Analysis

ANALYSIS AND INTERPRETATION CHAPTER IV
ANALYSIS OF COST PATTERN: 1
COST SHEET OF PRIME COST OR MANUFACTURING EXPENSES
Table No: 3.1

prime cost 2000-2001 2001-2002 2002-2003
IN RATIOS IN RATIOS IN RATIOS
RUPEES RUPEES RUPEES
Brooding Expenses 89650 0.016 150000 0.027 175000 0.024
Carriage Inward NIL NIL NIL NIL NIL NIL
Commission and Brokerage- 670392 0.122 598604 0.108 720937 0.101
Purchase
Cess paid 27166 0.005 30175 0.005 46942 0.007
Electricity Charges 4252500 0.776 4337346 0.782 6514344 0.912
Growing Charges 3492125 6.376 3294333 5.941 4628542 6.479
5 6 8
Hatching charges NIL NIL NIL NIL NIL NIL
Rearing charges NIL NIL NIL NIL 2378744 0.333
Railway Freight and Other charges 3941586 0.72 6367546 1.148 9108860 1.275
Rent - Factory & godown NIL NIL 6237334 1.125 2420650 0.339
Wages 514300 0.094 1570778 0.283 1877810 0.263
TNGST – Purchase Tax NIL NIL NIL NIL NIL NIL
Compensation a/c NIL NIL NIL NIL NIL NIL
Delivery Expenses 3507810 0.64 2537500 0.458 1194195 0.167
Repairers & maintance 1549691 2.83 1416457 2.554 11560688 1.618
9 0
6342157 11.58 6893718 12.43 8228359 11.52

8 9 8
COST SHEET OF PRIME COST OR MANUFACTURING EXPENSES
SANKARA COLLEGE OF SCIENCE AND COMMERCE 36

Table No:3.1 (Continuous)
Prime cost 2003-2004 2004-2005 2005-2006 2006-2007

RATIOS RATIOS RATIOS RATIOS
Particulars RUPEES RUPEES RUPEES RUPEES
Brooding Expenses 165000 0.019089 295000 0.0217 939000 0.05826 674599 0.04186
Carriage Inward NIL NIL NIL NIL NIL NIL 2672156 0.1658
Commission and 684000 0.079131 1290000 0.0948 1226000 0.07607 4787881 0.29707
Brokerage-Purchase 8
Cess paid 10000 0.001157 13000 0.0009 36000 0.00223 132046 0.00819
6
Electricity Charges 8641000 0.999661 15475000 1.1381 15943000 0.98921 20565136 1.276
4
Growing Charges 52964000 6.127306 62068000 4.5649 50853000 3.15527 84512418 5.24373
2
Hatching charges 175000 0.020245 86000 0.0063 237000 0.01471 439519 0.02727
3
Rearing charges 3934000 0.455117 5103000 0.3753 3766000 0.23367 3708861 0.23012
1
Railway Freight and 3218000 0.372284 6931000 0.5097 4029000 0.24999 53943417 3.34702
Other charges 6
Rent - Factory & 600000 0.069413 3289000 0.2419 3318000 0.20587 2569525 0.15943
Godown
Wages 2099000 0.242829 3148000 0.2315 5575000 0.34591 7674385 0.47617
3
TNGST - Purchase 49000 0.005669 64000 0.0047 140000 0.00869 39310 0.00244
Tax 1
Compensation a/c NIL NIL NIL NIL 250000 0.01551 664500 0.04123
Delivery Expenses 159000 0.018394 588000 0.0432 673000 0.04176 2686245 0.16667
5
Repairs & maintance 14050064 1.625425 19792000 1.4556 21980000 1.36379 42329455 2.62641
5
86748064 10.04 118142000 8.689 108965000 6.7609 227399453 14.109
CHART OF PRIME COST OR MANUFACTURING EXPENSES

Chart No: 3.1
INTERPRETATION:
The above table shows that the prime cost of the cost sheet during the year 2000-
2001 to 2006-2007. In the year of 2000-2001 the prime cost was 11.58% of sale. It has
increased at 12.43% of sale in the year 2001-2002. From the year 2002-2006 the prime
cost was decreased (12.43 to 6.76). It was maximum at 14.109% of the sale in the year of
2006-2007.
COST SHEET OF ADMINISTRATIVE EXPENSES

Table No: 3.2
Works cost 2000-2001 2001-2002 2002-2003

Salaries, Bonus, PF, Etc., 584294 0.107 1082096 0.195 1715920 0.24
Labour & staff Welfare 300494 0.055 778802 0.14 766918 0.107
Expenses
Gratuity A/c NIL NIL NIL NIL NIL NIL
Books and Periodicals 3790 7E-04 5700 0.001 6000 8E-04
Canteen Expenses NIL NIL NIL NIL NIL NIL
Electricity Charges NIL NIL NIL NIL 767559 0.107
Fine and Penalty NIL NIL NIL NIL NIL NIL
General Expenses 368320 0.067 778802 0.14 197465 0.028
Food and Fever ages NIL NIL NIL NIL NIL NIL
Donation 15000 0.003 20100 0.004 45500 0.006
Insurance 289448 0.053 106126 0.019 360159 0.05
Legal & Accountancy Charges 231450 0.042 279500 0.05 205200 0.029
License Fees and Taxes 46906 0.009 87530 0.016 250012 0.035
Office Expenses 55723 0.01 NIL NIL NIL NIL
Consulting fees 5500 0.001 116361 0.021 5500 8E-04
Advertisement 100220 0.018 750550 0.135 551000 0.077
Printing & Stationery 297571 0.054 205787 0.037 193926 0.027
Professional Charges 105022 0.019 NIL NIL NIL NIL
Remuneration paid to Directors 1200000 0.219 2040000 0.368 2040000 0.286
Rent 2919142 0.533 1246308 0.225 292054 0.041
Security Charges NIL NIL NIL NIL NIL NIL
Subscription 45500 0.008 83450 0.015 90230 0.013
postage and Telegram 3728 7E-04 10200 0.002 15000 0.002
Traveling Expenses 355801 0.065 401166 0.072 554523 0.078
Sales tax & service tax 20000 0.004 69800 0.013 406464 0.057
Telephone Expenses 161265 0.029 218128 0.039 142987 0.02
Festival Expenses 7312 0.001 8450 0.002 9000 0.001
Sundry Balances Written off 217447 0.04 157860 0.028 13967 0.002
7333933 1.339 8446716 1.523 8629384 1.208
COST SHEET OF ADMINISTRATIVE EXPENSES
Table No: 3.2 (Continuous)

Work cost 2003-2004 2004-2005 2005-2006 2006-2007

IN RATIOS IN RATIOS IN RATIOS IN RATIOS
RUPEES RUPEES RUPEES RUPEES
Salaries, Bonus, PF, Etc., 2843000 0.329 2907000 0.2138 2859000 0.177 1715920 0.24
Labour & staff Welfare 775000 0.09 1438000 0.1058 297000 0.018 1615512 0.052
Expenses
Gratuity A/c NIL NIL NIL NIL NIL NIL 48960 0.002
Books and Periodicals 5000 0.0006 5000 0.0004 11000 0.0007 13224 0.0004

Canteen Expenses NIL NIL NIL NIL NIL NIL 169455 0.005
Electricity Charges NIL NIL NIL NIL NIL NIL 274344 0.009
Fine and Penalty 2000 0.0002 7000 0.0005 39000 0.002 30520 0.0003
General Expenses 98000 0.011 178000 0.0131 59000 0.004 268881 0.009
Food and Fever ages NIL NIL NIL NIL 853000 0.053 919785 0.03
Donation 40000 0.005 77000 0.0057 134000 0.008 214581 0.007
Insurance 389000 0.045 629000 0.0463 588000 0.036 419742 0.014
Legal & Accountancy 239000 0.028 50000 0.0037 18000 0.001 5500 0.0002
Charges
License Fees and Taxes 510000 0.059 307000 0.0226 437000 0.027 1507182 0.049
Office Expenses 87000 0.01 113000 0.0083 108000 0.007 93220 0.003
Consulting fees 30000 0.003 30000 0.0022 138000 0.009 62000 0.002
Advertisement NIL NIL 69000 0.0051 79000 0.005 106854 0.003
Printing & Stationery 267000 0.031 377000 0.0277 517000 0.032 853395 0.028
Professional Charges NIL NIL 19000 0.0014 17000 0.001 456086 0.015
Remuneration paid to 2040000 0.236 2040000 0.15 2040000 0.127 1200000 0.039
Directors
Rent NIL NIL 47000 0.0035 95000 0.006 161480 0.005
Security Charges NIL NIL NIL NIL NIL NIL 65250 0.002
Subscription 1123000 0.13 216000 0.0159 278000 0.017 183000 0.006
postage and Telegram 12000 0.001 17000 0.0013 27000 0.002 55912 0.002
Traveling Expenses 788000 0.091 926000 0.0681 413000 0.026 880368 0.028
Sales tax & service tax 6000 0.0007 64000 0.0047 176000 0.011 115605 0.004
Telephone Expenses 240000 0.028 501000 0.0368 699000 0.043 1268576 0.041
Festival Expenses 38000 0.004 72000 0.0053 64000 0.004 105084 0.003
Sundry Balances Written off NIL NIL 3000 0.0002 70000 0.004 177216 0.006
9532000 1.103 10092000 0.74224 10016000 0.62146 16264566 0.52628
CHART OF ADMINISTRATIVE EXPENSES
Chart No: 3.2

INTERPRETATION:
The above table indicates that, the cost sheet of administrative expense was increased at
1.52% of the sales in the year of 2000-2001 to 2001-2002. During the year 2002-2007 the
administrative expanses was decreased from 1.523% to 0.526% of the sales.
COST SHEET OF SELLING AND DISTRIBUTION EXPENSES
Table No: 3.3

2000-2001 2001-2002 2002-2003

Particulars IN RATIOS IN RATIOS IN RATIOS
Selling expenses 39750 0.007 2537500 0.458 1209989 0.169
Commission & Brokerage - 182000 0.031 130510 0.024 696282 0.097
Sales
Unloading and Loading 492275 0.084 690200 0.124 1194195 0.167
expenses
Discount Allowed on Sales 3961489 0.678 1096568 1.978 1803748 2.525
6 7
Depreciation 7485206 1.281 1476062 2.662 1330196 1.862
2 5
12160720 2.081 2908451 5.245 3443991 4.821

8 8
COST SHEET OF SELLING AND DISTRIBUTION EXPENSES
Table No: 3.3

(Continuous)

Particulars 2003-2004 2004-2005 2005-2006 2006-2007

Selling expenses 939000 0.109 5278000 0.3882 1992000 0.1236 3476886 0.1125
Commission & 210000 0.024 4000 0.0003 347000 0.0215 1163400 0.0376
Brokerage - Sales
Unloading and Loading 815000 0.094 1046000 0.0769 596000 0.037 2059686 0.0666
expenses
Discount Allowed on 1689500 1.955 26337000 1.937 45419000 2.8181 76619282 2.4792
Sales 0
Depreciation 2766100 3.2 22220000 1.6342 87142000 5.4069 16999000 0.55
0
4652000 5.382 54885000 4.0366 13549600 8.4071 10031825 3.246

0 0 4
INTERPRETATION:
The selling and distribution expense is based on the investment in advertising, discount
allowed to sales, loading expenses and depreciation charges. The company caution may
have served as a catalyst for sellers, but after prices of raw material and mining stock hit
such heights and production cost. So the selling and distribution expense will differ based
on the sales. The selling and distribution expenses was increasing and decreasing from
the year 2000-2001 to 2006-2007. So it was fluctuating trend. The selling and distribution
expense for the years 2002, 2004 and 2006 was low as well as good.
CHART OF SELLING AND DISTRIBUTION
Chart No: 3.3

COST SHEET OF FINANCE CHARGES
Table No: 3.4
Particulars 2000-2001 2001-2002 2002-2003


Bank Charges 148097 0.027 101120 0.018 641230 0.09
HP Finance Charges 209004 0.038 217802 0.039 46606 0.007
Bank Interest 1094797 0.2 1267408 0.229 3170513 0.444
LIC Charges NIL NIL NIL NIL NIL NIL
1451898 0.265 1586330 0.286 3858349 0.54
COST SHEET OF FINANCE CHARGES
Table No: 3.4

(Continuous)
Particulars 2003-2004 2004-2005 2005-2006 2006-2007

Bank Charges 176000 0.02 309000 0.0227 860000 0.0534 6820934 0.2207
HP Finance 82000 0.009 57000 0.0042 3000 0.0002 11432 0.0004

Charges
Bank Interest 4380000 0.507 9642000 0.7091 11616000 0.7207 17950160 0.5808
LIC Charges 617000 0.071 235000 0.0173 92000 0.0057 NIL NIL
5255000 0.608 10243000 0.7533 12571000 0.78 24782526 0.8019
INTERPRETATION:
The earlier underperformance during the continuous year is due to factors like rising
interest rates and bank charges, slowing credit growth, pressure on interest margins and
potential threat of rising non-performing assets. Cost sheet of finance charges from the
year 2001-2002 to 2006-2007. The maximum during the year 2006-2007 at 0.80% of
the sale and it was minimum during the year 2002-2003 at 0.54%.
CHART OF FINANCE CHARGES
Chart No: 3.4

ANALYSIS OF THE WARE HOUSE IMPLEMENTATION COST
Table No: 3.5
Initial Investment amount of ware 1,30,40,301

house on 2007
Benefit Received in the year
of 2007
Rent 1800000
Reduction of 800000
transportation cost
Raw material waste 150000
Labour utilization wage 576000
Total 33,26,00
0
If Ware house was not implementing and that amount was invested into
bank or if any other financial institutions the interest rate would be
Investment amount 1,30,40,301
Bank Interest @ .85% per 1330111

Month
(-)Tax 260806
10,69,30
5
INTERPRETATION:

The above table indicates the analysis of warehouse implementation during the
year 2007. The company has spend the implementation of warehouse amount was
RS.1,30,40,301. For that purpose farm has saved Rs.33,20,000. The Company need
1,50,000 sqr.fit capacity of warehouse still the year of 2010. So the company will save
Rs 25,00,000 to 45,00,000 lakhs per year for the warehouse implementation.
If the company have invested for the bank RS.13040301it will receive the interest
only RS. 1069305.
But the financial year of 2007 the company has saved RS.33, 22,000 for the
implementation of warehouse to receive the benefit.
ANALYSIS OF THE WINDMILL POWER GENERATION:
Table No: 3.6

Initial Investment amount of power 19,41,13,502

generation up to 2007
Some additional cost in this year
of 2007
Rent 10,00,000
Other cost 800000
18,00,000
Total cost 195913502
Total income up to 2007 90950770
Power utilization in its 59158943
own consumption
Total income and 15010971
consumption 3
INTERPRETATION:
Globally, coal and gas continue to dominate as the prime source for generating
power. The growing presence in other markets and favorable industry trend is also
reflected in the company’s strong revenue and growth. As far as margins are concerned,
even if produced more the margin will get increased based on environment climate. The
shanthi poultry farm has 8 large wind mills with capacity of 4.75M.V. The company has
spent initial investment up to 2007 Rs. 194113502 and got revenue RS.90950770 for
generating power still the year of 2007. The company has gained the benefit
RS.59158943 from the windmill power generation.
MARGINAL COSTING AND DIFFERENTIAL COSTING
Preparation of differential cost analysis for capacity utilization based on the

financial year 2006-2007

Table No: 3.7
Amount Capacity Capacity Capacity

Utilization utilization utilization
60% 70% 85%
Sales (1) 309049152 360557344 4378196325
3 4
Less
Direct material 2651916160 309390218 3756881227
7
Direct Labour 7674385 8953450 10872046
Variable cost 311005635 362839908 440591317
Total of variable cost (2) 297059618 346569554 4208344590

0 5
Contribution (1) – (2) = (3) 119895343 139877899 169851735
Less
Fixed cost (4) 33085779 33085779 33085779
Less
Earnings before (3)-(4) = (5) 86809564 106792120 136765956
interest on tax
Less
Interest on loan (6) 17950160 20941854 25429394
Profit before tax (5)-(6) = (7) 68859404 85850266 111336562

Less
Tax (8) 23278894 27158710 32978434
Profit after tax (7)-(8) 45580510 58691556 78358128
INTERPRETATION:
The above table shows that Marginal costing and differential costing of capacity
utilization based on the financial year 2006-2007. The costs of capacity utilization will
increase at 60% to 70% as well as sales and profit after tax also increased.
COMPUTATION OF DIFFERENTIAL COST OF PRODUCTION

FROM 10,000 TONS ADDITIONAL UNITS

Table No: 3.8
Elements of cost 90,000 1,00,000 Tons Differential

Tons cost of 10,000
Tons
Prime cost 227399453 252666059 25266606
Variable cost 311005635 345561817 34556182
Semi - variable cost 2659590545 2955100606 295510061
Fixed cost 33086779
Total 3231082412 3553328482 322246070
INTERPRETATION:
For an additional output of 10,000 tons over the operated capacity of 90,000 tons, the
differential cost was Rs.32, 22, 46,070. Since the profit margin required 11.15% on the
sales or 15% on the cost: hence the minimum selling price will be increased. In the
above case differential costs were Rs.32, 22, 46,070 while differential prime costs were
RS.2, 52, 66,606.and the variable cost was Rs.3, 45, 56,182. .
COMPUTATION OF DIFFERENTIAL COST OF PRODUCTION

FROM 10,000 TONS ADDITIONAL UNITS

Chart No: 3.5
ANALYSIS OF COST SHEET FOR THE YEAR ENDED

31ST DECEMBER 2007
Table No: 3.9

PURCHASES OF RAW 277286816
MATERIAL 0
Wages 7674385
Prime cost 2780542545
Add: Works overheads
Brooding Expenses 674599
Carriage Inward 2672156
Commission and 4787881
Brokerage-Purchase
Cess paid 132046
Electricity Charges 20565136
Growing Charges 84512418
Hatching charges 439519
Rearing charges 3708861
Railway Freight and Other 53943417
charges
Rent - Factory & godown 2569525
TNGST - Purchase Tax 39310
Compensation a/c 664500
Delivery Expenses 2686245 177395613
Work cost 2957938158
Add: Administrative expanses
Salaries, Bonus, PF, Etc., 4992834
Labour & staff Welfare Expenses 1615512
Gratuity A/c 48960
Books and Periodicals 13224
Canteen Expenses 169455
Electricity Charges 274344
Fine and Penalty 30520
General Expenses 268881
Food and Fever ages 919785
Donation 214581
Insurance 419742
Legal & Accountancy Charges 5500
License Fees and Taxes 1507182
Office Expenses 93220
Consulting fees 62000
Advertisement 106854
Printing & Stationery 853395
Professional Charges 456086
Remuneration paid to Directors 1200000
Rent 161480
Security Charges 65250
Subscription 183000
postage and Telegram 55912
Traveling Expenses 880368
Sales tax & service tax 115605
Telephone Expenses 1268576
Festival Expenses 105084
Sundry Balances Written off 177216 16264566
Office cost 2974202724
Add: Selling
SANKARA COLLEGE and distribution
OF SCIENCE 3476886
AND COMMERCE 55
Selling expenses 1163400
Commission & Brokerage - Sales 2059686
Unloading and Loading expenses 76619282
Discount Allowed on Sales 16999000 100318254
Total cost 3074520978
(Continuous)
Total cost
Calculation of cost of per unit: number of
Output
: 3074520978
106017965
(106017.96 tons)
Per unit cost : 29 rupees/ Kg
Interpretation:
This above statement shows that, the analysis of cost sheet for the year ended 31
December 2007. The overall cost was Rs.3074520978. The number of units of output was
(106017.96 tons) and cost per kg is Rs.29.
COMPUTATION OF CHICKEN COST USING ACTIVITY-BASED COST

METHOD FIXED AND VARIABLE COST BY ACTIVITY
Table No: 3.10
Traceable Number of Rate per event

Activity cost chicks of Transaction
Fixed cost
Farm Building 42,50,000 25,000 170
Net 2,00,160 25,000 6.57
Total 44,50,160 25,000 176.57
Variable cost (Based on the June 2008)
chicks 2,75,000 25,000 11
Feeds per chicken 8,20,313 25,000 32.81
Electrical light,
Medicine, labour
cost 62,500 25,000 2.5
Total 11,57813 25,000 46.31

INTERPRETATION:
From the above computations, it is cleared that the higher fixed cost and lower
variable cost should be used to implement the farm project. If the variable cost is
increased, the price will be high. If the raw material cost is reduced, the profitability will
be more to operate the farm.
Table No: 3.11

POULTRY
COST OF REARING 100 BROILERS (FORTNIGHTLY BATCHES)
A. CAPITAL COST
(Amount in Rs.)
1. Construction of shed – brick and mud wall, bumboo, purlins, = 35,000.00

thatched roof @ 1 sq. ft. per bird for 5 batches of 100 birds each
i.e. 500 sq. ft. @ Rs.70 per sq.ft.
2. Equipment @ Rs.15 per bird for 500 birds = 7,500.00
TOTAL – ‘A’… 42,500.00
B. RECURRING COST
1. Cost of day old chicks – 4 batches of 100+5% extra

i.e. 420 chicks @ Rs.15.00 each … 6,300.00

2. Cost of fed for 4 batches of 102 birds each @ 3.2 kg. Per bird
@ Rs.8.60 / kg. … 12,852.00
3. Cost of medicines, vaccines and misc. charges for
4 batches of 102 birds each … 2,040.00
4. Insurance of birds – 420 birds at Re.1/- per birds 420.00
5. Insurance of sheds @ Rs.5.05 per Rs.1000/- per year 177.00
TOTAL – ‘B’ 21,789.00
TOTAL - ‘A’ + ‘B’ … … 64,289.00
UNIT COST … … … 64,300.00
BANK LOAN (90%) … … 57,870.00
ASSUMPTIONS
A. Technical parameters – fortnightly batches of 100 birds in deep litter system
No. of birds 1st yr 2nd yr 3rd yr 4th yr 5th yr

per batch
1. No. of batches purchased 105 26 26 26 26
2. No. of rearing weeks 102 196 208 208 208

3. No. of batches sold 100 23 26 26 26
4. Manure (tons) 4.5 4.8 4.8 4.8
5. Gunny bags 100 108 108 108 108
6. Feed consumption per bird per week 0.40
(kg.) :

B. Financial parameters
1. Cost of day old chicks (Rs.) … 12.00

2. Cost of feed (Rs. per kg.) … 9.00
3. Medicines, vaccines & breeding
expenses (per bird per year) … 0.62
4. Insurance of birds (Rs. per bird) … 1.00
5. Insurance of sheds (Rs. per 1000 rupees) … 5.05
6. Average live weight of birds (kg.per bird) … 1.50
7. Sale price of birds (Rs. per kg.) … 39.00
8. Sale price of manure (Rs. per ton) … 200.00
9. Sale price of gunny bags (Rs. per bag) … 5.00
Table No: 3.11
ECONOMICS OF BROILER UNIT (FORTNIGHTLY BATCHES OF

100 BIRDS)
(Amount in Rs.)
INCOME 1st yr 2nd yr 3rd yr 4th yr 5th yr
1. Sale of birds 134550 152100 152100 152100
2. Sale of manure 900 960 960 960
3. Sale of gunny bags 1000 1080 1080 1080
TOTAL 136450 154140 154140 154140
EXPENDITURE 1st yr 2nd yr 3rd yr 4th yr 5th yr

1. Cost of chicks 40950 40950 40950 40950
2. Cost of feed 71971 76378 76378 76378
3. Cost of medicines, vaccines and 12395 13154 13154 13154
misc. charges
4. Insurance of birds 2730 2730 2730 2730
5. Insurance of sheds 177 177 177 177

TOTAL 12822 133389 133389 133389
3
GROSS SURPLUS 82272 20751 20751 20751
FINANCIAL ANALYSIS
COST 1st yr 2nd yr 3rd yr 4th yr 5th yr

1. Capital cost 42500 - - -
2 Recurring cost 128223 133389 133389 133389
Total cost 170723 133389 133389 133389
INCOME
TOTAL BENEFIT 136450 154140 154140 154140
NET BENEFIT -34273 20751 20751 20751
NPV @ 15% D.F. … 21714 (+)

BCR @ 15% D.F. ... 1.05 : 1.00
IRR … 47.89 %
REPAYMENT PERIOD: 5 YEARS
Table No: 3.13
POULTRY
COST OF REARING 100 BROILERS (WEEKLY BATCHES)
(Amount in Rs.)
A. CAPITAL COST
1. Construction of shed – brick and mud wall, bumboo, purlins,

thatched roof @ 1 sq. ft. per bird for 7 batches of 100 birds each
i.e. 700 sq. ft. @ Rs.70 per sq.ft. 49,000.00
2. Equipment @ Rs.15 per bird for 700 birds 10,500.00
TOTAL – ‘A’ … 59,500.00
B. RECURRING COST
1. Cost of day old chicks – 7 batches of 100+5% extra

i.e. 735 chicks @ Rs.15.00 each … 11,025.00
2. Cost of feed for 7 batches of 102 birds each @ 3.2 kg. Per bird
@ Rs.8.60 / kg. … 20,563.00
3. Cost of medicines, vaccines and misc. charges for
7 batches of 102 birds each@ Rs.5.00 per bird 3,570.00
4. Insurance of birds – 735 birds at Re.1/- per birds 735.00
TOTAL – ‘B’ 36,140.00
TOTAL - ‘A’ + ‘B’ … … 95,640.00
UNIT COST … … … 95,600.00
BANK LOAN (90%) … … 86,040.00
ASSUMPTIONS
A. Technical parameters – fortnightly batches of 100 birds in deep litter system
No. of birds per batch 1st yr 2nd yr 3rd yr 4th yr 5th yr

1. No. of batches purchased 105 52 52 52
2. No. of rearing weeks 102 276 312 312
3. No. of batches sold 100 46 52 52
4. Manure (tons) 7.36 8.32 8.32 8.32
5. Gunny bags 210 238 238 238
6. Feed consumption per bird per week 0.40
(kg.) :
1. Cost of day old chicks (Rs.) … 15.00

2. Cost of feed (Rs. per kg.) … 9.00
3. Medicines, vaccines & breeding
expenses (per bird per year) … 0.62
5. Insurance of sheds (Rs. per 1000 rupees) … 5.05
6. Average live weight of birds (kg.per bird) … 1.50
7. Sale price of birds (Rs. per kg.) …38.00
8. Sale price of manure (Rs. per ton) …200.00
ECONOMICS OF BROILER UNIT (FORTNIGHTLY BATCHES OF

100 BIRDS)
(Amount in Rs.)
1. Sale of birds 262200 296400 296400 296400
2. Sale of manure 1472900 1664 1664 1664 2376

3. Sale of gunny bags 2102 2376 2376 1684 1684
TOTAL 265774 300440 300440 300440 300440

1. Cost of chicks 81900 81900 81900 81900 81900
2. Cost of feed 101347 114566 114566 114566 114566
3. Cost of 17454 19731 19731 19731 19731
medicines
4. vaccines and 5460 5460 5460 5460 5460
misc. charges
5. Insurance of 247 247 247 247 247
sheds
TOTAL 206408 221904 221904 221904 221904
GROSS 59366 78536 78536 78536 78536
SURPLUS
FINANCIAL ANALYSIS

1. Capital 59500 - - - -
cost
2 Recurring 206408 221904 221904 221904 221904
cost
265908 221904 221904 221904 221904
INCOME
TOTAL 265774 300440 300440 300440 300440
BENEFIT
NET -134 78536 78536 78536 78536
BENEFIT
NPV @ 15% D.F 194857 (+)
BCR @ 15% D.F 1.25:1.00
IRR >50 %
REPAYMENT PERIOD : 5 YEARS WITHOUT GRACE PERIOD
Table No: 3.14
POULTRY
UNIT COST OF REARING – 200 LAYERS
(Amount in Rs.)
A. CAPITAL COST

thatched roof @ Rs.70 per sq.ft.
a) Brooder cum grower shed – 1 sq.ft. per bird for birds
i.e. 105 sq. ft. 7,350.00
b) Layer shed – 2 sq.ft.per bird for 200 birds- 2 pens
of 200 sq.ft. each i.e. 400 sq. ft. 28,000.00
2. Improvised brooder equipment @ Rs.7.00 per birds
for 105 birds 735.00
3. Improvised layer equipment @ Rs.10.00 per bird for 200 birds 2,000.00
TOTAL – ‘A’ 38,085.00
B. RECURRING COST
(Amount in Rs.)
1. Cost of day old female chicks (DOC)
200+10% extra i.e 220 chicks @ Rs.15.00 per chick … 3,300.00
2. Cost of chick and grower feed up to initial stages of laying
@ Rs.7.5 kg. Per bird for 210 birds @ Rs.8.50 per kg .… 15,173.00
3. Medicines, vaccines, litter and misc. charges up to initial
Stages of laying @ Rs.10.00 per bird for 210 birds 2,100.00
4. Insurance of birds from day old to culling @ Rs.2.00 per bird
For 220 birds 440.00
TOTAL – ‘B’ 21,192.00
TOTAL - ‘A’ + ‘B’ … … 59,277.00
UNIT COST … … … 59,300.00
BANK LOAN (90%) … … 53,400.00
ASSUMPTIONS
A. Technical parameters :
Deep litter system in 2 batches of 100 birds each
No. of birds 1st yr 2nd yr 3rd yr 4th yr 5th yr

per batch
1. No. of batches of DOC”s 110 2 2 2 2
purchased
2. Grower weeks 105 40 40 39 36
3. Layer weeks 100 39 96 97 99
4. Culled batches 90 0 2 2 1
5. Manure (tons) 2.7 5.4 5.4 5.4 5.3
6. Gunny bags excluding damages 57 112 112 112 109
7. Hen housed egg production (kg. Per 5.5
bird per week)
8. Feed consumption during growing period (kg. Per 0.375
bird per week)
9. Feed consumption during laying period (kg. Per 0.75
bird per week)

(Amount in Rs.)
1. Cost of day old female chicks(Rs.) … 15.00

2. Cost of grower’s feed (Rs. per kg.) … 8.50
3. Cost of layer feed (Rs. per kg.) … 7.00
4. Cost of medicines, vaccines, litter and misc.
Charges up to laying (Rs. per bird per week) … 0.5
5. ……do……. During laying ……..do…….. … 0.35
7. Insurance of sheds (Rs. per 1000/- per annum) … 5.05
8. Sale price of eggs (Rs.) … 1.5
9. Sale price of culled birds (Rs. per bird) … 50.00
8. Sale price of manure (Rs. per ton) … 200.00
Table No: 3.15
ECONOMICS OF 200 BIRD LAYER UNITS

(Amount in Rs.)

1. Sale of birds 321750 79200 80025 81675 79200
2. Sale of culled birds 0 9000 9000 4500 9000
3. Sale of gunny bags 570 1120 1120 1120 1090
4. Sale of manure 540 1080 1080 1080 1060
TOTAL 33285 90400 91225 88375 90350

1. Cost of day old chicks 3300 3300 3300 3300 3300
2. Cost of feed
a. Up to laying 13388 20475 13388 50400 13053
b. During laying 50925 12049 51975 12049 50400
3. Cost of medicines,
vaccines and misc.
charges.
a. Up to laying 2100 1365 2100 3360 2048

b. During laying 3395 1890 3465 1890 3360
4. Insurance of birds 440 440 440 440 440
5. Insurance of sheds 179 179 179 179 179
TOTAL 41247 73167 73340 73298 71618
GROSS SURPLUS -7962 17233 17886 15077 13732
FINANCIAL ANALYSIS

1. Capital cost 38085 - - - -
2 Recurring cost 41247 73167 73340 73298 71618
TOTAL COST 79332 73167 73340 73298 71618
1. INCOME 33285 90400 91225 88375 90350
2. Salvage value (7th year)
TOTAL BENEFIT 33285 90400 91225 88375 90350
NET BENEFIT -46047 17233 17885 15077 18732
NPV @ 15% D.F 213957 (+)
BCR @ 15% D.F 1.07 : 1.00
IRR 32.01 %
REPAYMENT PERIOD : 7 YEARS WITH ONE YEAR GRACE PERIO

Table No: 3.16
POULTRY
UNIT COST OF REARING – 500 LAYERS
(Amount in Rs.)
A. CAPITAL COST
thatched roof @ Rs.70 per sq.ft.
a) Brooder cum grower shed – 1 sq.ft. per bird for 260 birds
i.e. 260 sq. ft. … 7,350.00
b) Layer shed – 2 sq.ft.per bird for 500 birds- 2 pens
of 500 sq.ft. each i.e. 1000 sq. ft. … 70,000.00
2. Improvised brooder equipment @ Rs.7.00 per birds for 260 birds … 1,820.00
3. Improvised layer equipment @ Rs.10.00 per bird for 500 birds … 5,000.00
TOTAL – ‘A’ … 84,170.00
B. RECURRING COST
1. Cost of sexed Mareck’s vaccinated day old female chicks (DOC)

500+5% extra i.e 525 chicks @ Rs.15.00 per chick … 7,875.00
2. Cost of chick and grower feed upto initial stages of laying

@ Rs.7.5 kg. Per bird for 525 birds @ Rs.8.50 per kg … 37,570.00
3. Medicines, vaccines, litter and misc. charges upto initial
stages of laying @ Rs.10.00 per bird for 525 birds 5,200.00
4. Insurance of birds from day old to culling @ Rs.2.00 per bird
for 525 birds 1,050.00
5. Insurance of sheds @ Rs.5.05 per Rs.1000/- per yea 391.00
TOTAL – ‘B’ 52,086.00
TOTAL - ‘A’ + ‘B’ … … 1,36,256.00
UNIT COST … … … 1,36,300.00
BANK LOAN (90%) … … 1,22,700.00
ASSUMPTIONS
A. Technical parameters:
Deep litter system in 2 batches of 250 birds each
No. of birds 1st yr 2nd yr 3rd yr 4th yr 5th yr 6th yr 7th yr

per batch
1. No. of batches of DOC”s 260 2 2 2 2 2 2
Purchased
2. Grower weeks 250 40 40 39 39 40 40
3. Layer weeks 240 39 96 97 99 96 96
4. Culled batches 216 0 2 2 1 2 2
5. Manure (tons) 5.4 10.8 10.8 10.8 10.8 10.8 10.8
6. Gunny bags excluding 114 224 224 218 218 218 218
damages
7. Hen housed egg production ( Per bird per week) 5.5 5.5
8. Feed consumption during growing period (kg. Per bird per week) 0.375
9. Feed consumption during laying period (kg. Per bird per week) 0.75
(Amount in Rs.)
1. Cost of day old female chicks(Rs.) … 15.00

2. Cost of grower’s feed (Rs. per kg.) … 8.50
3. Cost of layer feed (Rs. per kg.) … 7.00
4. Cost of medicines, vaccines, litter and misc.
charges up to laying (Rs. per bird per week) … 0.50
5. ……do……. during laying ……..do…….. … 0.35
7. Insurance of sheds (Rs. per 1000/- per annum) … 5.05
8. Sale price of eggs (Rs.) … 1.50
9. Sale price of culled birds (Rs. per b … 50.00
8. Sale price of manure (Rs. per to … 200.00
Table No: 3.17
ECONOMICS OF 500 BIRD LAYER UNITS

(Amount in Rs.)
INCOME 1st yr 2nd yr 3rd yr 4th yr 5th yr 6th yr 7th yr
1. Sale of birds 77220 190080 192060 196020 190080 19008 190080

0
2. Sale of culled 0 21600 21600 10800 21600 21600 21600
Birds
3. Sale of gunny 1140 2240 2240 2240 2180 2180 2180
Bags
4. Sale of 1080 2160 2160 2160 2160 2160 2160
manure
TOTAL 79440 216080 218060 211220 216020 21602 216020
0

EXPENDITURE 1st yr 2nd yr 3rd yr 4th yr 5th yr 6th yr 7th yr

1. Cost of day old 7800 7800 7800 7800 7800 7800 7800
chicks
2. Cost of feed
a. Up to laying 31875 31875 31875 31875 31875 31875 31875
b. During laying 49140 120960 122220 12474 12096 12096 120960
0 0 0
3. Cost of
medicines, vaccines
and misc. charges.
a. Up to laying 5000 5000 4875 4875 4875 5000 5000
b. During laying 3276 8064 8148 8316 8064 8064 8064
4. Insurance of 1040 1040 1040 1040 1040 1040 1040
birds
5. Insurance of 391 391 391 391 391 391 391
sheds
TOTAL 98522 175130 175552 17824 17420 17513 175130
0 8 0
GROSS -1908 40950 42508 32980 41812 40890 40890
SURPLUS 2
FINANCIAL ANALYSIS
COST 1st yr 2nd yr 3rd yr 4th yr 5th yr 6th yr 7th yr

1. Capital 84170 - - - - - -
Cost
2 Recurring cost 98522 175130 175552 178240 174208 175130 175130
TOTAL COST 182692 175130 175552 178240 174208 175130 175130
1.INCOME 79440 216080 218060 211220 216020 216020 216020
2. Salvage value 22800
TOTAL BENEFIT 79440 216080 218060 211220 216020 216020 238820
NET -103252 40950 42508 32980 41812 41890 63690
BENEFIT
NPV @ 15% D.F. … 50395 (+)

BCR @ 15% D.F. ... 1.07 : 1.00
IRR … 33.13 %
REPAYMENT PERIOD : 7 YEARS WITH ONE YEAR GRACE PERIOD
PLANT LOCATION DECISION

A company is setting up a farm at a cost of Rs.90 lakhs investment in fixed assets. It has
to decide whether to locate the farm in
ECONOMICS OF THE BENEFICIARY UNIT:
The beneficiaries will be supplied at a time with 2000 to 5000 chicks which are 6
weeks old. The economics of a beneficiary unit having 5000 birds is worked out here.
The initial fixed expenditure to be incurred is Rs. 11, 00,000 (Rs. 5000 for night shelter
and Rs. 52000 for the feeders and drinkers). The first batch of 4750 chicks will cost Rs.
142500 at the rate of Rs. 30 per chick. The cost of feed required (at the rate of 50 grams
per day per bird 225kg) for first 5 weeks and medicines will come to Rs.6000. After the
first 5 weeks, feed worth Rs. 2,52,000 will be provided for another 5 weeks. This entire
cost of Rs.15,00,500 will be subsidized as the beneficiary who often would belong to a
family cannot afford to make any investment. The beneficiary will rear the birds and she
will sell the male birds (about 475 in number) when they are 16 weeks old; this is
expected to fetch about Rs. 21375. The female birds will start laying eggs when they are
26 weeks old till the 80th week. It is expected that each bird will lay on an average 3 eggs
per week during this period. The eggs of these country birds are expected to fetch a
minimum price of Rs. 1.50 each. At the end of the 80th week the beneficiary will sell the
culled female birds for meat purposes earning an income of about Rs. 11,54,250.
Meanwhile, 26 weeks after the supply of the first batch of birds another batch of 4750
birds will be supplied to the beneficiary with feed and medicines.
It is proposed to provide 80% of the cost of this (i.e. 80% of Rs. 12,00,400) as
subsidy as the income which has accrued to the beneficiary by that time would not be
significant. Like this, 20 six week old chicks will be supplied to the beneficiary after a
gap f every 26weeks. The subsidy for the third batch will be restricted to 60% (of Rs.
9,00,300) and no subsidy is proposed to be given for subsequent batches of birds as the
beneficiary’s income stream (from sale of culled birds and eggs) would enable her to
meet the required expenses apart from using part of the income for the consumption of
the family.
With this cycle for the supply of six week old birds and the subsidy pattern
mentioned above, it has been worked out that in the first 72 weeks after the beneficiary
gets the first batch of birds, she will get a total income of Rs.2,02,500, out of which she
has to incur expenses of Rs. 10,18,500 (net of a total subsidy of Rs. 12,61,125), leaving
her with a surplus income of Rs.2,42,625. After this, the annual income of the beneficiary
will be Rs.2,39,375.

ECONOMICS OF A MOTHER UNIT:
Farms for the supply of one day old chicks will have attached to it 10 mother
units initially and 15 mother units from the third year onwards. The mother unit has to
supply 6 week old chicks to the beneficiary units with feed and medicines, and also to
market the eggs and the culled birds unless the beneficiary is able to sell the same locally.
The mother unit has also to periodically provide necessary services to the beneficiaries.
For the success of the scheme, it is, therefore, very important to ensure the economic
viability of the mother unit. Each mother unit is expected to cater to 200 beneficiaries
initially (later this is expected to be increased to 300). The mother unit has to supply 6
week old chicks to each beneficiary (an average of 45 per beneficiary is assumed) once
every 26 weeks, making a total of 12000 chicks per year. The mother unit gets one day
old chicks (at a cost of Rs. 10 per chick) and rears them till 6 weeks and then supplies
them to the beneficiaries at a price of Rs. 45. The total number of 12000 chicks expected
to be supplied to the beneficiaries in a year are to be reared in seven batches of about
1720 each. After meeting all costs of feed, medicines and labour costs, the mother unit
will earn a margin of Rs. 5 per chick. Its annual net income will thus be Rs. 60,000.
The initial fixed cost to be incurred in setting up a mother unit will be Rs.
3,72,000(consisting of Rs. 3,20,000 for poultry shed of area 1000 sq. feet with asbestos
roof); Rs. 32,000 for feeders and drinkers and Rs. 20,000 for cycles (with proper
attachments for carrying chicks and birds) and other miscellaneous costs. It is proposed
that 10% of this cost should be borne by the NGO setting up the mother unit, 30% as
interest free loan by Government, 20% as subsidy by Government and 40% as loan by
banks. The loan will be repayable in five years. Out of the annual income of Rs. 1,20,000,
the mother unit will have to meet the annual interest and repayment burden of about
Rs. 35,000, leaving a net income of Rs. 85,000.
In addition to this the mother unit can earn margin on sale of culled birds (an also
eggs) which the beneficiaries are not able to dispose of locally. Assuming that the
proportion of such birds to be sold by the mother unit comes to about 25%, the annual net
income (at the rate of Rs. 5 per bird) will come to Rs. 15000 giving a total income of Rs.
1,00,000. This is expected to ensure the general viability of the mother units. From the
second year onwards when a mother unit is able to cater to 300 beneficiaries, the net
income from the sale of 6 week old chicks will be Rs. 67,500 and the margin from sale of
culled birds will be Rs. 22,500 making a total of Rs. 90,000

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ANALYSIS AND INTERPRETATION CHAPTER IV

ANALYSIS OF COST PATTERN: 1

COST SHEET OF PRIME COST OR MANUFACTURING EXPENSES

Table No: 3.1

6342157 11.58 6893718 12.43 8228359 11.52

COST SHEET OF PRIME COST OR MANUFACTURING EXPENSES

SANKARA COLLEGE OF SCIENCE AND COMMERCE 36

Table No:3.1 (Continuous)

Prime cost 2003-2004 2004-2005 2005-2006 2006-2007

86748064 10.04 118142000 8.689 108965000 6.7609 227399453 14.109

CHART OF PRIME COST OR MANUFACTURING EXPENSES

Chart No: 3.1

COST SHEET OF ADMINISTRATIVE EXPENSES

SANKARA COLLEGE OF SCIENCE AND COMMERCE 38

Table No: 3.2

Works cost 2000-2001 2001-2002 2002-2003

7333933 1.339 8446716 1.523 8629384 1.208

COST SHEET OF ADMINISTRATIVE EXPENSES

Table No: 3.2 (Continuous)

SANKARA COLLEGE OF SCIENCE AND COMMERCE 39

Work cost 2003-2004 2004-2005 2005-2006 2006-2007

SANKARA COLLEGE OF SCIENCE AND COMMERCE 40

CHART OF ADMINISTRATIVE EXPENSES

Chart No: 3.2

SANKARA COLLEGE OF SCIENCE AND COMMERCE 41

COST SHEET OF SELLING AND DISTRIBUTION EXPENSES

Table No: 3.3

SANKARA COLLEGE OF SCIENCE AND COMMERCE 42

2000-2001 2001-2002 2002-2003

12160720 2.081 2908451 5.245 3443991 4.821

COST SHEET OF SELLING AND DISTRIBUTION EXPENSES

Table No: 3.3

SANKARA COLLEGE OF SCIENCE AND COMMERCE 43

Particulars 2003-2004 2004-2005 2005-2006 2006-2007

4652000 5.382 54885000 4.0366 13549600 8.4071 10031825 3.246

CHART OF SELLING AND DISTRIBUTION

Chart No: 3.3

SANKARA COLLEGE OF SCIENCE AND COMMERCE 44

COST SHEET OF FINANCE CHARGES

Table No: 3.4

Particulars 2000-2001 2001-2002 2002-2003

IN RATIOS IN RATIOS IN RATIOS

COST SHEET OF FINANCE CHARGES

Table No: 3.4

Particulars 2003-2004 2004-2005 2005-2006 2006-2007

HP Finance 82000 0.009 57000 0.0042 3000 0.0002 11432 0.0004

5255000 0.608 10243000 0.7533 12571000 0.78 24782526 0.8019

CHART OF FINANCE CHARGES

Chart No: 3.4

SANKARA COLLEGE OF SCIENCE AND COMMERCE 47

ANALYSIS OF THE WARE HOUSE IMPLEMENTATION COST

Table No: 3.5

Initial Investment amount of ware 1,30,40,301

Investment amount 1,30,40,301

Bank Interest @ .85% per 1330111

SANKARA COLLEGE OF SCIENCE AND COMMERCE 49

ANALYSIS OF THE WINDMILL POWER GENERATION:

Table No: 3.6

SANKARA COLLEGE OF SCIENCE AND COMMERCE 50

Initial Investment amount of power 19,41,13,502

MARGINAL COSTING AND DIFFERENTIAL COSTING

Preparation of differential cost analysis for capacity utilization based on the

SANKARA COLLEGE OF SCIENCE AND COMMERCE 51

Table No: 3.7