ent.pptx for mechanical engineer and IIM graduates

entrepreneurship ppt for mechanical and business studies

1. MYTHS AND FACTS ABOUT ENTREPRENEURSHIP

2. Myth about entrepreneurs is that, they are born not made. But…. fact is that entrepreneur characteristics may be acquired through properly structured learning.

3. Myth:  Most successful entrepreneurs take huge risks in starting their companies.  But…. Fact:  Most successful entrepreneurs concentrate on minimizing risk.

4. Myth:  Being first to market is important for success.  But…. Fact:  Being first to execute well and delight customers is important for success .

5. Myth: Business schools have no place in entrepreneurship. But… FACT: In actual practice most of the successful entrepreneurs have come from engineering and business schools.

6. Myth:  Access to capital is required for a startup. But….   Fact:  More than 80 percent of new ventures are boot-strapped from personal savings, credit cards, second mortgages and the like.

7. Myth:  entrepreneurs are only does not thinkers. But….   Fact:  whereas the reality is that frequent thinking in planning, creativity, innovation and risk taking is required.

8. Cost Accounting and cost Estimation

9. OVERVIEW OF COST CATEGORIES FOR A MANUFACTURING FIRM All costs incurred by the firm must be accounted for in its financial statements MANUFACTURING COSTS Direct Labor (DL) Direct Materials (DM) Overhead (OH) Indirect Materials Indirect Labor Other NON-MANUFACTURING COSTS Marketing or Selling Costs Administrative Costs

10. MANUFACTURING COSTS 1. Direct Materials (DM) Materials that are consumed in the manufacturing process and physically incorporated in the finished product Materials whose cost is sufficiently large to justify the record keeping expenses necessary to trace the costs to individual products

11. 2. Direct Labor (DL) Labor time that is physically traceable to the products being manufactured. Labor time whose cost is sufficiently large to justify the record keeping expenses necessary to trace the costs to individual products. Example: Direct labor for manufacturing Honda Accords Line workers, robot operators, painters, assembly workers MANUFACTURING COSTS

12. 3. Manufacturing Overhead (OH) All of costs of manufacturing excluding direct materials and direct labor a. Indirect Materials (IM) – Materials, used in the manufacturing of products, which are difficult to trace to particular products in an economical way Glue, nails, cleaning supplies. b. Indirect Labor (IL) – Labor, used in the manufacturing of products, which is difficult to trace to particular products in an economical way .Wages for maintenance workers, factory supervisor’s salary, idle time MANUFACTURING COSTS

13. MANUFACTURING COSTS C . All other types of manufacturing overhead Depreciation on machinery, depreciation on factory building, factory insurance, utilities for factory

14. NON-MANUFACTURING COSTS 1. Marketing or Selling Costs – Costs incurred in securing orders from customers and providing customers with the finished product Sales commissions, costs of shipping products to customers, storage of finished goods, depreciation of selling equipment (cash register) 2. Administrative Costs – Executive, organizational, and clerical costs that are not related to manufacturing or marketing CEO’s salary, cost of controller’s office, depreciation on administrative building.

15. OTHER COST CONCEPTS Product Costs or Inventoriable Costs – costs assigned to products that were either purchased for resale (merchandising firm or retailer) or manufactured for sale (manufacturing firm) When products are sold, product costs are recognized as an expense (cost of goods sold or COGS). The costs of unsold products remain in inventory and are not expensed (i.e. not deducted from revenue in calculating net income) Period Costs – costs that are not product costs and that are associated with the period in which they are incurred Period costs such as selling and administrative costs are expensed (i.e. deducted from revenue in calculating net income) in the period they are incurred

16. Variable and Fixed Costs Activity – a quantitative measure of a firm’s output of goods or services Number of Chrysler vans Pairs of Nike shoes Tons of cement produced Variable Costs – costs that change proportionately (in total) with the activity level within a relevant range of activity Fixed Costs – costs that do not change in total as activity level changes within a relevant range of activity Example : Publishing a magazine Variable costs Fixed Costs Cost of paper Rent on building Cost of ink Salaries to reporters Sales Commissions Depreciation on printing equipment Cost of lubricants for machine Cost of operating press

17. Total Variable and Fixed Costs Total Variable Cost Number of units Number of units Total Fixed Cost

18. Per Unit Variable Cost Number of units Number of units Per Unit Fixed Cost Variable and Fixed Costs Per Unit

19. Relevant Range The range of activity within which the firm’s cost structure (i.e. variable cost per unit and total fixed cost) remains unchanged Publishing a small number of magazines (cost structure of a small publisher) Total Variable Cost Number of units Total Fixed Cost Number of units Relevant Range Relevant Range