North South University

Department of Accounting & Finance

Course: ACT 202

Submitted to: Rakibul Hasan

Section: 07

Date of Submission: 26 August 2019

Contributors

Full Name ID Number

Somiya Binte Masud 1811553630

Bindu

Sadia Nusrat Shomy 1811920630

1813149630
Rumana Sultana
 Table of Contents

 Executive Summery
 Product Details
 Production Process
 Cost of Product……….. a) Total sells & Selling Price per Unit

b) Direct Materials

c) Direct Labor

d) Variable Manufacturing Overhead

e) Total Fixed Cost

f) Manufacturing Overhead

 Variances
 Product Price
 Product Margin
 Contribution Margin
 Breakeven Point
 References
 Appendix
 Letter of Submission

26th August, 2019

To,

Mr. Rakibul Hasan

Lecturer

North South University

Dhaka, Bangladesh

Subject - Submission of Group Report.

Dear Sir,

It is a great pleasure for us to prepare our group project which is prepared as a requirement of

the Accounting Course (ACT 202) under Department of Business Administration, North South
University. In this report, we have tried to come up with our project about the Production
process, DM, DL,MOH, Production Cost, Profit margin, Contribution margin, Break-even point,
Break even revenue. We selected Spicy Puffed Rice as our product. We would like to thank you
for giving us the opportunity to prepare this group report. If you have any further inquiry
concerning our additional information, we would be very pleased to clarify the information.

Thank You

Somiya Binte Masud Bindu - 1811553630

Sadia Nusrat Shomy -1811920630

Rumana Sultana -1813149630

 Executive Summery

We survey three different places to take an interview of a Spicy Puffed Rice seller. We survey
in Dhaka cantonment, Mirpur 2 and Mohammadpur. Through the interview we have collected
the information of the cost of all direct material cost of spicy puffed rice for one day. There is
one labor that makes spicy puffed rice for the customers. The labor work 8 hours in a day and
make around 200 packets of spicy puffed rice per day. Per packet spicy puffed rice is 10 tk.
The owner invested 6000 tk as a fixed cost.

By the information given above we have calculated the project cost, product cost, product
margin, contribution margin and breakeven point of the product. We have assumed that the
standard price of direct material is 1.70 per packet. Standard quantity of input is 180
packet/units (per day), standard labor hours per day are 10 hours and standard labor rate per
hour is 30 tk. We have used the variable costing method to calculate the product cost and
traditional costing method to calculate the product margin and formula method to calculate the
breakeven point of the product.
Product Details:
The product details we collect through interview the cost of all direct material for spicy puffed
rice for one day. 1 labor makes spicy puffed rice. Total sell is 200 packets and per packet price
is 10. Assumed standard quantity of input is 180 packets per day. Direct materials are puffed
rice, onion, tomato, peanut, pea, chili, coriander, chanachur. Tables and utensils for fixed cost.

Production Process

Chopping onions, green chilies and tomatoes

Adding puffed rice, chanachur, cumin, pea and

bit salt

Mixing all with oil and sour spices

Adding some toppings (coriander leaves)

Finished product to serve

 Cost of Product

 ** Total sell is 200 packets spicy puffed rice in a day and per packet price is 10 tk.
** We have assumed that company standard quality of input is 180 packets per day.

 Direct Materials (Daily basis) :

Puffed rice (100 gm) ----------------------- 116tk

Onion (1 kg) ---------------------------------- 30tk
Tomato (250 gm) ----------------------------29tk
Peanut (20 gm) ------------------------------ 6tk
Pea (20 gm) ---------------------------------- 5tk
Chili (200 gm) -------------------------------- 30tk
Coriander (100 gm) -------------------------15tk
Chanachur (100 gm) ----------------------- 100tk
**Total direct material is = 331tk

**Direct material per packet spicy puffed rice = (331/200 packets) tk

= 1.66 per packet

**We have assumed the company’s standard price of direct material is 1.70 per packet
 Direct Labor (Daily basis) :

**There is one labor for making spicy puffed rice, so total wage in a day is 133tk.

**Direct labor per packet spicy puffed rice is = (133/200 packets) tk

= .67Tk per packet

**One labor actual work for 8 hours in a day and his actual labor rate
(133/8 hours) = 16.63 taka per hour

**We have assumed that company’s standard labor hour per day is 10 hours and
standard labor rate per hour is 30tk

 Total Fixed Cost :

Tables --------------------------- 3000tk

Utensils ------------------------- 3000tk

**Total fixed cost = 6000tk

**Depreciation rate = 15% (assumption)

**Annual depreciation of fixed cost = (6000*15%)tk

= 900tk

**Monthly depreciation of fixed cost = (900/12 monthly) tk

= 75tk

 Variable Manufacturing Overhead (Daily basis) :

Indirect material per day:

Salt -------------------------------------32tk

Bit salt -------------------------------------7tk

Mustard oil --------------------------------50tk

Spices Cumin ------------------------------7tk

Turmeric ------------------------------- 8tk

Cinnamon ----------------------------- 15tk

**Total variable MOH per day = 119tk

**Variable MOH per packet = (119/200 packet) tk

= .60 tk per packet

 Manufacturing Overhead (Monthly basis) :

Depreciation of fixed assets ------------------------------ 75TK

**Estimate MOH = 75tk

**Labor hour per day = 8 hours

** Estimated labor hour per month= (8 hours*30 days) LHs

= 240 LHs

**Predetermined overhead rate = Estimated total MOH

Estimated labor hours
= 75tk
240LHs
= 0.31 Tk
Direct Material Variances (Daily Basis)
Actual Quantity Actual Quantity Standard Quantity

* * *

Actual Price Standard price Standard Price

200 packet * 1.66 200 packet * 1.70 180 packet * 1.70

= 332 tk = 340 tk = 306 tk

Price Variance Quantity Variance

= 8 tk (F) = 34 (U)

Direct Labor Variances (Daily Basis)

Actual Hours Actual Hours Standard Hours

* * *

Actual Rate Standard Rate Standard Rate

8 hours * 16.63tk 8 hours * 16 tk 10 hours * 16 tk

= 133.04 = 128 = 160

Labor Rate Variance Labor Efficiency Variance

= 5.04 tk (U) = 32 tk (F)

Product Price:

Price of per packet spicy Puffed Rice: 10 Taka

Product Margin (Traditional Method)

(For monthly basis)

Seles (10tk * 200packets * 30days) ------------------------------------------- 60,000tk

Direct materials (1.66tk * 200packets * 30days)……. 9,960tk

Direct labor (0.67tk * 200packets * 30days)…………… 4,020tk

Manufacturing overhead applied @

0.31tk per labor hour (0.31 * 200packets * 30days)….. 1860tk
Total manufacturing overhead-------------------- (15,840tk)

**Product margin of the spicy Puffed Rice: 44,160tk

 Contribution Margin:

Total Per unit Percentage

Sales 60,000tk 10tk 100%

Variable expense 17,580tk 2.93tk 29.3%

Contribution margin 42420tk 7.07tk 70.7%

Breakeven point (unit):

Fixed Cost
CM

6,000tk
7.07tk

= 848.65 packets

Dollar sales : Fixed cost

CM Ratio

6,000tk
0.707

= 8486.562tk
 References:
 Managerial Accounting – Garrison, Noreen , Brewer
 Survey on Shaheed Bir Uttam lt girls’ college, Dhaka Cantonment.
Mohammadpur Saint Joseph Higher Secondary School, Mirpur- 2
 www.accountingmanagement.com

Appendix: