EMPIRICAL ANALYSIS OF ASSESSING THE COST ANALYSIS OF NEW PRODUCT

Authors:

Dr. N. Venkateswaran1, Mr. Sathish P2

1Dr. N. Venkateswaran, Professor and Dean Panimalar Engineering College, Chennai - 600123

2Mr. Sathish P, Student, Panimalar Engineering College, Chennai - 600123

Abstract

This study focuses on the empirical analysis of cost assessment in the development of a new product, with the aim of understanding how different cost components influence overall production cost and profitability. The research primarily examines key cost elements such as raw material cost, labour cost, and miscellaneous (overhead) expenses. A descriptive and analytical research design is adopted, using quantitative data collected through a structured questionnaire from 362 respondents.The analysis reveals that raw

material cost (₹39.90 crore) constitutes the largest share of the total cost, while labour cost (₹13.30 crore) and miscellaneous cost (₹13.30 crore) contribute equally but to a lesser extent. The cost ratio indicates that raw material expenses are three times higher than labour costs, highlighting it as the major cost driver. Further analysis shows that a 10% reduction in miscellaneous cost results in a

saving of ₹1.33 crore, demonstrating that even small reductions in overhead expenses can improve overall cost efficiency.Statistical tools such as percentage analysis, correlation, and chi-square tests are used to examine relationships between cost components and their impact on pricing and profitability. The findings emphasize the importance of effective cost management, particularly in controlling raw material costs and optimizing overhead expenses.Overall, the study concludes that a data-driven and systematic approach to cost analysis is essential for improving financial performance and ensuring the success of new product development. The results provide practical insights for better decision-making, cost control, and long-term sustainability in a competitive business environment.