Entrepreneurship, Costing and Vocational Practice
Domain 9 tests turning craft into a priced, compliant product: a cost sheet, a selling price, a break-even figure and awareness of support schemes.
Cost sheet
Direct material (paper, board, cloth, thread, adhesive, plus 5–10 % waste) + direct labour (hours × rate) + overheads (rent, power, depreciation, tools) + packing = total cost. Unit cost = total ÷ units produced.
Pricing
- Markup on cost = profit ÷ cost. Margin = profit ÷ selling price. A 25 % markup is only a 20 % margin.
- Working from a target margin: price = unit cost ÷ (1 − margin).
- Quote in writing: quantity, specification, delivery date, GST, validity period.
Break-even
BEP in units = fixed cost ÷ (selling price − variable cost per unit).
Worked example
50 hand-sewn notebooks. Material ₹2,400; labour 5 hours × ₹120 = ₹600; overhead ₹300. Total ₹3,300, so unit cost ₹66. At a target margin of 22 %, price = 66 ÷ 0.78 = ₹84.6, rounded to ₹85. Variable cost is ₹60 and fixed cost ₹5,700; contribution = 85 − 60 = ₹25; BEP = 5,700 ÷ 25 = 228 notebooks. At 50 a month, break-even arrives in about 4.6 months.
Scheme literacy
Udyam registration for the enterprise; MUDRA loans in Shishu, Kishore and Tarun tiers; PMEGP for manufacturing units; Uttar Pradesh ODOP and Vishwakarma Shram Samman; GST registration once turnover crosses the goods threshold.
Traps
- Leaving your own labour out of the cost sheet.
- Quoting without a wastage allowance.
- Confusing markup with margin.
- Giving a verbal price with no validity.
- Ignoring packaging and delivery in the unit cost.