Professional Documents
Culture Documents
Introduction
Continued
Products
Aim
Competitors
The major competitor for Rahat Bakers is Jalal sons, Gourmet and Green
valley.
Green Valley has given a lot of competition to Rahat the major reason is
green valley is next to Rahat location wise which is a disadvantage for
Rahat bakers. Green Valley provides high quality products at reasonable
prices so it gives customer a choice to choose Rahat or Green Valley.
Perceptual Map
Total Cost
Anum Shan
Direct Material
Raw Material
Quantity(Total)
Rate
Total (Rs.)
Butter
Sugar
Flour
Baking Powder
Eggs
Flavor
Fresh Cream
373
299
373
6
12238
6
1524
300
55
50
150
8.33
600
300
111900
16445
18650
900
101942.54
3600
457200
Rate
300
55
50
150
8.33
600
300
Cost per Kg
30
5.5
5
30
33.32
1.2
153
228.32
Assumption
Direct Labor
Labor Cost
No. of
workers
Salary
Total
Master Chef
50000
300000
Helpers
16
12000
192000
Assistant Cooks
14
30000
420000
912000
8.290909091
Assumption
Factory Overhead
Manufacturing overheads
Rs.
Electricity
1200000
Gas
600000
Fuel
800000
Guards
144000
Depreciation
143975
Building Rental
900000
Indirect Labor
50000
3837975
Overhead Rate
Overhead Rate = Total Overhead / Total Material in Kg
= 3837975 / 110000
= Rs. 34.89 per kg
Standard Costing
Continued
This tells the management that the companys actual profit will
be less than planned
If the actual costs are less than the standard costs, the
variance is favorable
This means that the actual profit will be more than the planned
profit.
Variances
Butter
Eggs
= (300 295) *373 kg
= (8.33
7.5) *12238
= Rs. 1865 Unfavorable
10157.54 Unfavorable
= Rs.
Variances
Butter
Eggs
= (373kg 385kg) * Rs. 295
(12238 12500) * 7.5
= 3540 Favorable
1965 Favorable
=
= Rs.
Total Variance
Butter
Eggs
= 3540 1865
10157.54 1965
= Rs. 1675 Favorable
8192.54 Unfavorable
=
= Rs.
Break-Even Analysis
Point at which cost or expenses and revenue are equal, there is no net
loss or gain
Total
Unit
Sales
2275000 (35000
units)
65
1300017
37.14
Contribution margin
1219983
27.86
299833
Operating income
920150
Direct Material:
Beginning Material Inventory
2,813,802.817
+Purchases
11,255,211.27
Material available for use
Less ending material inventory
14,069,014.09
3,939,323.944
10,129,690.14
Direct Labor:
912,000
Factory Overhead:
Indirect Labor
50,000
Electricity
1200,000
Gas
Fuel
Guards
Depreciation
Building rental
5,891,675
16,933,365
600,000
800,000
144,000
143,975
900,000
0
Direct Labor
Factory Overhead:
Indirect Labor
50,000
Electricity
1200,000
Gas
600,000
Fuel
800,000
Guards
Depreciation
Building rental
912,000
144,000
143,975
900,000
5,891,675
0
16,933,365.14
0
16,933,365.14
955985
15977380.14
955985
15,021,395.14
Order Point
The lead time should not be more than 3 days for flour and
safety stock should not be for more than 3 days also.
Assumptions :
INVENTORY
Process Costing
Baking
Decorating
Summary
Rahat
Cost of Production
Total
37625
Material
4.65
Labor
9.198
Factory overhead
Total
25.34
Inventory Costs
35000
2625
11.49
886917.49
Cost of WIP
Material
Labor
Factory overhead
12206.25
24123.75
30161.25
66491.2
953408.74
Conclusion
Recommendations
Continued
It should focus on its current bakery service rather than using market
spreading strategy and keeps on opening a new bakery in various places
First, it should focus on its current position and try to improve it and then
opt for a market spreading strategy by opening its new outlets at
various places.