Costing is an important tool for any organization. For a person to start and run a business, an estimation of all the costs should be provided to allow the projection of sales and revenue.
The concern here is a business whose activities are to sell and repair mobile phones and accessories. Since the business performance is attractive and the need for expansion developed, the business may venture to mobile phones and accessories. The business requires an initial outlay whose purpose is to facilitate the expansion and ensure the business is up and running. The following is the proposed runway of activities in the new extension of the business. All the relevant projections are inclusive.
| Item | Amount in $ | Amount in $ |
| Sales | 1000 units each at 400 dollars. Total value 400,000 dollars | |
Cost of new equipment.
|
60,000 dollars
20,000 dollars 15,000dollars 10,000dollars |
|
Cost of personnel involved
|
1200 dollars each* 20 people working in shifts
The total cost is 24,000 dollars plus3000 dollars for the CEO, which is 27,000 dollars. |
|
Cost of overheads
|
The total cost will be an amount of 25,000 dollars | |
Cost of materials involved
|
The total is 80,000 dollars | |
| Total cost | 237,000 dollars | |
| Profit | 163,000dollars |
The proposal above reflects on the mobile phone product for a client who wants to use it for resale purposes. The client is in the business of buying and selling for profit purposes.
