Presentation On:

Bamboo Lamp
 Presented By:
Name ID

Anika Tahsin Tondra 1813637630

Nusrat Jahan Lamia 1511751030

Sabiha Naim Nisha 1811627630

Saiful Alam Miraz 1531470630

Syeda Afrida Reza 1812995630

Introduction
The main raw materials for making the lamp is bamboo plants. Bamboo lamps do not produce harmful
substances into the atmosphere so that they suit the ecological requirement. Keeping people’s choice in
mind we have come out with the idea of making and selling Bamboo Lamp since it falls into the category
of unique products and it will help to satisfy both our and our customers.

Direct Materials:

Plywood,
Bamboo Plants,
Lightning Sets,
Stripping Nails, and
Thin Ropes
Jigsaw
Drilling Machine
Maximum Production in a Month
Working days in a month 24 days
Number of labors worked - 5 labors
Manufacturing sector- 4 labors
Sales and supportive department- 1 labor
Each employee can manufacture per day- 5 units
4 employees can manufacture per day- (5 units* 4 labor) = 20 units
In a month production, we will manufacture (20 units* 24 days) = 480 units
 Manufacturing Process
Our product is ‘Bamboo Lamp’ manufacturing consists of 5 steps:

 Step 1: First we collected all the materials like a processed slice of bamboo round shape plywood piece, nails, glue, LED
Lights Set and thin rope for decorating.
 Step 2: We take short pieces of bamboo and dug out many holes on the bamboo using drill machine to spread out the
light ray.
 Step 3: We took plywood pieces and cut them in a rounded shape with the help of jigsaw and attested them to the
bottom of the bamboo with nails and glue to make the lamp stand on any straight surface.
 Step 4: In this step we place the light set. For installation of light we dug a hole in the plywood on the bottom of lamp
shades with the help of drill machine and put the light in the bamboo and fixed the LED light set.
 Step 5: In Last step for making the lampshade a classier look we take a thin rope and twist around the bottom part of the
bamboo and fix it using glue.
Production Cost
Direct Material + Direct Labor + Manufacturing Overhead = Production cost

Direct
Materials
Production Cost
Direct
Labor Cost

Manufacturing
Overhead
Selling and Support Cost
Selling Cost

Support Cost
Cost Analysis
Fixed Cost

Variable Cost
Full Cost
Prime Cost = Direct materials + Direct labor = 51690 + 36288 = BDT. 87978

Conversion Cost = Direct labor + Manufacturing overhead (MOH) + Other Direct Cost

Full Cost = Fixed Cost + Variable Cost

= 57600+105238
= BDT 162838
Product Cost Per Unit
Total Budgeted Production is 480 units

Under Simple Costing Costing Strategy

Total Cost Per Unit is 252.66 Taka
Since we are a small business, we will use a direct
method to allocate support department cost to
Under Activity Based Costing the operating department.
Total Cost Per Unit is 280.99 Taka
We have only one department (AS&IS) under
supportive department, so we will allocate 60% of
the cost to the manufacturing department and
40% to the Sales department.
Product Line Profitability
ABC
59,578 BDT

Simple Costing
31,618 BDT
 Pricing Strategy
We have chosen the market base strategy
and our product price is 446 Tk per Bamboo
lamp considering our product cost and
competitor’s price. We have given the price
as Tk 446 because there are a few
competitors already in the market with
nearer prices. If we want to compete in the
market, we have to focus on the market
based strategy.
 Master Budget
According to the marketing analysis, bamboo lamps are existing
products but our business is new in the market. Hence, we are Direct Labor Cost Budget
predicting to sell 436 units of products in the first month. Total Direct Labor Cost = 65318 BDT

Sales Budget = Units * Selling Price

= 436 * 446 Direct Materials Purchase Budget
= 194,456 BDT Total Direct Materials Usage Cost = 51686 BDT
Production Budget
Budgeted sales unit 436 Direct Manufacturing Overhead Budget

Target ending inventory (436*10%) 44 Total MOH Cost = 23300 BDT

Beginning inventory 0
Direct Materials Cost Budget
Total units needed to be produced 480
Total Direct Material Cost : 59438.9 BDT
 Master Budget
Predetermined overhead rate (POHR)
= Budgeted MOH/Direct Labor hours Manufacturing Budget

=23300/864hours Total Cost = 23868.59 BDT

= BDT 26.97/DLH
Ending Inventory Budget

MOH per units Plywood= 432 BDT

= Budgeted MOH/Units needed to produce  Bamboo= 3024 BDT

=23300/480                                                                          
= 48.54 Cost of Goods Sold Budget
Total Cost = 116235 BDT
 Budgeted Income Statement
In Traditional Format In Contribution Format
Forecasting
Break-Even in revenue
Break-Even Point in Unit
= 446taka * 281units
= Fixed cost/ Contribution margin per unit
=125326 Taka
= 57600/204.63
= 281units
Margin of safety in BDT
= Budgeted Revenue – Break Even Revenue
Margin of safety percentage =194456 –125326 Taka
= Margin of Safety/Budgeted Revenues*100 = 69130 Taka
= 69130/125326 taka
The margin of safety ratio indicates that if revenue falls by more than 55.16%, we will
= 55.16% incur loss. However, our actual sale is around 1.55 (436/281) times of our break-even sales
in units. Since, higher MOS reduces the risks, and that we are selling more than that of
the break-even units, we assume to be in a safe position.
 Sensitivity Analysis
Scenario 1:
If we increase the Direct Materials by 12%, our net
operating profit will increased by 13,421 taka.
Degree of Operating Leverage
= Contribution Margin / Operating Income
Scenario 2:
= 89218 / 36461
If we decrease the demand of our budgeted sales units by
= 2.44 times 10%, our net operating profit will decrease by 9,003 taka.

Operating leverage is a cost-accounting formula that calculates the

extent to which a company can increase operating income by raising
Scenario 3:
sales. In a weak economy, having low operating leverage helps an
organization to survive periods of low sales. Here the degree of If we increase the demand of our budgeted sales units by
operating leverage is quite low which tells us that it will help the 15%, our net operating profit will increase by 13,301 taka.
company to survive for a longer period.
Thank You !!