Cost break up sheet ( per operation cost )

 Cost break up sheet 

To find the cost of any operation

We should know about the various factors that are indulged to complete a specific type of operation

Here is a list of factors that specify the cost of a particular type of product

1. Cost of machine on which we have to prepare our product

2. Life span of the machine so that we can calculate the depreciation value of the machine

3. Production rate of the machine 

4. Area in square feet which is being used to complete that operation.

5. Rent of that area per square feet.

6. Unskilled labour wages in that area.

7. Number of unskilled workers working there to complete that operation.

8. Skilled manpower wages in that area.

9. Number of unskilled workers working there to complete that operation.

10. Power charges in that area

11. What is the machine power consumption rate ?

12. What is the power consumption per minute, per hour, per shift, per day, per month and per year ?

13. What other electrical appliances like light, fan etc are being used to run that machine and to complete that specific operation.

14. If there are other factors that effects the cost of operation , you can them also in the list.

so by considering all these above factors, we can calculate the price incurred to perform a specific operation.

Let us understand with the help of an example

Step 1   To calculate the Number of strokes per year 

Let us assume Strokes per minute as                                           9

Strokes/Day will be 

@21.8 Hrs/day,3 shift,90% efficiency,300 days   

= 9 x 60 x 21.8 x 0.9        =  10594.8 or 10594

Strokes/Yr-3 shift of 8 Hours@90% efficiency                      3178440

Step 2   To calculate the Cost of machine per year 

Let us consider Cost of Machine as                                                   Rs  5500000

And Life span of M/c in Years                                                                   10

So the cost per year of machine considering depreciation will be

= Rs 5500000/10                                                                                 =Rs 550000

Step 3   To calculate the Area Cost per year 

Let us consider Area in Sq. Ft on which machine is fitted as            107.63

Extra Ares(30%),Sq. Ft                                                                        32.3

Then Total Area will be = 107.63 + 32.3 =                                         139.9

Area Cost/Yr@ 7 Rs/Sq.Ft,Rs  =139.9 x 7                        =11753.2

Step 4   To calculate the Manpower cost per year 

Let us consider that one direct manpower is working for that operation

Direct Man cost/Yr@5000/Mth-CTC,for 3 Shifts 

                                                                = 5000 x 3 x 12               =   180000

Let us consider that one indirect manpower is working for that operation

InDirect Man cost/Yr@4000/Mth-CTC,for 3 Shifts                      

                                                                = 4000 x 3 x 12               =   144000

Total Manpower cost/yr,Rs  = 180000 + 144000              =  324000

Step 5   To calculate the Power cost per year 

      Let us assume Power of M/c in Kw                                               28

      Power cost/Yr@Rs 6/Kw and 20%load factor                           

      =   ( 28 x 6 x 300 ) + ( 28 x 6 x 300 x 0.2 ) = 1098720 + 219744 = 1318764

Step 6   To calculate the overhead cost per year 

     Overheads@10% on total costs   = (550000 + 11753.2 +  324000 + 1318764) x 0.1

                                                           = 2204217.2 x 0.1 =  220421.72                                        

Total costs/Year   = 2204217.2 + 220421.72 = 2424638.92

Stroke Rate- in Paise = 2424638.92 / 3178440

                                       
                                                        =Rs 0.77

Thank You

To understand more 

You can follow my youtube video link

https://youtu.be/lRvTPBd8AH0