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Costing and Pricing: Group 1

The document discusses costing and pricing, which are important areas for any business. It describes a group exercise where participants calculated costs for products and identified fixed and variable expenses. The concepts of fixed and variable expenses were then discussed. Groups then set prices for their products by identifying expenses and setting prices to cover costs while making a profit. Each group then presented their findings which included lists of expenses, costs per unit, and proposed prices.

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Nishant Neogy
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© Attribution Non-Commercial (BY-NC)
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52 views4 pages

Costing and Pricing: Group 1

The document discusses costing and pricing, which are important areas for any business. It describes a group exercise where participants calculated costs for products and identified fixed and variable expenses. The concepts of fixed and variable expenses were then discussed. Groups then set prices for their products by identifying expenses and setting prices to cover costs while making a profit. Each group then presented their findings which included lists of expenses, costs per unit, and proposed prices.

Uploaded by

Nishant Neogy
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Costing and Pricing

Costing and pricing are two very important areas of any business. In smallscale enterprise women very often price their products without undertaking costing. The session started with a group exercise. Participants were divided into four groups. Each group calculated the costs of products based on an exercise on page 57 of the manual. Each group also identified areas to be considered in costing items. In any business there are two types of expenses: fixed expenses and variable expenses. In general, fixed expenses never change, while variable or recurring expenses change along with the changes in the volume of transactions. The concepts of fixed and variable expenses were discussed in the plenary. Then participants were asked to read Handout 8.1 for getting more insight into how to set prices for goods. After reading Handout 8.1 participants were divided into groups to set prices for their products. During the group discussion each group identified fixed expenses and variable expenses for their product and set prices for their product as per expenditure (considering fixed expenses). In the plenary each group presented its findings, which are as follows:

Group 1
Variable Cost ($) Seed cost Pesticides Fertilizer Labour cost POL cost Transportation Sales tax Interest Power and water Adver. sale production and packing Unforseen (misc.) 30.00 15.00 10.00 200.00 21.00 22.00 7.00 21.00 @ 6% 5.00 19.00 19.00 380.00 Fixed Cost ($) Land rent Power tiller Mat/mini equipment Training 60.00 30.00 10.00 20.00 120.00

Variable cost $ 380 + 0.090 per kg.

Fixed cost + 120 + 0.03 per kg +

profit 8y 0.02

= = =

price @ 16.8 % 0.14 $

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Small-scale Enterprise for Neo-literates through CLCs

Expenses: 1 day buying 1 day boiling and drying 1 day husking 5 days selling paddy rice transport porter tax firewood husking Total cost = Cost per kg. = $ 39 $ 0.278 1x2 1x2 1x2 5x2 = = = = $2 $2 $2 $ 10 $ 10 $ 10 $ 1 $ 2 $ 1 $ 4 38 + 1 = 39

$ 16

Group 2
A. Fxed Cost ($) Bananas (100 kg) Sugar Oil Spices Equipment Gas Labour Package Rent 15 2 2 1 10 5 6 1 1 45 B. Vairable Cost ($) Advertising Transportation Storage Survey Porter Tax Interest Sub total 8 3 3 3 2 1 1 21

Total A + B = $ 66 $ 66 : 200 package = $ 0.33 fixed price 300 grm = $ 330 1 grm $ 1.1 1 kg. - $ 1.10 Package price : $ 0.50 Total Profit = $ 34.00 Cost of Rice Paddy Transport Porter Tax Wood Husking Labour/wage $ 10 (200 kg.) $1 $2 $1 $4 $4 $ 16 (8 days x $ 2)

Interest $ 1.06 ($ 4/30 days) 200 kg Paddy = 140 rice $ 39.06 (rice) 1kg = $ 0.28/kg

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Group 3
Expenses : 200 kg. Paddy = 140 kg. $ 10 for 20 kg. of paddy $ 1 for transportation $ 2 for porter $ 1 for tax $ 4 for firewood $ 4 for husking (200 divided by 50 = $ 4) $ 16 for cost of labour ($ 2X8 days = $ 16) (1 day for buying and 1 day for husking and $ 38 1 day for boiling and 5 days for selling = 8 days) Interest = 1.3 3.93

140 kg of rice (28 kg. per 40 kg paddy) 1 kg rice = $0.3 Tailoring and designing ($) Cost of machines Transportation Tax (3%) Rent Electricity Wages (20x20 = 200) Promotion Raw materials Interest (6%) Repairs Miscellaneous 3 per piece of uniform (900) 5 per piece of design (300) Capital Borrowed = $ 500 = $ 200/(1525 + 975) 1,200 125 75 100 20 400 50 300 150 50 30 2,500

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Small-scale Enterprise for Neo-literates through CLCs

Group 4
Handicraft Production A. 1. Variable cost raw materials wood nails shellac sandpaper wax 2. 3. 4 5. 6. 7. 8. B. 1. 2. P 1,000.00

P 2,000.00 P10,000.00 1,500.00 2,500.00 1,500.00 2,000.00 3,000.00 2,000.00

labour packaging transportation electricity/fuel tax sales promotion maintenance Fixed Cost license tools/machines

P 500.00 10,000.00 P 45,000.00 P 5,000.00 50,000.00

C. Contingency Amount Product Produced 150 unit

Unit cost = 30,000 = P200/unit 150 Unit price = P unit cost + (25% Profit Margin) including depreciation cost = 200 + 50 = P 250 Total income = P 250 x 150 = P 37,500.00 Gross profit = 37,500.00 30,000.00 = P 7,500/month

Costing and Pricing

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