Actual Profitablity of an article

Question

Dear experts,
Please go through the problem mentioned below
PROBLEM FOR ACHIEVING ACTUAL PROFITABILITY
Background
In case of Purchase Orders made for articles to be imported, at the time of receipt of the import documents the following operations are performed with respect to defining the landed cost of the articles:
1.     The formula being used to calculate the landed cost of any article is:
a.     Landed Cost of Article = (Article cost given in PO + Import/Custom Duty + Insurance + Freight) + (10% for Admin. Overhead + 3% for Publicity + 2% for Travel Expenses)
b.     Now the second parenthesis (10% for Admin. Overhead + 3% for Publicity + 2% for Travel Expenses) is an attempt to apportion the said expenses ( like Admin overhead, publicity, travel) on the articles.
2.     Now we know that the apportionment done is not the correct way to recover my expenses. We mean that the cost should not get affected or inflated for achieving this objective because ultimately the cost is getting inflated and the profitability gets reduced in the longer run.
3.     In the above process (current practice) the cost of the article is getting increased (by the above mentions formula) in the stock value.
4.     The ultimate objective of the client here is to set aside a certain percentage of his sales revenue (achieved by marking up the cost and in turn the article selling price) for the earlier mentioned expenses or overheads.
What the client wants to do is:
a.     Client wants this cost to be apportioned as pre-decided. I mean they want this additional margin to be there in each of the relevant import articles. Right now the overhead margin is added to all the import articles without distinction or categorization.
b.     Client wants that the money accrued from the apportionment of the various overheads like Admin overhead, publicity and travel expenses described above should be accounted separately, tracked and budgeted. Now what we mean by budgeting here is that for example if he had collected 100,000 in the travel overhead the organization should not be spending more than this amount. Similarly for the rest of the overheads. We need a solution to implement this.
Please tel me what are the steps to achieve client's objective.
Thanks a lot for your time and help
Regards
Lakhbir Singh

Answer 1

Yes I also agree that you won't find it in the refurbished section of the store. I am pretty sure as well you will find it easier on Ebay than the other stores.