The Denim Hub Report

Submitted TO :
SIR NAUKHAIZ SB
SUBMITTED BY :
LUQMAN MUJAHID
DEPARTMENT :
BBA (3rd ) MORNING
COURSE :
COST & MANAGEIAL ACCOUTING
NAME OF BUSINESS :
THE DENIM HUB
PRODUCT :
JEANS PANTS
OWNER OF THE BUSINESS :

LUQMAN MUJAHID
BANK ACCOUNT :
BANK ALFLAH LTD
Business introduction
Dear sir naukhaiz sb :
My name is luqman mujahid , I would like to
introduce my business , The Denim Hub business opperunity demans
adequate knowledge about tesxtile designing and current trend. With
proper planning and substantial capital investment,jeans
manufacturing business can be initiated as a small-scale basis . jeans
now a days very popular apparel as casual pr informal dress among
men,women an kid also.
Product introduction
In this business we manufactured
denim jeans pant ,the denim has
one of the fastest-growing
fabric sefgment,Over 50% of
denim productionis based in
asia with Pakistan, india, china
and Bangladesh etc.
Business registration
In starting jeans manufacturing business
you will need to register your business
first. Several licenses and permits are required from the local authority.
Check these with a small business consultant choose an attractive ,
catchy brand name for your product. You can protect the brand by
registering trade mark.
Required area :
while starting jeans manufacturing business
you need to select the right area or location for denim production
which will be easily accessible from the target market and raw
material supplier . you should have the ownership of land assessing
around 1000 sQ ft that wil be satisfactory for jeans garments
business.
Raw material & machinery

Raw material required for making denim jeans pants :
 Fabric
 Thread
 Button and zip
 Label
 Packaging material
Machine required for making denim jeans :
So our business is a small scale business so

three basic machine is required to production of jeans pant ,
 Stitching machine
 Cutting machine
 Steam machine
Price & profit margin :
The price of each denim jeans pant is 400Rs and you can earn 30 to
40 % profit margin of each pant .
For example : each pant= 400Rs
35% profit = 140Rs
Selling price of each denim pant is 550Rs
Product Formation
By the industrial revolution, machinery had been developed for
faster production of denim jeans on electric looms. The indigo dye is
now created synthetically to reduce costs make the material more
accessible than ever before.
Today, denim is made with followings process :
Estimate costing procedure
Direct material total production =
48,00
Fabric :
Per meter : 200 =400
Fabric required per month = 19,20,000
Threads = 5,000
Zips &button = 10,000
Total material cost = 19,35,000
Direct labour :
No of labours = 4
For Cutting fabric = 96,00

per price =(2)
For stiching = 96,00
Per price stich =(2)
For steaming = 96,00

Per price =(2)
Packing cost (1) = 48,00
Direct labour cost = 33,600
Manufacturing overhead
Indirect material :
Machine (3) = 60,000
Rent factory = 25,000
Transportation cost = 10,000
Total = 95,000
Indirect labour :
Electricity charges = 25,000

Delivery charges = 15,500
Total = 40,500 Rs
Non manufacturing overhead
Selling and adminstrtaing = 10,000rs
Price of the product
Direct material = 420

Direct labour = 07
FOH
Indirect labour = 15
Indirect material = 11
Selling and administrating = 02
450
Profit margin : 150
Total selling price = 600
Accourding to the market competition so the owner decided to collect

reasonable profit margin . it would be 600 per unit .
Fixed cost
Rent = 25,000
Selling and administrating = 10,000
Wages labour = 33,600

Total fixed cost = 68,600
Variable cost per unit
direct matrial = 420
electricity = 02
indirect material = 11
total variable cost = 433
FOH Expenses
Rent = 25,000
electricity cost = 25,000
Indirect labour = 40,500
Indirect material = 95,000
Total = 185,500
Predetermined overhead rate

Y=a+bx
Fixed cost = 87,000
Variable cost = 433
Total allocation base =300 units
Y = 87,000+433 (300)
Y = 87,000+129,900
Y= 216,900
Predetermined overhead rate = estimated MOH cost/ amount of

allocation base
Predetermined overhead = 2,16900/300
Predetermined overhead = 723 per unit
Break even point
Break even point = fixed cot / sale price per unit – cost price
Break even point = 87,000/600 – 460
Break even point = 621.42
IN RUPEES = BREAK EVEN POINT * SALE IN RUPEES
IN RUPEES = 621 * 600
IN RUPEES = 37,2600
SALE BUDGET :
THE DENIM HUB
SALE BUDGET
For the year ended dec 31 22
Quarter
1 2 3 4 yearly
Budgeted sale 10,000 12,000 9,000 15,000 46,000
selling price 600 600 600 600 600
Total sale 6000,000 7200,000 54,00,000 90,00,000 2760,000
Percentage of sale 60 %
colleted in the
period of sale
After sale collect 40 %

First quarter sale 42,000 28,000 70,000
2nd quarter sale 126,000 84,000 210,000
3rd quarter sale 84,000 56,000 140,000

4th quarter sale 168,000 168,000
Total cash 42,000 154,000 168,000 224,000 588,000
collection
Production budget :
THE DENIM HUB

production BUDGET
Quarter
1 2 3 4 yearly
Budgeted sale 100 300 200 400 1000
Add desired ening 60 40 80 50 230
Total needs 160 340 280 450 1230
Less begning 0 0 0 0 0.00
inventory
Required 160 340 280 450 1230
production in case
Direct material budget :

THE DENIM HUB
Direct material BUDGET
Quarter
1 2 3 4 yearly
Required 160 340 280 450 12,30
production
Raw material 600 600 600 600 600
needed
Need to meet 96,000 204,000 168,000 270,000 738,000
production
Desired ending 180,000 170,000 130,000 150,000 150,000
258,000 344,000 256,000 366,000 744,000
Less opening 140,000 180,000 170,000 130,000 150,000

Cost of raw 118,000 164,000 86,000 236,000 594,000
material to be
purchased
1
Purchased paid in 30%

the period
After purchased 60%
paid
First quarter 35,400 70,800 106,200
2nd quarter 49,200 98,400 147,600

3rd quarter 25,800 51,60 30,960
4th quarter 70,800 70,800

Total cash 35,400 120,000 124,200 75,960 355,560
DIRECT LABOUR BUDGET :
THE DENIM HUB

Direct LABOUR BUDGET
Quarter
1 2 3 4 yearly
Required 130 290 210 360 990
production
DIRECT LABOUR 0.5 0.5 0.5 0.5 0.5
HOUR
LABOUR HOUR 70 140 120 180 510
NEEDED
LABOUR PER COST 200 200 200 200 200
TOTAL COST 14000 28000 24000 36000 102,000
MANUFACTURING OVERHEAD BUDGET :
THE DENIM HUB

M.O.H.BUDGET
Quarter
1 2 3 4 yearly
LABOUR HOUR 70 140 120 180 510
NEEDED
MANUFACURING 1000 1000 1000 1000 1000
COST PER
VARIABLE 70,000 140,000 120,000 180,000 510,000
MANUFACURING
OVERHEAD
210,000 210,000 210,000 210,000 840,000
FIXED
MANUFACURING
OVERHEAD
TOTAL 280,000 350,000 330,000 390,000 13,50,000
Cash budget :
THE DENIM HUB
Cash BUDGET
Quarter
1 2 3 4 yearly
Cash collection 54,000 198,000 216,000 288,000 856,000
from customer 0 0 0
direct material 35,400 120,000 124,200 75960 355,560
Direct labour 14,000 28,000 24,000 36,000 102,000
Selling & 10,000 10,000 10,000 10,000 40,000
administrting
Available cash 99800 250,000 300,000 150,000 896,000
The denim hub
Income statement
sale : 600 * 48,00 28,80,000

Less variable exp :
Cost of good sold : 433 * 48,00 20,78,400
Gross margin 820,000
Less fixed exp : 68,600
Net operating income :
751,000

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Submitted TO :

OWNER OF THE BUSINESS :

denim jeans pant ,the denim has

one of the fastest-growing

fabric sefgment,Over 50% of

denim productionis based in

asia with Pakistan, india, china

and Bangladesh etc.

Raw material & machinery

Machine required for making denim jeans :

So our business is a small scale business so

Price & profit margin :

Total material cost = 19,35,000

For Cutting fabric = 96,00

For steaming = 96,00

Direct labour cost = 33,600

Electricity charges = 25,000

Selling and adminstrtaing = 10,000rs

Price of the product

Direct material = 420

Profit margin : 150

Total selling price = 600

Accourding to the market competition so the owner decided to collect

Selling and administrating = 10,000

Wages labour = 33,600

Variable cost per unit

direct matrial = 420

total variable cost = 433

Indirect labour = 40,500

Indirect material = 95,000

Predetermined overhead rate

Fixed cost = 87,000

Variable cost = 433

Total allocation base =300 units

Predetermined overhead rate = estimated MOH cost/ amount of

Predetermined overhead = 2,16900/300

Predetermined overhead = 723 per unit

Break even point

Break even point = 87,000/600 – 460

Break even point = 621.42

IN RUPEES = BREAK EVEN POINT * SALE IN RUPEES

IN RUPEES = 621 * 600

After sale collect 40 %

2nd quarter sale 126,000 84,000 210,000

3rd quarter sale 84,000 56,000 140,000

THE DENIM HUB

Direct material budget :

258,000 344,000 256,000 366,000 744,000

Less opening 140,000 180,000 170,000 130,000 150,000

Purchased paid in 30%

First quarter 35,400 70,800 106,200

2nd quarter 49,200 98,400 147,600

4th quarter 70,800 70,800

DIRECT LABOUR BUDGET :

THE DENIM HUB

TOTAL COST 14000 28000 24000 36000 102,000

MANUFACTURING OVERHEAD BUDGET :

THE DENIM HUB

direct material 35,400 120,000 124,200 75960 355,560