Pani Puri Stall

Pani Puri stall

M.Sabari Ayyappan(87)

Shivakumar(98)

Swathi Manjunath(108)

Tanveer Khan(110)

Theagarajan(111)

Varsha Kumar(112)

Vedashree(114)

Costs Involved

Cost incurred are broadly classified in to direct cost and indirect cost •Direct cost – directly attributed to production

•Indirect cost – incurred in the course, but cannot be directly attributed to production

In this business venture –

•Direct cost – Oil peas, onions, puris, tomatoes, Samosas, coriander, green

chillies, sev tamarind, chutneys(sauces), coconut salt, fuel, spices and transport(freight) – Rs 486(per 100 plates).

•Indirect cost – Rent, electricity, anti rodent poison cakes, drinking water etc (Rs 39 per 100 plates)

Cost also divided in to Fixed cost and variable cost

Cost that has to be incurred for the mere sustenance of the business irrespective of the volume of business or trade is called – Fixed cost.

Rent paid, electricity charges are fixed cost no matter how the sales are in that

particular period.

Cost that depends heavily on the quantity of production or volume of the business – Variable cost.

Oil peas, onions, puris, tomatoes, Samosas, coriander, green chillies etc are

dirteclty proprtional to the volume of the business i.e the number plates made and sold

Varying cost – mutual relation between volume and variable cost – volume can

alter it & it can alter volume

In this case it can also depend on the process undertaken – Different dishes produced i.e Sev Puri, pani puri etc

Break-Even Analysis

Study of interrelationships among a firm’s sales, costs, and operating profit at various levels of output

Break-even point (BEP) is the

point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even"

In the linear Cost-Volume-Profit Analysis model, the break-even point (in terms of Unit Sales (X)) can be directly computed in terms of Total Revenue (TR) and Total Costs (TC) as:

TFC is Total Fixed Costs, P is Unit Sale Price, and V is Unit Variable Cost.

The quantity (P-V) is of interest in its own right, and is called the Unit Contribution Margin (C). It is the marginal profit per unit, or alternatively the portion of each sale that contributes to Fixed Costs.

Computation

Graphical method: We first draw the total cost curve (TC in the diagram), the fixed cost curve (FC) and finally the various total revenue lines (R1, R2, and R3) which is the total revenue received at each output level, given the price you will be charging.

The break even points (A,B,C) are the points of intersection between the total cost curve (TC) and a total revenue curve (R1, R2, or R3). The break even quantity at each selling price can be read off the horizontal axis and the break even price at each selling price can be read off the vertical axis.

Cost Sheet of a Chat stall per day

per 100 plates

Rs for 1 day = 100 units

Direct materials:

fuel (1kg/30days/rs300)

30

=3kgs a month = rs 900/30 days

big = 0.56 kgs/day *rs 700 per14kg cylinder

28

Samosas

40

oil

5

peas

39

onion (2kg)

38

puris

161

tomatoes

5

coriander and green chillies

13

sev

25

tamarind

30

chutneys

7.5

coconut

10

salt 200 GMS

1

spices

32

Direct expenses

Fuel - transport

12

carriage inward

10

--Prime Cost--

486

rent - Rs 2000/pm (for a shop 10 hours and 5 hours for the pani puri store)22

SemiFixed

Electricity - 200/pm (same 10,5hours as above) 2 Factory cost 24

Cost of production/ cost of sales 511

Profit 489

sales 1000

BE analysis in the chosen Pani Puri Stall

Component

Rs

Rs

Sales

1000

47

Variable cost

486

23

Contribution

514

24

Fixed cost

24

24

Total Cost

510

47

Profit

490

0

PV ratio

0.514

BE sales

47

BE units

5

GP/NP

49

MOS

953

M/S

95

SP is Rs 10

Com

ponent

Rs

Rs

Sales

600

126

Variable cost

486

102

Contribution

114

24

Fixed cost

24

24

Total Cost

510

126

Profit

90

0

PV ratio

0.19

BE sales

126

BE units

21

GP/NP

15

MOS

474

M/S

79

Case 1: SP is Rs 6

Component

Rs

Rs

Sales

800

61

Variable cost

486

37

Contribution

314

24

Fixed cost

24

24

Total Cost

510

61

Profit

290

0

PV ratio

0.3925

BE sales

61

BE units

8

GP/NP

36

MOS

739

M/S

92

Case 2: SP is Rs 8

Component

Rs

Rs

Sales

1200

40

Variable cost

486

16

Contribution

714

24

Fixed cost

24

24

Total Cost

510

40

Profit

690

0

PV ratio

0.595

BE sales

40

BE units

3

GP/NP

58

MOS

1160

M/S

97

Case 3: SP is Rs 12

Stock control

Reorder level: This is the level at which storekeeper initiates purchase

requisition for fresh supplies of material.

Minimum level: This represents a level which the stock will reach with

fresh delivery of material provided the fresh delivery is made within the reorder period and usage remains normal during the period. Stock is not allowed to fall below this level. It is known as buffer stock.

Maximum level: This represents the stock level above which the stock

should not be allowed to rise. It is computed as reorder level plus reorder quantity minus minimum consumption during reorder period.

Stock turnover and average stock-holding: Stock turnover ratio for a

period is calculated as follows:

Stock turnover ratio=cost of materials used divided by average stock of material

held during that period

Average stock holding is obtained

1) averaging opening and closing stocks.

2) averaging minimum and maximum levels of stock. 3) minimum stock plus half of reorder quantity.

Reorder quantity: this refers to the quantity to be covered in a single

purchase order.

Carrying cost and ordering cost: cost of carrying includes rent, insurance

and other cost of storage, interest on capital blocked, losses and pilferage, risk of obsolescence, etc. Cost of ordering consists of the cost of placing an order,

setting up of production-run, transportation and receiving cost. Carrying cost is fixed while ordering cost is variable.

Economic order quantity (EOQ): EOQ is the quantity fixed at a point

where total cost of ordering and the cost of carrying the inventory will be minimum.

Inventory calculation

EOQ = sqrt ((2*4900*10)/0.23*6) = 266 units of puri = 3 packets

Reorder Level = Maximum Consumption * Max lead time = 1050 * 2 days

= 2100

Reorder Level

Minimum Level

Minimum level = Reorder level – Normal Consumption * Normal Lead time = 2100 – 700 * 1

= 1400

Maximum Level

Maximum level = Reorder Level + Reorder Quantity – Minimum Consumption Maximum level = 2100 +2100 – 350

Waste and Scrap

Waste is defined as discarded substances having no value. It is that part of material which is either lost, shrinks or evaporate in the manufacturing process and hence, invisible, or a residue which is visible but having measurable recovery value.

Accounting: Good units should absorb the cost of waste. However, if any

value is realized, the process account concerned may be credited.

Scrap is defined as discarded material from manufacturing operations that has measurable but relatively value. They are usually disposed of without further treatment. They may be reintroduced into the production process in place of raw material, such as, scraps in metallurgical industries.

•Readymade puris get crushed due to various reasons.

•For every 60 plates of panipuri, 16 rupees worth of puri get crushed. •Around 13.5 rupees worth of crushed puris get used as sev.

•crushed puris worth 2.5 rupees/100 plates will be lost.

•Since the cost of crushed puri lost cannot be identifiable with any process, this will added to either overheads or material cost respectively.