A PROJECT REPORT ON FINANCIAL ACCOUNTING & COSTING

COSTING OF 100 PLATES OF LUNCH

SUBMITTED BY E-MBA INSURANCE

GROUP NO 7

Group Members
Dhaval Gaglani Lavesh Kalsekar Simul Shah Viraj Vyas Shilpi Jain

Roll No.
818 832 860 866 873

Submitted to Prof. L.N. Chopde

CERTIFICATE
This is to certify that the project titled Costing of 100 plates of lunch is based on the original study conducted by: Dhaval Gaglani Lavesh Kalsekar Simul Shah Viraj Vyas Shilpi Jain 818 832 860 866 873

Under my guidance & this had not formed a basis for the award of any other degree of this Institute. Place: Mumbai Date: 03-12-08 ________________ Faculty sign
3

PREFACE
The following report consists of detailed costing of 100 plates of lunch. The given data for the project has been collected from different sources & has been compiled accordingly. The menu for the lunch plates may vary from supplier to supplier & may affect the costing accordingly. Also the prices of our ingredients and labour may vary from supplier to supplier. Also it is important to know that the Market Price of the below mentioned ingredients may vary accordingly. However, the basic elements of cost statement would remain the same. The overhead costs considered are according to the quantity 100. Furthermore, as the quantity increases, overheads would further increase.
4

ACKNOWLEDGMENT
We would like to thank the manager at Bhavani Caterers and Nagrik Caterers for helping us in completing the project and giving out confidential information about the cost incurred by them for 100 plates. We would also like to thank Prof. L. N. Chopde for giving us an opportunity on working on such a project.

SUMMARY
We have made a cost statement with the help of which understanding of its break up is made available. The Statement of Cost includes Direct Material, Direct Labour, and Overheads. For the purpose of calculation of cost of 100 plates all costs incurred are taken into consideration. The total cost of Direct Material is Rs.6900. The total cost of Direct Labour is Rs.7400. And the Total cost of Direct Expenses and Overheads is Rs.6250. The total cost of 100 plates is Rs.20550. If we consider profit of round about Rs.12450, then our selling price for 100 plates of lunch will be Rs.33000 with a complete delicious food. Thus charges per plate of lunch will be Rs.330 (Rs. 33000100 plates of lunch).

LIST OF CONTENTS
Sr. No.
1 2 3 4 5 6 7

Particulars
Introduction to Costing Direct Material Cost Labour Cost Overheads Cost Profit Menu for 100 Lunch Plates Cost Sheet Details
7

Page No.
8 11 12 13 14 15 16

Bibliography

19

COSTING
COST in accounting means expenses. It is the price paid for attaining the objective. For 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. Cost can be classified as 1. 2. Direct Cost. Indirect Cost
8

1.

DIRECT COST

Direct Cost is a cost that can be directly traced to producing specific goods or services. For example, the cost of Vada in a Vada Pav 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. Therefore Direct Cost can be classified in three elements. 1. 2. Direct Material Direct Labour
9

3.

Direct Expenses

2.

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 firm is an indirect cost that must be spread over a number of products or services. It is also as called overhead.

10

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: 1. 2. 3. Indirect Material Indirect Labour 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
11

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. In the case of lunch plates, the inventory would be the basic food items & 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.

LABOUR COSTS
12

Total labour costs are the sum of wages and salaries 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 our case, Labour costs include the costs of food preparation and service by the workers. Also included are Social Security taxes, 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

13

food plates, the remuneration given to the cooks would contribute majorly as the labour costs.

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

14

 Also includes expenditure made on chairs and tables

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. In our case determining a price is not easy. There is no one exact price. The price is based on the type of event being catered, special services offered and your competition. To operate a profitable catering business, there is a 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 the
15

expenses and earning profits. Caterers price their services using different methods. The pricing formula that covers the costs and provides a profit is as follows: Materials + Labour + Overheads + Profit = Price Therefore, in case of lunch plates the cost will include the following components: -The Materials would include the Cost of food items. -The Labour would include the cost of cooks, helpers. -The Overheads would include the cost of utensils.

MENU FOR COSTING OF 100 LUNCH PLATES

16

1. Salad (Cucumber, Tomato, Onion, Carrot)

2. Papad 3. Paneer Tikka Masala 4. Mix Vegetable 5. Tandoori Roti 6. Dal Tadka 7. Jeera Rice
17

8. Gulab Jamun 9. Khaman Dhokla 1 Raita 0. 1 Pickle 1.

Note that the Menu is taken as a normal one and with consulting the caterers. The Menu may vary as per the clients requirement and thus the cost may vary also. i.e. it may increase or decrease accordingly. In our Case, we will the take above Menu for calculating the cost of 100 lunch Plates.

COST STATEMENT FOR 100 LUNCH PLATES

The statement shown below is consolidated one and the detailed statement is shown in working notes mentioned below.

NO PARTICULARS WORKIN . G NOTE NO.

1 2 3 DIRECT MATERIAL 1 DIRECT LABOUR 2 DIRECT 3
18

AMT. (RS)
6900 7400 1050

4 5 6 7

EXPENSES PRIME COST ADD: OTHER OVERHEADS TOTAL COST PROFIT SALES SELLING PRICE PER PLATE

5200 20550 12450 33000 330

The Caterer first finds the total cost by adding the cost items. Once this is done cost per plate is calculated. The Caterer then fixes the per plate price with the customer through negotiations to reach the profit per plate and thus the profit margin. Notes: 1. Utensils, tables and chair are on rent. 2. The labour is paid on a consignment basis.

WORKING NOTES
1.
NO

DIRECT MATERIAL
INGREDIENT S
Cucumber Tomato Carrot Papad Peas

QUANTIT Y
5 kg 15 kg 3 kg 4kg 3 kg
19

PRICE PER KG/LTR

24 30 25 100 35

TOTAL EXPENS E
120 450 75 400 105

1 2 3 4 5

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Lemons Onions Potatoes French beans Capsicum Oil Sugar Curd Kasturi Methi Dal Corriander Chillies Mix masala Ghee Basmati Rice Maida Paneer Malai Mawa Raisins Amchur Jeera Rai Besan Wheat Flour Mukhwas Pickle

33 pcs 15 kg 6 kg 4 kg 4 kg 10 litres 5 kg 12 kg 100 gms 10 kg 10 bundles 500 gms 250 gms 5 kg 10 kg 10 kg 5 kg 3 kg 4 Kg 100 gms 50 gms 250 gms 20 gms 10 Kg 10kg 500gms 1kg

1 18 10 25 30 60 15 40 100 40 5 40 300 150 45 30 110 50 110 250 100 100 120 40 15 1pct 130

33 270 60 100 120 600 60 480 12 400 50 20 75 750 450 300 550 150 440 25 5 25 5 400 150 100 120

TOTAL

6900

2.

DIRECT LABOUR
NUMBE R 4 6 4 WAGES 4800 600 2000

SERIA LABOUR L NO. 1. Main Cooks 2. Cleaners 3. Helpers

TOTAL

16
20

7400

The Labour is as per the consignment basis. So as per the information gathered the Cooks are paid around Rs.1200 per person, the Cleaners are paid Rs. 100 per person and the Helpers are paid Rs. 500 per person.

3.
SERI AL NO. 1.

DIRECT EXPENSES
ITEMS NUMBE AMOUNT R 3 1050

GAS CYLINDER

TOTAL

1050

The Direct Expenses to the Caterers include of the Gas Cylinders that are used to cook the Direct materials (Food).

4.

OTHER OVERHEADS

21

SERIAL NO. 1. 2. 3. 4. 5. 6.

ITEM Utensils Rent Electricity Tables Chairs Napkins

AMOUNT 2000 2000 800 200 100 100

TOTAL

5200

The other expenses that form part of the Costing are put under OTHER OVERHEADS. The Utensils, Chairs, Tables are on Rent.

BIBLIOGRAPHY
- Cost Accounting by KHAN AND JAIN. - Cost Accounting by Horngen , Datar ,Foster. - Reference of Class Notes.

-THANK YOU-

22