Allowance for Fixed Investment

Investment in plant and other fixed

assets 15,000,000
Practical annual capacity 50,000
Standard volume, percent of practical
annual capacity 80%
Standard
Factory volume,
cost equivalent
per unit at standard 40,000
volume 1,000
Annual factory cost of production at
standard volume 40,000,000
Standard factor for fixed investment
(ratio of investment to annual factory
cost of production) 0.38
 Turnover per
In Relation to
year
Cash Sales 20
Drafts and accounts receivable Sales 10
Raw material and work-in-process Factory Cost 6
Finished Product Factory Cost 12
Gross Working Capital
Fixed Investment
Total Investment
Economic Return Attainable, 20%
With the Investment ratio multiplied by this,
the necessary net profit margin is arrived at 20%
Standard allowance for commercial expenses, 7% 7%
Gross margin over factory cost

Selling price, as ratio to factory cost 1.250

If standard cost = 1,000
Then standard price 1,250
 Ratio to
Ratio to Sales
Factory Cost
Annual Basis
Annual Basis
0.050
0.100
0.167
0.083
0.150 0.250
0.375
0.625

0.030 0.125
0.070
0.100 0.125
 Product A
Ratio to Factory
Ratio to Sales
Cost Annual
Annual Basis
Basis
Gross Working Capital 0.150 0.250
Fixed Investment 0.500
Total Investment 0.150 0.750
Economic Return Attainable, 20%
With the Investment ratio multiplied
by this, the necessary net profit
margin is arrived at 0.030 0.150
Standard allowance for commercial
expenses, 7% 0.070
Gross margin over factory cost 0.100 0.150
a b

Selling price, as ratio to factory cost 1.278

If standard cost = 1,000
Then standard price 1,278
 Product B Total Product (A plus B)
Ratio to Factory Ratio to Factory
Ratio to Sales Ratio to Sales
Cost Annual Cost Annual
Annual Basis Annual Basis
Basis Basis
0.150 0.250 0.150 0.250
0.250 0.375
0.150 0.500 0.150 0.625

0.030 0.100 0.030 0.125

0.070 0.070
0.100 0.100 0.100 0.125
a b a b

1.222 1.250
1,000 1,000
1,222 1,250
Investment in plant and other fixed assets 600,000,000.00
Required ROI 30% before income tax
Practical annual capacity 1,250,000
Standard volume - assume 80%
Factory cost per unit:
Outside purchases of parts 500.00 *
Parts manufactured inside 600.00 *
Assembly hour 75.00
Burden 125.00
Total 1,300.00

Commercial Cost
Inbound and outbound freight 85.00
Tooling and engineering 50.00
Sales and advertising 50.00
Administrative and miscellaneous 50.00
Warranty (repairs within guarantee) 15.00
Total 250.00

Standard volume (80% x 1.250.000) 1,000,000

Annual factory cost of production at standard volume
1,300,000,000
($1.300 x 1.000.000)
Standard factor for fixed investment 0.462

Ratio to Sales
Annual Basis
Gross Working Capital 0.150
Fixed Investment
Total Investment
Economic Return Attainable, 30%
With the Investment ratio multiplied by this,
the necessary net profit margin is arrived at 30% 0.045
Gross margin over factory cost 0.045

Selling price, as ratio to factory cost 1.271

If standard cost = 1,300
Then standard price 1,902

??
tanda *
Standard allowance for commercial expenses, $250
Ratio to Factory
Cost Annual
Basis
0.250
0.462
0.712

0.213
0.213
Investment in plant and other fixed
600,000,000.00
assets
Practical annual capacity 1,250,000
Standard Price 1,902.00
Unit Cost 1,550.00
Fixed Cost 350.00
Variable Cost 1,200.00
Volume Standard 1,000,000
Rasio Modal Kerja 0.25

Standard Volume 60% 80% 100%

Sales ### ### ###
Variable Cost 900,000,000.00 ### ###
Contibution Margin 526,500,000.00 702,000,000.00 877,500,000.00
Fixed Cost 350,000,000.00 350,000,000.00 350,000,000.00
Gross Profit 176,500,000.00 352,000,000.00 527,500,000.00
Laba turun Laba naik
Modal Kerja 312,500,000.00 387,500,000.00 462,500,000.00
ROI 19.34% 35.65% 49.65%
ROI turun ROI naik

?
Modal kerja = rasio modal kerja terhadap biaya pabrik x Total biaya pabrik
Fixed Cost = volume standard x biaya per unit?