Pani Puri Stall

Pani Puri stall

M.Sabari Ayyappan(87)Shivakumar(98)Swathi Manjunath(108)Tanveer Khan(110)Theagarajan(111)Varsha Kumar(112)Vedashree(114)

Costs Involved

Cost incurred are broadly classified in to direct cost and indirect

cost

•Direct cost – directly attributed to production

•Indirect cost – incurred in the course, but cannot be directly

attributed to production

In this business venture –

•Direct cost – Oil peas, onions, puris, tomatoes, Samosas,

coriander, green chillies, sev tamarind, chutneys(sauces), coconut

salt, fuel, spices and transport(freight) – Rs 486(per 100 plates).

•Indirect cost – Rent, electricity, anti rodent poison cakes,

drinking water etc (Rs 39 per 100 plates)

Cost also divided in to Fixed cost and variable cost

Cost that has to be incurred for the mere sustenance of the business

irrespective of the volume of business or trade is called – Fixed cost.

Rent paid, electricity charges are fixed cost no matter how the sales

are in that particular period.

Cost that depends heavily on the quantity of production or volume of

the business – Variable cost.

Oil peas, onions, puris, tomatoes, Samosas, coriander, green chillies

etc are dirteclty proprtional to the volume of the business i.e the

number plates made and sold

Varying cost – mutual relation between volume and variable cost –

volume can alter it & it can alter volume

In this case it can also depend on the process undertaken – Different

dishes produced i.e Sev Puri, pani puri etc

Break-Even Analysis

Study of interrelationships

among a firm’s sales, costs, and

operating profit at various

levels of output

Break-even point (BEP) is the

point at which cost or expenses

and revenue are equal: there is

no net loss or gain, and one has

"broken even"

In the linear Cost-Volume-Profit Analysis model, the break-even

point (in terms of Unit Sales (X)) can be directly computed in terms

of Total Revenue (TR) and Total Costs (TC) as:

TFC is Total Fixed Costs, P is Unit Sale Price, and V is Unit

Variable Cost.

The quantity (P-V) is of interest in its own right, and is called

the Unit Contribution Margin (C). It is the marginal profit per unit, or

alternatively the portion of each sale that contributes to Fixed Costs.

ComputationGraphical method: We first draw the total cost curve (TC in the diagram), the fixed cost curve (FC) and finally the various total revenue lines (R1, R2, and R3) which is the total revenue received at each output level, given the price you will be charging.The break even points (A,B,C) are the points of intersection between the total cost curve (TC) and a total revenue curve (R1, R2, or R3). The break even quantity at each selling price can be read off the horizontal axis and the break even price at each selling price can be read off the vertical axis.

Cost Sheet of a Chat stall per day per 100 plates

Rs for 1 day = 100 unitsDirect materials:fuel (1kg/30days/rs300) 30=3kgs a month = rs 900/30 daysbig = 0.56 kgs/day *rs 700 per14kg cylinder 28

Samosas 40oil 5peas 39onion (2kg) 38puris 161tomatoes 5coriander and green chillies 13sev 25tamarind 30chutneys 7.5coconut 10salt 200 GMS 1spices 32

Direct expensesFuel - transport 12carriage inward 10--Prime Cost-- 486

Factory OverheadsFixedrent - Rs 2000/pm (for a shop 10 hours and 5 hours for the pani puri store)22SemiFixed

Electricity - 200/pm (same 10,5hours as above) 2

Factory cost 24

Cost of production/ cost of sales 511Profit 489sales 1000PFT MARGIN 48.94

BE analysis in the chosen Pani Puri StallComponent Rs Rs

Sales 1000 47Variable cost 486 23Contribution 514 24Fixed cost 24 24Total Cost 510 47Profit 490 0

PV ratio 0.514BE sales 47BE units 5GP/NP 49MOS 953M/S 95

SP is Rs 10

Component Rs RsSales 600 126Variable cost 486 102Contribution 114 24Fixed cost 24 24Total Cost 510 126Profit 90 0


Case 1: SP is Rs 6



Case 2: SP is Rs 8



Case 3: SP is Rs 12

Stock control

Reorder level: This is the level at which storekeeper initiates

purchase requisition for fresh supplies of material.

Minimum level: This represents a level which the stock will

reach with fresh delivery of material provided the fresh delivery is

made within the reorder period and usage remains normal during

the period. Stock is not allowed to fall below this level. It is known

as buffer stock.

Maximum level: This represents the stock level above which the

stock should not be allowed to rise. It is computed as reorder level

plus reorder quantity minus minimum consumption during reorder

period.

Stock turnover and average stock-holding: Stock turnover ratio

for a period is calculated as follows:

Stock turnover ratio=cost of materials used divided by average stock

of material held during that period

Average stock holding is obtained by:-

1) averaging opening and closing stocks.

2) averaging minimum and maximum levels of stock.

3) minimum stock plus half of reorder quantity.

Reorder quantity: this refers to the quantity to be covered in a

single purchase order.

Carrying cost and ordering cost: cost of carrying includes rent,

insurance and other cost of storage, interest on capital blocked,

losses and pilferage, risk of obsolescence, etc. Cost of ordering

consists of the cost of placing an order, setting up of production-run,

transportation and receiving cost. Carrying cost is fixed while

ordering cost is variable.

Economic order quantity (EOQ): EOQ is the quantity fixed at a

point where total cost of ordering and the cost of carrying the

inventory will be minimum.

Inventory calculation

EOQ = sqrt ((2*4900*10)/0.23*6)

= 266 units of puri = 3 packets

Reorder Level = Maximum Consumption * Max lead time = 1050 * 2 days = 2100

Reorder Level

Economic Order Quantity

Minimum Level

Minimum level = Reorder level – Normal Consumption * Normal Lead time

= 2100 – 700 * 1 = 1400

Maximum Level

Maximum level = Reorder Level + Reorder Quantity – Minimum Consumption

Maximum level = 2100 +2100 – 350

= 3850

Waste and ScrapWaste is defined as discarded substances having no value. It is

that part of material which is either lost, shrinks or evaporate in

the manufacturing process and hence, invisible, or a residue

which is visible but having measurable recovery value.

Accounting: Good units should absorb the cost of waste.

However, if any value is realized, the process account concerned

may be credited.

Scrap is defined as discarded material from manufacturing

operations that has measurable but relatively value. They are

usually disposed of without further treatment. They may be

reintroduced into the production process in place of raw material,

such as, scraps in metallurgical industries.

•Readymade puris get crushed due to various reasons.

•For every 60 plates of panipuri, 16 rupees worth of puri get

crushed.

•Around 13.5 rupees worth of crushed puris get used as sev.

•crushed puris worth 2.5 rupees/100 plates will be lost.

•Since the cost of crushed puri lost cannot be identifiable with any

process, this will added to either overheads or material cost

respectively.

Pani Puri Wastage

Pani Puri Stall

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