2 2 20ESTIMATING THE PRODUCT COST OF AMUL ICECREAM Abhijit Mohapatra UM21193 Ashutosh Mallick UM21206 Satyajeet Mohanty UM21238 Sourabh Panda UM21247 Vishal Wani UM21255 Introduction In Sanskrit, amul means "priceless." The dairy cooperative "Amul," derived from the Sanskrit "Amoolya" (meaning Precious), was founded in 1946. It is a brand name controlled by Gujarat Co-operative Milk Marketing Federation Ltd Amul ice-creams first appeared in Mumbai in 1997, then in Chennai in 1998, then in Kolkata and Delhi in 2002. Today, Amul ice cream has a 38 percent market share compared to HLL (Kwality Walls), which has a 9 percent market share, making it four times larger than its nearest competitor. Facts About Amul AMUL ICE-CREAMS FIRST APPEARED IN MUMBAI IN 1997, THEN IN CHENNAI IN 1998, THEN IN KOLKATA AND DELHI IN 2002. IT WAS FIRST USED ON A NATIONAL SCALE IN 1999. HAS DEFEATED COMPETITORS SUCH AS WALLS AND MOTHER DAIRY TO BECOME THE COUNTRY'S NUMBER ONE AMUL ICE CREAM NOW HAS A 38 PERCENT MARKET SHARE. Ice Cream Industry in India: Snapshot of the Industry Market Size - 1200 Crores The ice cream market is growing at 26% Major players Amul - Market Leader with a share of 36% HLL - Kwality Walls - 2nd most significant player Mother Diary Arun - Chennai Based Hatsun Agro Product Product 05 04 03 02 01 TRICONE CUPS CAMEL MILK MEDIUM FAT ICE CREAM TUBS 1 lit Big Cones COMBO PACKS Buy 1 Get One Free (750ml+750ml Free) Jumbo Cups 125ml 100ml 65ml Production 01 Blending the mixture 02 Pasteurizing to kill bacteria 03 Homogenizing to produce a uniform texture 04 Cooling and resting to blend flavors 05 Flavoring the ice cream 06 Freezing to soft-serve consistency 07 Adding fruit and sweetened chunks 08 Packaging and bundling the finished product and Hardening Distribution Prime Cost/Direct Costs Raw Material Cost-Dry fruits, Milk, Flavours, Sugar, Cup, Cutlery, Seasonal fruit, waffle, Cocoa Direct Cost-Carriage inward, direct expense, direct labor DIFFERENT TYPES AND CLASSIFICATIONS OF COSTS Factory Expense Fixed cost-Depreciation, Rent, Power, Insurance, Supervisor Salary Variable cost-Electricity, Running expense of the machine, Work cost, office overhead, Employee cost, computer, telephone, taxes, carriage outward, cost of production, opening stock. Cost Of Goods Sold-Selling and distribution, advertisement, delivery vehicles, petrol, packaging rate, cost of sales DETAILS OF COST SHEET Particulars Cost per unit Amount Opening stock 10 1000000 Raw materials 3 300000 Dry fruits 2.5 250000 Milk 3.0 300000 Flavors 3.5 350000 Other ingredients 2.0 200000 Sugar 2.5 250000 Cup 1.5 150000 Cutlery 1.0 100000 Seasonal fruit 0.5 50000 Waffle 1.0 100000 Cocoa 1.5 150000 Carriage inward 1.845 184500 Raw material consumed 33.845 3384500 Direct expense 2.2 220000 Direct labor 5.3 530000 Prime cost 40.045 4134500 Depreciation 2.5 250000 Rent 1.0 100000 Power 1.75 175000 Insurance 1.5 150000 Supervisor’s salary 0.7 70000 Electricity 1.0 100000 Running expense of machine 9.05 905000 Work cost 50.395 5039500 10.00 1000000 Computer 1.2 120000 Telephone 0.1 10000 Taxes 0.4 40000 Carriage outward 0.2 20000 Cost of production 62.295 6229500 Opening stock 2.0 200000 (Closing stock) - - Cost of goods sold 64.295 6429500 Advertisement 4.0 400000 Delivery vehicles 3.5 350000 Petrol 1.75 175000 Packaging rate 0.505 50500 Cost of sales 74.05 7405000 Profit 18.5 1851250 Sales 92.5625 9256250 Factory overheads Fixed Variable Office overhead Employee cost Other expenditure Selling and distribution Analysis of the costs Sales 9256250 Variable cost Purchase 3200000 Raw material consumed 3384500 contribution 2671750 Fixed cost Factory expense 905000 employee cost 1000000 Depreciation 100000 Other expenditure 190000 Profit 476750 PVR = C/S = 2671750/9256250 = 28.86% BEP (in Rs.) = FC/PVR = 2195000/28.86 = Rs.760568.26 BEP (in units) = FC/C = 2195000/2.67175 = 821558.9 = 821559 MOS = Profit/PVR = 476750/28.86 = 16519.404 Conclusion The firm is making 100000 units of ice cream at Rs. 74.05 per unit, with a total cost of Rs. 7405000 and a total sale of Rs. 9256250, implying that the profit is Rs. 1851250. The corporation charges Rs. 92.5625 for a single cup of ice creams, which includes the cost of a cup of ice cream. This implies a profit of Rs 18.5125 is generated on a single unit of Amul ice cream. Since the company is making a profit, it has the potential to grow and diversify over time. THANK YOU! We're open to questions and clarifications.
