed expenses that must be covered to stay in business. Variable costs are those expenses that fluctuate including vehicle expenses, rental expenses, utility bills and supplies. Fixed costs include the purchase of equipment and service ware. After overhead costs are determined, the total overhead costs are divided among the total number of catering jobs expected. In our case, the overhead costs would involve the following: Cost incurred towards the cleaners Cost of Utensils and Napkins Rent and Electricity

Also includes expenditure made on tables

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Profit
It is a desired percentage added to ones total costs. You will need to determine the percentage of profit added to each menu item or type of event. Determining a price is not easy. There is no one exact price. Base your price on the type of event being catered, special services offered and your competition. To operate a profitable catering business, you need to decide on a price that is appropriate for the services rendered. Determining the costs of catering an event is the most important part of covering your expenses and earning profits. Caterers price their services using different methods. The pricing formula that covers your costs and provides a profit is as follows: Materials + Labour +Overheads + Profit = Price Thus, in case of lunch plates: Cost Materials Labour Overhead Component Cost of food items Cost of cooks Cost of utensils

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Costing Of 100 Plates from Swapna Caterers

MENU 1. 2. 3.
4. 5.

Aloo Chat Papad Paneer Makhanwala Veg Kolhapuri Dal Fry/Dal Tadka (any one) Pickle Sweet (Ltd): Gulab Jamun/Rasgulla/Sitafal Basundi Naan/Puri/Paratha Vegetable Pulav

6.
7.

8.
9.

10.Raita
11. Farsan

Item: Cutlet, Cocktail Samosa / Harabhara Kebab

Note:

Taxes as applicable 14 COST MGMT & MGMT

MHRDM 2010 2013 CONTROL

Order will be taken for the numbers of persons fixed At the time of the order and rate will be charged accordingly, Irrespective of their presence at the occasion 50% advance with the order and balance after the function will be taken. Minimum order should be for 25 persons Parcels are not entertained after the function All food prepared in refined sunflower oil only

Statement of Cost for 100 Plates

NO. PARTICULARS WORKIN AMOUNT G NOTE (Rs.) NO. 1 2 3 10500 5000 1500 17000 4 1500 18500
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1 2 3

DIRECT MATERIAL DIRECT LABOUR DIRECT EXPENSES PRIME COST

ADD: OTHER OVERHEADS TOTAL COST

5 6 7

PROFIT SALES SELLING PRICE PER PLATE

10000 28500 285

The company initially attains the total cost by summing up the cost items. Once this is done cost per plate is calculated. The company then fixes the per plate price with the customer through negotiations to reach the profit per plate and thus the profit margin. Notes:
1. 2.

Utensils & tables are on rent. The labour is paid on a consignment basis.

Working Notes
1. DIRECT MATERIAL NO INGREDIENTS QUANTITY PRICE PER KG/LTR 50 20 30 150 40 TOTAL EXPENS E 250 300 90 600 160

1 2 3 4 5

Sitafal Tomato Carrot Papad Peas

5 kg 15 kg 3 kg 4kg 4 kg
16

MHRDM 2010 2013 CONTROL

COST MGMT & MGMT

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Lemons Onions Potatoes French beans Capsicum Oil Sugar Curd Kasuri Methi Dal Corriander Chillies Mix masala Ghee Basmati Rice Maida Paneer Mava Cashewnuts Raisins Amchur Jeera Rai Palak

30 pcs 15 kg 10 kg 4 kg 2 kg 15 litres 4 kg 12 kg 100 gms 10 kg 10 bundles 500 gms 250 gms 5 kg 10 kg 10 kg 7 kg 2 kg 250 gms 200 gms 100 gms 50 gms 20 gms 50 Bundles
17

5 18 15 50 40 90 15 50 150 45 12 54 400 150 50 35 120 150 400 250 100 100 120 7

150 270 150 200 80 1350 60 600 15 450 120 30 100 750 500 350 840 300 100 50 10 10 10 350
COST MGMT & MGMT

MHRDM 2010 2013 CONTROL

30 31 32 33 34

Milk Wheat Flour Assorted Mukhwas Pickle Rasgulla

30 litres 10kg 1 Kg 1kg 250

25 14 230 135 4/piece TOTAL

750 140 230 135 1000 10500

2. DIRECT LABOUR SERIAL NO. 1. 2. 3. LABOUR Main Cooks Helpers Cleaners TOTAL NUMBER 2 3 2 7 WAGES 3000 1500 500 5000

3. DIRECT EXPENSES

SERIAL NO. 1

ITEMS GAS CYLINDER TOTAL

NUMBER 4

AMOUNT 1500 1500

4. OTHER OVERHEADS

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SERIAL NO. 1. 2. 3. 4. 5.

ITEM Utensils Rent Electricity Tables Paper Napkins TOTAL

AMOUNT 540 400 300 200 60 1500

Bibliography

Cost Accounting by CHAWLA AND KAPOOR

Cost Accounting by Horngen , Datar ,Foster

Visit to Swapna Caterers

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