Kindly explain the method to fix Selling Price of Spare Parts.We are a dealer and import spare parts from abroad and sell locally .Exchange rate are increasing monthly.We use FIFO method for Inventory Valuation.Is this method correct .Secondly, How do we set the selling price
Example supplier price Euro 120(CIF) x 70 INR =8400 Import duty and others 30% = 2520 Profit can be charged as per supplier instruction-30% on supplier price-2520 Order cost per order - 1200 Estimated orders per year-20 Estimated Purchase- 2400 Euro Administration expenses-30,000 Estimated sales -100,000
How to price items.Should we include any other items in cost calculation
05 September 2012
You should make an order wise costing by adding all costs directly related to the product. All cost in FC to be added and converted in INR at actuals plus cost in INR. divided by qnty will give you cost per pc.Now, calculate % of all indirect costs and add this % to the profit % desired and divide the per pc cost cost % so calculated to get the selling price per pc.
05 September 2012
Dear Sir, Thank you for your response.could you please explain it in more details.on what basis we can charge General administration costs .assume 30,000 is the yearly General Administration charges and selling price to be fixed before material purchase. Secondly, there are many spare parts purchase 1-2 years back and that time exchange rate was very low.When we sell this product in current year using current year selling price, gross profit margin increases.Is there any method to resolve this.Should we revalue the spare parts ?
CAclubindia
