Page 109 - RISK Management IC 86
P. 109
The Insurance Times
place in one building, they can be separated (with an
explanatory note)
b) Analyse products into products groups. Groups should consist
of individual products with basically common processing
requirements.
c) Analyse sales into product groups. If several factories make
the same product - the sales should be sub-divided from factory
into product.
d) Determine
l variable cost of production (V.C.):
i) each group
ii) each factory (unit price will be helpful)
l factory fixed cost of production (F.F.C.)
i) each group
ii) each factory
l overhead costs and basis of allocation
e) Calculate gross profit and contribution
Gross profit = sales - (V.C. + F.F.C. + allocated overheads)
Net contribution = sales - (Gross profit + V.C.) for each
product group and factory
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