Standardize proposal cost estimation for SMEs! (Excel template provided)

DY Management Research Institute

(Director Ryu Dae-young, Ph.D. in Business Administration/Business Consultant (Finance))

• YouTube: www.youtube.com/@dy-4714

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This is Daeyoung Ryu, who runs the 'DY Management Research Institute' on YouTube and N Blog.

I would like to help those who are working in related fields based on my experience in the company and what I have studied in business administration. I will provide a very practical and immediate approach to help with cost, management, accounting, financial business planning, investment attraction, and overall management. If you would like to collaborate on a lecture I have posted or my area of ​​expertise, please contact me by email!

※ Areas of expertise:

• Management/cost consulting, business feasibility review, financial business plan establishment, management simulation, financial projection for investment attraction.

• Excel practical training, data visualization using Excel, work efficiency using Excel. We will cut your work time in half.

• We welcome lectures/work requests/Q&As related to specialized fields and YouTube videos.

Small and medium-sized business executives may be having a hard time calculating the proposal price.

To help you with this, I've created an easy-to-use template in Excel.

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This is an Excel template that organizes the previous year's or planned costs well, derives several indicators, and easily 'calculates' the proposed price using these indicators.

This material consists of two parts: 'Calculating the Proposal Price' and 'How Costs are Calculated in Financial Statements and Break-Even Point Analysis'.

※ Proposal price calculation template

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1. First, define the incurred costs as follows. Manufacturing expenses/sales expenses, manufacturing costs are divided into material costs, labor costs, and expenses.

2. Using the data organized in No. 1, derive the manufacturing indirect rate, sales ratio, and profit rate indicators.

3. Derive the average wage rate index. It can be obtained by dividing the company's total direct labor costs by the total number of employees.

4. Now we can standardize our proposal work using the metrics we have obtained above. (See attached picture)

※ Let’s learn how financial statements are created by referring to the cost aggregation.

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1. Manufacturing Cost Statement: This is the manufacturing cost statement, which is one of the most important things for a manufacturing company. I have explained in Excel how the manufacturing cost statement is created.

2. Income Statement: I have explained in Excel how the manufacturing cost statement leads to the income statement.

3. Operation rate-contribution profit graph: The figure below is a graph of profit fluctuations according to operation rate. It is a very important concept for decision-making in management accounting.

4. Variable Cost (Direct Cost) Income Statement: Divide costs into fixed and variable costs to create a variable cost income statement.

5. You can simulate profit according to sales as shown below using the variable cost income statement. Break-even point (BEP) analysis is also possible.

6. You can also calculate the sales amount needed to achieve your target profit.

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This concludes the description of the material.

If you understand just the parts explained above, it will be of great help in running a small business.