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Tarun Suthar

ย โ€ขย 

The Institute of Chartered Accountants of Indiaย โ€ขย 7m

How to Calculate Product Cost, Set Profit & Selling Price - Using a Cost Sheet ๐Ÿค” Ever wondered how businesses actually price their products? It all starts with one simple but powerful tool: the Cost Sheet. ๐Ÿš€๐Ÿ”ฅ Hereโ€™s how it helps: 1๏ธโƒฃ Calculate Product Cost First, prepare your cost sheet with all components: โœ…๏ธ Direct Costs: Raw material, labour, direct expenses โœ…๏ธ Indirect Costs: Factory overheads, admin, selling & distribution Then use this formula: Cost per Unit = Total Cost / Number of Units Produced 2๏ธโƒฃ Decide Your Profit Once you know the cost per unit, set your desired profit margin: Profit = Cost per Unit ร— Desired % Example: If your cost is โ‚น100 and you want a 20% profit, Profit = โ‚น100 ร— 20% = โ‚น20 3๏ธโƒฃ Set the Selling Price Now just add the profit to the cost: Selling Price = Cost per Unit + Profit โ‚น100 (cost) + โ‚น20 (profit) = โ‚น120 Selling Price 4๏ธโƒฃ why It Matters? You never underprice and lose money You never overprice and lose customers You make decisions based on numbers, not guesses

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