How to obtain pre unit cost of production.

1. TOPIC:- ESTIMATED COST OF
PRODUCTION OF A CELL PHONE.

2. SPECIFICATIONS
Key Features:-
• 4 GB RAM / 32 GB ROM / EXPANDABLE UPTO 256 GB
• 5.1 inch Quad HD Display (Gorilla glass 4)
• 13 MP Rear camera / 5 MP Front camera
• 3000 mAh Li-ion battery (Non- Removable)
• Exynos 8890 processor

3. Cont.…
• Android Marshmallow 6.0 operating system
• SIM size- Nano SIM
• WI-FI- 802.11a/b/g/n/ac
• NFC support
• Network types support- 4G,
3G,2G(LTE)

4. PRODUCT :- CELL PHONE
PRODUCTION CAPACITY:- QUALITY 1000 Nos. (Per Month)
(I) RAW MATERIALS (1 unit)
ITEMS AMOUNT (RS)
Flash memory and RAM 1,288.24
Display and touch screen 2,834.13
Sensors 531.40
Processor 1,223.83
Camera 1,288.24
Cellular Radio 2,383.25
Wireless Radio 644.12
Packaging 772.94
Battery 901.77
Total 10,595.74

5. (II) Staff and labours (Per Month)
* Assumed cost
(III) Indirect cost (Per Month)
* Assumed cost
DESIGNATION NO. OF PERSON SALARY TOTAL
Production Manager 1 4,000 4,000
Skilled worker 20 3,000 60,000
Un-skilled worker 10 2,500 25,000
House Keeping 2 2,000 4,000
Total 33 11,500 93,000
PARTICULAR AMOUNT (RS)
Power 1000
Water 200
Total 1,200

6. (IV) Factory Overhead (Per Month)
* Assumed cost
PARTICULAR AMOUNT (RS)
Rent 3,000
Postage and stationary 700
Telephone and fax charge 500
Repair and Maintenance 2,000
Transport and conveyance charge 1,000
Advt. and Publicity 500
Insurance and taxes 800
Copyright or licensing (1000 unit) 48,300
Total 56,800

7. • COST OF PRODUCTION
= DIRECT COST + INDIRECT COST + OVERHEAD
• COST OF PRODUCTION OF 1000 units of cell phone
= Total direct cost + Total indirect cost + Total overhead
= Rs (1,06,88,740 +1200+56,800)
= Rs 1,07,46,740

8. COST OF PRODUCT OF 1 UNIT OF CELL
PHONE
(I) DIRECT COST
a) Raw Material = Rs 10,595.74
b) Labour= 98,000/1000 × 1/30
= Rs 3.1
Total Direct Cost = Rs (10,595.74 + 3.1)
= Rs 10,598.84
(II) INDIRECT COST
Indirect cost= Rs 1200
Indirect cost for a cell phone = 1200/1000 × 1/30
=Rs 0.04

9. (III) OVERHEADS
A) Copyright and licensing is in unit.
The cost of the copyright and licensing for 1 unit is
=48,300/1000
=Rs 48.3
Cost of the copyright and licensing for a
cell phone is Rs 48.36
B) Cost of other overheads = Rs 8500
Overhead cost of production of 1 unit
= 8500/1000×1/30
=Rs 0.28
Therefore, Total overhead cost of 1 unit of cell phone
=Rs(48.30+0.28)
=Rs 48.58

10. Cont.…
Cost of production of 1 unit of cell phone
=Direct cost + Indirect cost + Overheads
=Rs (10,598.84+0.04+48.58)
=Rs 10,647.46
Hence,
The cost of production for 1 unit of cell
phone is Rs 10,647.46

11. THANKYOU……