Total Variable cost1.4= Total Cost of Material+ Cost of Labor1.2 +Overhead Expenses for the Product1.3

1.1

Materials used for Production of Hair oil. (Ref Page: 51, Statement of Material Consumed: Raw Material Consumed + Packing Material Consumed.)

Raw material consumption

Qty (Kg's)

Amount

per kg

Refined oil

2,766,284

224,903,000

81

Light liquid paraffin

10,173,396

755,341,000

74

Perfumes

286,699

279,764,000

976

packaging material – VC 677,790,000

1.2

Labor Charges from the Wages and Salary Expense: 2657110000 Ref Page: 52, Employee benefit expense: Salaries & Wages)

Therefore Total Labor Charges to include is 0.2*2657110000 = 531422000

Assumption: 20 percent of this salary goes in Direct Labor, or company attributes around 20% of its Labor Cost to this product.

1.3

Overhead Expense = 87600000 (Ref Page: 52, Other Expenses: “General & Administrative Expenses”).

1.4

Total Variable Costs = 1.1 +1.2+1.3 = 2,556,820,000

1.5

Total Number of Liters Manufactured: 15486670 (Ref: Page 51, Details of Production, Stock and Turnover: Manufactured goods: Hair Oil)

1.6

Therefore, per Liter Variable Costs = Total variable cost1.4 / Total number of Units1.5 = 165.09811

1.7

Selling Price, per unit Liter = Total Sales of Hair Oil (INR)/ Total number of Liters Sold

For Total Sales, and units sold: (Ref: Page 51, Details of Production, Stock and Turnover: Manufactured goods: Hair Oil:Sales)

Selling Price, per unit Liter= 338.55289

1.8

Contribution Margin per unit Liters = Selling Price per unit1.7 – Variable Costs per unit 1.6 = 173.45

1.9

Assuming that the average cost is almost constant for all the SKUs we get an approximation of the cost, selling price of the product and the per unit contribution. There for a 300 ML bottle, for which we have the offer the contribution shall be: (300/1000)*Contribution Margin per unit Liters1.8 = INR 52.04

1.91

Cost of the Pantene shampoo