Entrepreneurship, Costing and Workplace Communication
Scope
Costing, pricing, break-even, small-business basics and workplace communication.
Core rules
- Cost sheet: direct material + direct labour + direct expenses = prime cost; add factory overhead = factory cost; add admin and selling = total cost.
- CMT means cut, make and trim; FOB includes materials and packing.
- Contribution = selling price - variable cost; break-even units = fixed cost / contribution.
- Markup is on cost; margin is on selling price.
- Communication: standard work instructions, andon, 5S, active listening, clear emails, escalation.
- Business basics: market survey, Udyam/MSME registration, GST invoice, cash-flow record.
Worked example
Fixed cost is 50,000 rupees; selling price 200; variable cost 120. Reasoning: contribution = 200 - 120 = 80; break-even = 50,000 / 80 = 625 units. At 700 units, profit = (700 - 625) x 80 = 6,000 rupees. If material rises by 10, contribution falls to 70 and break-even rises to about 715 units.
Traps
Ignoring overhead; confusing markup and margin; forgetting scrap and rework; quoting without a cost sheet; poor documentation.