case3

HARSHELECTRICALS_ANALYZINGCOSTINSEARCHOFPROFITStudentSpreadsheets.xlsx

TYPES OF COST CLASSIFICATIONS

VARIOUS TYPES OF COST CLASSIFICATIONS
Basis	Cost Concept	Example	Managerial Application
Nature of Expenses
Functional Classification
Behavioural
Cost Inventory Basis
Cost Object or Traceability
Cost for Decision
Note: CEO = chief executive officer

EXHIBIT TN-2: HARSH ELECTRICALS COST CLASSIFICATIONS (IN ₹)
			Traceability	Behavioral	Inventoriable
Cost	Note	Total Cost
Workshop Electricity
During the Season
Standard Coolers (During Production)
Baleno Coolers (During Production)
Maintenance (During Production)
Factory Lighting (During Production)
During Off-Season
Lighting and Maintenance
Total
Office Electricity
During the Season
Office Computer (During Production)
Office Lighting (During the Season)
During Off-Season
During Off-Season (1/8 based on space)
Total			Check Figure:	16,500.00
Note: *During off production time, 1,000 unit of electricity per month are allocated to the office and factory, based on the space they occupy; 1 square foot = 0.09 square metres; ₹ = INR = Indian rupee; US$1 = ₹54.35 on April 1, 2013.

PRODUCT PROFITABILITY ANALYSIS UNDER THE CONVENTIONAL COST SYSTEM (IN ₹)
Particulars		Regular	Baleno Model
Direct Materials Consumed
Direct Materials Consumed
Direct Labour
Direct Expenses
Prime Cost
Manufacturing Overheads
Total Manufacturing Overheads
Production of Standard Model
Production of Baleno Model
Total Direct Labour Cost
Cost Driver Rate / Overhead Recovery Rate
Manufacturing Overheads
Product Cost
Revenue
Profit
Product Profitability (in %)
Note: ₹ = INR = Indian rupee; US$1 = ₹54.35 on April 1, 2013.
	Check Figure	0.18	0.16

HARSH ELECTRICALS STATEMENT OF COST OF GOODS SOLD (IN ₹)
Particulars	Amount	Amount
Direct Material (Consumed)		0.00
Prime Cost		0.00
Manufacturing Overhead:
		0.00
Cost of Production		0.00
Cost of Goods Manufactured		0.00
Add Opening Inventory of Finished Goods
Less Closing Inventory of Finished Goods (60 Standard models @ ₹2,055.41 and 10 Baleno models @ ₹2,515.9)
Cost of Goods Sold			Check Figure:	8,588,662.61
Note: ₹ = INR = Indian rupee; US$1 = ₹54.35 on April 1, 2013; WIP = work in progress

HARSH ELECTRICALS PROJECTED INCOME STATEMENT FOR CALENDAR YEAR 2014 (IN ₹)
Particulars	Amount	Amount	Classification
Net Income/Profit before Tax
Less: Tax
Profit after Tax
Note: ₹ = INR = Indian rupee; US$1 = ₹54.35 on April 1, 2013; COGS = cost of goods sold; EBITDA = earnings before interest, taxes, depreciation, and amortization; EBIT = earnings before interest and taxes.
	Check Figure:	1,202,464.90

EXHIBIT TN-7: CALCULATION OF HARSH ELECTRICALS COST-VOLUME-PROFIT ANALYSIS (IN ₹)
Particulars	Standard Model	Baleno Model	Total
	Variable Costs
Direct Materials Used
Direct Labour
Drilling Bits
Distribution
Electricity
Procurement Cost
Per Unit Variable Cost	0.00	0.00
Selling Price
Contribution per Unit
Units Sold
Total Contribution	0.00	0.00	0.00
Total Fixed Costs for Standard and Baleno Models			0.00
Total Earnings before Interest and Tax			0.00	Check Figure:	1,379,600.00
Calculation of Fixed Costs (in ₹)
Total	0.00
Note: ₹ = INR = Indian rupee; US$1 = ₹54.35 on April 1, 2013

EXHIBIT TN-8: CALCULATION OF HARSH ELECTRICALS BREAK-EVEN POINT (IN ₹)
Model	Sales Mix	Contribution	Contribution of the Bundle
Standard	4.00	0.00	0.00
Baleno	1.00	0.00	0.00
Total			0.00
Fixed Cost			0.00
BEP in bundles	Fixed Costs / Contribution		ERROR:#DIV/0!
BEP in units
Standard
Baleno
BEP in revenue
Standard
Baleno
Total					Check Figure:	4,357,500.00
Note: ₹ = INR = Indian rupee; US$1 = ₹54.35 on April 1, 2013; BEP = break-even point
EXHIBIT TN-9: HARSH ELECTRICALS SALES REQUIRED FOR THE DESIRED PROFIT
Desired Profit (as in 2010–11)
Desired EBIT (as in 2010–11)
Desired Contribution
Required Sales in Bundles
Sales of Standard Model (in units)
Sales of Baleno Model (in units)
Total Sales of Both Models (in units)
Sales of Standard Model
Sales of Baleno Model
Required Revenue for profit desired			Check Figure:	[$INR] 8,642,500.00
Note: ₹ = INR = Indian rupee; US$1 = ₹54.35 on April 1, 2013; EBIT = earnings before interest and taxes