Ice cream and frozen desserts are one of the most dynamic sectors of the Indian dairy industry growing at an annual growth rate of 12–15 percent (IICMA, 2012) where maximum value-addition has taken place in last few decades. The objective of this paper is to calculate the cost of production of a newly developed product ‘low fat yoghurt ice cream ’and delineate the cost components in detail. To achieve this, process wise and component wise cost analysis was undertaken to arrive at the most accurate cost estimate of the product. Further, break even output was calculated to reach an estimate of the minimum amount of output needed for the economic viability of the enterprise. Based upon an initial premise comprising of a set of assumptions related to the plant and manufacturing facility, we are able to bring forth a realistic estimate of the product cost. For establishing a 1000 litres per day ice cream plant, start-up investment-to the tune of 01.19 Crores and total operating expenses of jjl.17 lakhs would be required for the per batch production of low fat yoghurt ice cream mix. The gross return per batch (for a batch size of 1000 litre) was worked out to be [J.13 lakhs. Batch size of 1000 litres per day ice cream mix production was found to be well above the break even output.