cost accounting basics walkthrough

Source: Company Information.

Cost Accounting Group Members:Mehul Parikh 15-F-302Kaushik Shah 15-F-327Rahul Sharma 15-F-330Deep Shroff 15-F-336Varun Tolani 15 -F-344Alok Vadgaonkar 15-F-348

• Introduction to the Project

• Party Panda: Overview

• Product Offerings

• SWOT Analysis

• Cost Analysis & Notes

• Marketing Strategies

• Future Plans

• Observations & RecommendationsSource: Company Information.

Cost Accounting

Party Panda


• Objective: Help to save cost and expand product line with minimum expenditure

• Target: A small sized business with greater transparency

• Party Industry : Highly unorganized sector; Industry is at a very nascent stage

• Consumer Mindset: Imitating the west (USA & UK); Easy to target

Project Introduction

Party Panda


• A partnership firm specialising in a broad spectrum of one-of-a-kind customized gifting solutions, based in Mumbai

• Products and services range from gift hampers, liquor bouquets to party supplies and they strive to offer something special for all age-groups

• Vision : Aim to find the perfect product for every customer, and not just to find customers for products.

• Founded:

- Founder: Krupa Mehta, Srishti Srivastava

- Started as a Party Props business

• Current Owners:

- Krupa Mehta

- Srishti Srivastava

Company Overview

Party Panda


•Target Market:

-High Profile Customers

-Parties, Baby Showers, Birthdays.

-Corporate Gifting

USP:

Customize every product according to customer needs

Attractive Packaging

Competitive Pricing

Company Overview (Cont’d)

Party Panda


Product Offerings

Party Panda


Product Offerings (Cont’d)

Party Panda


SWOT Analysis

Strengths Weaknesses

ThreatsOpportunities

•Customized products•Attractive price points•Agile and adaptive•Low startup costs•Less water, electrical, renting fees•Clear target market•Having clear business plan•Detail introduction of all items

•Industry at a nascent stage•Advantage of being first•Possible to expand into other Metros•No region restriction•Brick and mortar stores / franchise•Less competition at present•Expanding market for foreign customers/NRIs

•Scaling up production and operations may be difficult•Online shopping•Cannot see the product before purchase•No obvious price advantage•Delivery•High price for long distance•More time for long distance

•Competition from Madcaps – A party shop and other well known Party prop suppliers•Increase in costs due to expansion activities may cause loss of competitiveness•Easy to copy•Product backlog causing loss•Giving the lowest price

Party Panda


Cost Analysis

Customised Nutella JarAmt (Rs.) % to Sales

Selling Price per unit 499 100%

Less: Direct Cost Raw Materials 249 Printing 10 -259 52%

Indirect Cost Advertisement & Promotions 15 Delivery expense 15 Administrative & other charges 50 Packing 10 -90 18%

Net Profit 150 30%

Party Panda


Cost Analysis

Hangover KitsAmt (Rs.) % to Sales


Less: Direct Cost Raw Materials 380 Assembling Labour cost 40 -420 53%


Net Profit 229 29%

Party Panda


Cost Analysis

Ferrero BouquetAmt (Rs.) % to Sales


Less: Direct Cost Raw Materials 1050 Assembling Labour cost 50 -1,100 61%


Net Profit 419 23%

Party Panda


Cost Analysis

Decorated BasketsAmt (Rs.) % to Sales


Less: Direct Cost Raw Materials 200 Assembling Labour cost 50 -250 42%


Net Profit 209 35%

Party Panda


Cost Analysis

Photobooth PropsDialogue Props Funky Hats/Shades Hand-made Props

Amt (Rs.) % to Sales Amt (Rs.) % to Sales Amt (Rs.) % to Sales

Selling Price for 30 units set 3000 100% 3000 100% 3000 100%

Direct Cost

Raw Materials 800 1000 400

Labour & Creativity cost 200 -1000 33% 250 -1250 42% 650 -1050 35%

Indirect Cost

Advertisement & Promotions 80 80 80

Delivery expense 75 75 75

Administrative & other charges 300 300 300

Packing 250 -705 24% 50 -505 17% 250 -705 24%

Net Profit 1295 43% 1245 42% 1245 42%

Party Panda


Notes

• Since it is a start-up, its overall operations do not fall within the ambit to attract any Indirect Taxes as of now

• Its is a partnership firm, the partners are retaining the profits and no interest on capital or salary was paid to the partners

• They currently operate out of their home, hence no rental cost is incurred• Administration costs include: electricity, internet, telephone, depreciation

cost of laptop, website development charges. The same is at about 10 % of Selling Price.

• The orders for every item are taken for a minimum quantity in order to meet the cost viability

Party Panda


• Current Marketing Strategies:

- Instagram (@partypandaprops )- Facebook (Party Panda Props)- Whatsapp (9819386611)- Website: www.partypandaprops.co.in (In Progress)- Market Development- All India delivery (Specific to products which can

reach the destination safely, without breaking in transit)- Tie up with event planners for greater reach- Tie up with Groupon and such other websites.- Exhibitions and promotional events such as popular college festivals

Marketing Strategy

Party Panda


Future Plans

- To setup a store which will give us added visibility : Customers can walk into our store and know how they can spice up their parties.

- To setup franchises in 3 cities - Mumbai , Delhi , Bangalore

- Customized/Corporate T-Shirts

- Corporate Gift Hampers

Party Panda


• The firm enjoys healthy Profit margins • Spending on marketing and promotions should be increased to promote

sales • Tie ups should be made with whole sellers instead of buying raw

materials from retailers, this will help reduce raw material costs • Currently raw materials are bought after receipt of order hence there is no

inventory; but in future, after buying goods in bulk, arrangements have to be made for storage

• Once the firm grows, capital requirement will increase, the cost of such capital will reduce the margins

Recommendations & Observations


Thank You!

cost accounting basics walkthrough

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