This document summarizes the costing and budgeting for sandal production. It includes analysis of direct material costs, direct labor costs, manufacturing overhead costs, and allocation of overhead. Budgets are presented for production, direct materials, direct labor, cost of goods sold, income statement, contribution margin, break-even point, margin of safety, and sensitivity analysis. The objective is to apply managerial accounting concepts to determine the full cost of each sandal and budget costs and profits.

1. Product : Sandal
Application of managerial accounting concepts to product costing

2. William Banarjee 142 0369 030
Nishat Tasnim Anika 123 1053 630
Tanjina Mozumdar 132 0135 030
Mariam Mozumdar 132 0136 03o
Rifat Islam 123 0564 030
Presented By:

3. INTRODUCTION
Product is sandal
Focusing on this product because of high demand in market
Nature of this business is manufacturing and wholesaling
Produce good quality product at reasonable price and hopefully our
customers will be satisfied with the product.

4. Competitor Analysis
Targeting to achieve the extra edge
Providing goods at reasonable price
Quality of the product will be an advantage competitors over our

5. Manufacturing process of the product
Step1: Cutting
Step2: Assembling
Step3; Finishing & Inspection

6. 1 2 3 4 5
Unit produced
per hour
No of working
hours in a day
No of Working
days in a
month
No. of labors Total
Maximum
Production
Possible
(1*2*3*4)
4 units 8 hours 24 days 5 labors 3840 units

7. Estimated Costs Cost
Direct Material
Direct Labor
Indirect Material (stitches,
adhesives etc.)
Depreciation on Machinery
Rent of factory & Utilities
Selling & Packaging Cost
৳518,400.00
৳96,000.00
৳96,000.00
৳ 10,000.00
৳ 35,000.00
৳ 35,000.00

8. Cost Per Unit No of units
Produced
Total Cost
leather 75 BDT 3840 units ৳288,000.00
Plastic Sole 60 BDT 3840 units ৳288,000.00
Total direct cost ৳ 518,400.00

9. No of Labor
allocated
No of hours
worked by
each labor in
a month
Total labor
hours
Per hour labor
cost
Total
Cutting Labor 2 labors 192 hours 384 hours 100 BDT ৳38,400.00
Assembly
Labor
2 labors 192 hours 384 hours 100 BDT ৳38,400.00
Finishing and
Inspecting
Labor
1 labors 192 hours 192 hours 100 BDT ৳19,200.00
Total labor
hours
960 labors Total Labor
Cost
৳96,000.00

12. Product Cost Direct / Indirect Fixed / Variable
Leather
Plastic Sole
Labor (Cutting, Assembling,
Finishing)
Indirect Materials
Depreciation on Machinery
Rent of Factory & Utility
Selling & Packaging Cost
Direct Material
Direct Material
Direct Labor
Indirect Manufacturing
Overhead
Indirect Manufacturing
Overhead
Indirect Manufacturing
Overhead
Indirect Manufacturing
Overhead
Variable
Variable
Variable
Variable
Fixed
Fixed
Variable

13. Variable Costs Total Per unit
Leather ৳ 288,000.00 ৳ 75.00
Plastic Sole ৳ 230,400.00 ৳ 60.00
Manufacturing Labor Cost ৳ 96,000.00 ৳ 25.00
Indirect Material (stitches,
adhesives etc.)
৳ 96,000.00 ৳ 25.01

14. Fixed Costs Total Per unit
Depreciation on
Machinery
৳ 10,000.00 ৳ 2.60
Rent of factory &
Utilities
৳ 35,000.00 ৳ 9.12
Total ৳ 45,000.00 ৳ 11.72

15. Total cost Per unit cost
Direct Material ৳ 518,400.00 ৳ 135.00
Direct Labor ৳ 96,000.00 ৳ 25.00
Total Direct Cost ৳ 614,400.00 ৳ 160.00
Total Indirect Cost ৳ 176,000.00
Indirect Cost Allocated to
Each Unit**
৳ 45.83
Total Cost ৳ 790,400.00 ৳ 205.83

17. Total Per unit
Direct Material ৳ 518,400.00 ৳ 135.00
Direct Labor ৳ 96,000.00 ৳ 25.00
Direct Expenses - -
Prime Cost ৳ 614,400.00 ৳ 160.00

18. Total Per unit
Direct Labor ৳ 96,000.00 ৳ 25.00
Manufacturing
Overhead
৳ 176,000.00 ৳ 45.83
Conversion Cost ৳ 272,000.00 ৳ 70.33

19. Total Per unit
Direct Material ৳ 518,400.00 ৳ 135.00
Direct Labor ৳ 96,000.00 ৳ 25.00
Manufacturing
Overhead
৳ 176,000.00 ৳ 45.83
Full Cost ৳ 790,400.00 ৳ 205.83

20. Activity based costing
Direct material 518400
Direct labor 96000
Indirect cost
Indirect material 96000
Rent and factory utility 35000
Depreciation on machinery 10000
Selling and packaging cost 35000

21. Indirect Costs Total
Budgeted
Cost
Cost Driver
Indirect Materials
৳ 96,000.00 Percentage Used
by each
department
Rent of Factory &
Utility
৳ 35,000.00 Square Footage area
Depreciation on
Machinery
৳ 10,000.00 No of Machine Hours
Selling & Packaging
Cost
৳ 35,000.00 Labor Hours

22. Cutting Assembling Finishing
& Inspecting
Total
Square Foot 400 sft
400 sft 200 sft
1000 sft
Percentage Used by each
department
10% 70% 20% 100%
Number of Machine Hours 384 hours 384 hours 192 hours 960 hours
Labor Hours 384 hours 384 hours 192 hours 960 hours

23. Indirect Costs of
Activities:
Cutting Assembling Finishing
& Inspecting
Total
Indirect Materials
৳ 9,600.00
৳ 67,200.00
৳ 19,200.00
96,000.00
Rent of Factory & Utility ৳ 14,000.00 ৳ 14,000.00 ৳ 7,000.00 35,000.00
Depreciation on Machinery ৳ 4,000.00 ৳ 4,000.00 ৳ 2,000.00 10,000.00
Selling & Packaging Cost ৳ 14,000.00 ৳ 14,000.00 ৳ 70,000.00 35,000.00

24. Simple costing
Revenue ৳ 1,031,700.00
Less: Total Direct Cost ৳ 614,400.00
Less: Total Indirect Cost ৳ 176,000.00
Net Operating Income ৳ 241,300.00

25. Activity based costing
Revenue ৳ 1,031,700.00
Less : Total Direct Cost ৳614,400.00
Indirect Materials ৳ 96,000.00
Rent of Factory & Utility ৳ 35,000.00
Depreciation on Machinery ৳10,000.00
Selling & Packaging Cost
৳35,000.00
Net Operating Income
৳ 241,300.00

26. Simple Costing System
Revenue ৳ 1,031,700.00
Less: Total Direct Cost ৳ 614,400.00
Less: Total Indirect Cost ৳ 176,000.00
Net Operating Income ৳ 241,300.00
ABC System
Revenue ৳ 1,031,700.00
Less : Total Direct Cost ৳614,400.00
Less: Indirect Costs
Indirect Materials ৳ 96,000.00
Rent of Factory & Utility ৳ 35,000.00
Depreciation on Machinery ৳10,000.00
Selling & Packaging Cost ৳35,000.00
Net Operating Income ৳ 241,300.00
Operating Income Percentage = ৳ 241,300.00 / ৳ 1,031,700.00
= 23.39 %

27. December 2015
Budgeted Sales In Units 3490 Units
Demand for Product 3490 Units
Forecast of Sales and Demand

28. Revenue Budget
Units Selling Price Total
Sandal 3490 Units ৳ 300.00 ৳ 1,047,000.00
৳ 1,047,000.00

29. Production Budget
Dec-15
Budgete
d Sales 3490 Units
Add: Desired Ending Inventory 349 Units
Total
Needs 3839 Units
Less: Beginning Inventory 0
Required Production 3839 Units

30. Direct Material Usage Budget
Physical Units Budget
Direct Material: Leather Plastic Sole
Leather (3839 units * 1,5 square feet)
5758.5
square feet
Plastic Sole ( 3839 units * 1 unit) 3839 units
Total Quantity of Direct Material to be
used 5758.5 s.f. 3839 units

31. Direct Material: Leather Plastic Sole Total
Leather (5758.5 square feet * 50
BDT ) ৳ 287,925.00
৳
287,925.00
Plastic Sole ( 3839 units * 60 BDT)
৳
230,340.00
৳
230,340.00
Total Direct Material to be used ৳ 287,925.00
৳
230,340.00
৳
518,265.00
Cost Budget

32. Direct Material Purchase Budget
Leather Plastic Sole
Leather (6649 s.f. * 50 BDT per s.f.)
৳
332,450.00
Plastic Sole (4415 units * 60 BDT per unit ) ৳ 264,900.00
Purchases
৳
332,450.00 ৳ 264,900.00

33.
No of
Labor
allocat
ed
No of hours
worked by
each labor in
a month
Total
labor
hours
Per hour
labor cost Total
Cutting
Labor 2 labors 192 hours 384 hours 100 BDT
৳
38,400.00
Assembly
Labor 2 labors 192 hours 384 hours 100 BDT
৳
38,400.00
Finished
Labor 1 labors 192 hours 192 hours 100 BDT
৳
19,200.00
Total labor
hours 960 hours
Total Labor
Cost
৳
96,000.00
Direct Manufacturing Labor Costs Budget

34. Ending Inventory Budget
Quantity
Cost Per
Unit Total
Direct Materials:
Leather 890.5 s.f. ৳ 50.00 ৳ 44,525.00
Plastic Sole 576 units ৳ 60.00 ৳ 34,560.00
Total Ending Direct Material ৳ 79,085.00
Finished Goods:
Sandel 349 Units ৳ 205.83 ৳ 71,834.67
Total Finished Goods Inventory ৳ 71,834.67
Total Ending Inventory ৳ 150,919.67

35. Cost of Goods Sold Budget
Total
Beginning Finished Good Inventory 0
Direct Material Used ৳ 518,265.00
Direct Manufacturing Labor ৳ 96,000.00
Manufacturing Overhead ৳ 176,000.00
Cost of Goods Manufactured ৳ 790,265.00
Cost of Goods Sold available for Sale ৳ 790,265.00
Deduct: Ending Finished Good Inventory ৳ 71,834.67
Cost of Goods Sold ৳ 718,430.33

36. Budgeted Income Statement
Revenue ৳ 1,047,000.00
Cost of Goods Sold ৳ 718,430.33
Gross Margin ৳ 328,569.67
Operating Costs:
Indirect Materials ৳ 96,000.00
Selling & Packaging Cost ৳ 35,000.00
Depreciation on Machinery ৳ 10,000.00
Rent of Factory & Utility ৳ 35,000.00
৳ 176,000.00
Operating
Income ৳ 152,569.67
Traditional Format:

37. Contribution Margin:
Total
Revenue ৳ 1,047,000.00
Less: Variable Costs
Indirect Materials ৳ 96,000.00
Cost of Goods Sold ৳ 718,430.33
Selling & Packaging Cost ৳ 35,000.00
Total Variable Cost ৳ 849,430.33
Contribution Margin ৳ 197,569.67
Less: Fixed Costs
Depreciation on Machinery ৳ 10,000.00
Rent of Factory & Utility ৳ 35,000.00
Total Fixed Cost ৳ 45,000.00
Net Operating
Income ৳ 152,569.67

38. Breakeven Point
1 2 3
Fixed Cost
*Contribution Margin per
Unit
*Breakeven Point
(1/2)
৳
45,000.00 ৳ 56.61 per Unit 795 units
Breakeven Revenue
1 2 3
Breakeven Point in units
Selling Price per
Units Breakeven Revenue (1*2)
795 units ৳ 300.00 ৳ 238,500.00

39. Margin of Safety
1 2 3
Budgeted Revenue Breakeven Revenue
Margin of Safety in BDT
(1-2)
৳ 1,047,000.00
৳
238,500.00 ৳ 808,500.00
Margin of Safety in Percentage = Margin of Safety in
BDT / Budgeted Revenue
= ৳ 808,500.00/ ৳ 1,047,000.00
= 77.22%

40. Summary of Sensitivity Analysis
Unit Sold
Selling
Price
Direct
Material
Cost per
Unit
Budgeted
Operating
Income
Change if
Operating
income from
Master Budget
Master Budget
3439
units ৳300.00 ৳135.00 ৳ 152,569.67
Scenario 1
12% increase in
price of Direct
Material
3439
units ৳300.00 ৳151.20
৳
96,031.67
decreased by
36.52%
Scenario 2
10% decrease in
Budgeted Sales
3141
units ৳300.00 ৳135.00 ৳ 119,704.34
decreased by
21.54%
Scenario 3
15% increase in 4014 increased by