A study on cost and cost techniques at Reid Braids India -Hassan

8/9/2019 A study on cost and cost techniques at Reid Braids India -Hassan

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COST AND COST TECHNIQUES

1. INDUSTRY PROFILE

TEXTILE INDUSTRY INTRODUCTIONThe textile industry is undergoing a major reorientation towards non!lothing

a""li!ations o# textiles$ %nown as te!hni!al textiles$ whi!h are growing roughly at twi!e

rate o# textiles #or !lothing a""li!ations and now a!!ount #or more than hal# o# total textile

"rodu!tion& The "ro!esses in'ol'ed in "rodu!ing te!hni!al textiles re(uire ex"ensi'e

e(ui"ment and s%illed wor%ers and are$ #or the moment$ !on!entrated in de'elo"ed

!ountries& Te!hni!al textiles ha'e many a""li!ations in!luding )ed sheets* #iltration and

a)rasi'e materials* #urniture and health!are u"holstery* thermal "rote!tion and )lood

a)sor)ing materials* seat)elts* adhesi'e ta"e$ and multi"le other s"e!iali+ed "rodu!ts and

a""li!ations& The Indian Textile industry has )een undergoing a ra"id trans#ormation and is

in the "ro!ess o# integrating with the world textile trade and industry& This !hange is )eing

dri'en )y the "rogressi'e dismantling o# the ,-A and the im"erati'e o# the re!ently signed

.eneral Agreement Trade / Tari##& In this )old$ new s!enario$ India has to mo'e )eyond its

role o# )eing a mere (uota satis#ying !ountry&

HISTORY

The term 0Textile0 is a1atin word originating #rom the word 0texere0 whi!h means 0to

wea'e2 The history o# textile is almost as old as that o# human !i'ili+ation& In India the

!ulture o# sil% was introdu!ed in 344AD& ,odern textile industry too% )irth in India in the

early nineteenth !entury the #irst !otton textile mill o# 5om)ay was esta)lished in6783

during the year 6944 the !otton textile industry was in )ad statea#ter inde"enden!e$ the

!otton textile industry made ra"id strides under the "lans&

::I,S ,5A De"artment$ ,ysore 6


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GLOBAL SCENARIO

A!!ording to statisti!s$ the glo)al textile mar%et is worth o# more than ;344 )illion

at "resent& In more li)erali+ed en'ironment$ the industry is #a!ing !om"etition as well as

o""ortunities& It is "redi!ted that .lo)al textile "rodu!tion will grow u" to


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)illion )y


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CURRENT FACTS OF INDIAN TEXTILE INDUSTRY

6& Indian Textile se!tor grew )y more than 8= in the last two #is!al years and is

"roje!ted to grow at 6= )y


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CURRENT SCENARIO

India earns a)out S- de!reased

)y -G @6


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FUTURE SCENARIO

The textile industry in India is su)stantial$ and largely di'ersi#ied& The Indian textile

industry roots thousands o# years )a!%& A#ter$ the Euro"ean industry insurre!tion$ Indiantextile se!tor also witnessed !onsidera)le de'elo"ment in industrial as"e!ts& Textile

industry "lays an im"ortant role in the terms o# re'enue generation in Indian e!onomy& The

signi#i!an!e o# the textile industry is also due to its !ontri)ution in the industrial

"rodu!tion$ em"loyment& Currently$ it is the se!ond largest em"loyment "ro'ider a#ter

agri!ulture and "ro'ides em"loyment to more than ?4mn "eo"le&

Considering the !ontinual !a"ital in'estments in the textile industry$ the .o't& o#

India may extend the Te!hnology U"gradation -und S!heme @TU-S )y the end o# the 66th

-i'e Gear >lan @till


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E!onomies li%e the USA and the western !ountries o# Euro"e and a"an$ along with

some newly emerged e!onomies$ su!h as South orea and Taiwan& Certainly$ im"ort

growth has )een witnessed 'erti!al rise in the "re'ious year&

A""arel is the most "re#erred and im"ortant o# all the other a""li!ations& o'en

#a)ri!s are widely used in a""arel assortments$ in!luding innerwear$ outerwear$ nightwear

and underwear$ as well as in s"e!iali+ed a""arels li%e "rote!ti'e !lothing and s"ortswear&

Home textile also !ontri)utes !onsidera)ly in wo'en #a)ri! in "rodu!ts assortments li%e

!urtains$ #urnishing #a)ri!s$ !ar"ets$ ta)le !loths et!&

S"e!ial %ind o# wo'en #a)ri!s are utili+ed in medi!al as well as industriala""li!ations& The medi!al a""li!ations in!lude adhesi'es$ dressing )andages$ "lasters et!&

Nonwo'en se!tor has great #uture in terms o# glo)al demand$ thus major #a!ilities

o# !otton yarn are !urrently !on!entrating just on home textiles& It is mandatory$ that the

"ea% management o# the !otton yarn manu#a!turers analy+e the #uture "ros"e!t and

growing gra"h o# demand #or nonwo'en "rodu!ts&

Anti!i"ating massi'e growth in medi!al and automo)ile se!tors$ these se!torsassures su)stantial demand #or nonwo'en #a!ilities in India& Al)eit$ home textiles also will

lure higher demand$ there are s"e!i#i! demands #or home textile #a!ilities also&

::I,S ,5A De"artment$ ,ysore B


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*. CO(PANY PROFILE

*+a,BAC-GROUND AND INCEPTION OF THE CO(PANY

Feid 5raids India @F5I was in!or"orated in the year 't 1td$ San%hla >olymers and Shree i& These !om"anies !ater to

the Feid 5raids India&

The management is ha'ing de!ades o# ex"erien!e in #a)ri! "rodu!tion and (uality

line whi!h ma%es the !om"any more relia)le in terms o# (uality and deli'ery It has good

#a)ri! sour!e in strength to satis#y !ustomer re(uirements as management as a wor%ing

ex"erien!e o# industry #rom end to end o# retailing &

*+,NATURE OF BUSINESS CARRIED

Feid 5raids India @F5I is the )iggest Narrow -a)ri! manu#a!turing !om"any in

India& It manu#a!tures Trims #or .arment industries$ Shoela!es #or Shoe Industries / Fetail

"rodu!ts #or its !lients& Its "rodu!ts !ater the re(uirements o# households as well as

indi'idual needs and ensure high (uality&



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*+/,0ISION (ISSION AND UALITY POLICY

0ISION

6& JOur 'ision is to )e the )est Narrow -a)ri! Com"any in the world and we are

willing to wor% hard to a!hie'e our goals&K


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e ins"e!t our "rodu!ts #orL

6& Denier


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*+e, AREA OF OPERATION GLOBAL3NATIONAL3REGIONAL

Feid )raids India @F5I has entered into glo)al mar%et& It ex"orts #inished "rodu!t

to Australia$ USA$ and Sri 1an%a&

*+4, O5NERSHIP PATTERN

T"6e' >artnershi" -irm

Natu!e $4 t#e indut!ial unde!ta7in&' ,edium S!ale

Pa!tne!3 Di!e/t$!L Fahul San%hla

Nitu San%hla

(ana&in& Di!e/t$!L Fahul San%hla

*+&, CO(PETITORS8 INFOR(ATION

6& ,MS 5alaji elasti! 5angalore


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*+#, INFRASTRUCTURAL FACILITY

SITTING FACILITIES

In the "rodu!tion de"artment$ wor%ers ha'e to stand #or long hours while wor%ing&

There#ore the !om"any "ro'ides sitting #a!ilities&Feid )raids India @F5I ha'e set u" rest

rooms #or em"loyees& The wor%ing hours are #ixed inFeid )raids India @F5I&

DRIN-ING 5ATER

The -a!tory A!t$ 6937 lies down that there should )e drin%ing water near the "la!e

o# wor%& Feid )raids India @F5I has its$own water wells #or drin%ing "ur"oses& The !om"any

"ro'ides #resh$ healthy drin%ing water near the "la!e so that the wor%ers may #eel #resh and

need not go to the !anteen #or drin%ing water& Com"any also "ro'ides !old water #a!ilities

within the #a!tory itsel#&

SAFETY

The im"ortant #a!tor while handling the ma!hinery$ tools and e(ui"ments is the

sa#ety o# wor%ers& The !om"any "ro'ides the wor%er$ "ro"er training "rogram regarding the

use o# sa#ety a"artments& The a!!idents "ro)lems are low in Feid )raids India @F5I )e!ause

o# this training "rogram o# handling ma!hines& I# any a!!idents o!!ur$ the !om"any )ears

the hos"ital ex"enses&

CANTEEN FACILITY

It "ro'ides !anteen #a!ility within the #a!tory itsel#& Contra!tor

Funs a !anteen and !harges hal# rate #or #ood stu##s "ro'ided )y them& The !ou"ons are

su""lied to all wor%ers&

*+i,ACHEI0(ENTS AND A5ARDS

6& 5est su""lier award


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*+:,5OR-FLO5 (ODEL

*+7,FUTURE GRO5TH AND PROSPECTUS

6& Esta)lishing new unit


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2. (C-INSEY8S ;SFRA(E5OR-

O!i&in $4 t#e ; 4!a%e9$!7'

The Bs #ramewor% o# ,!insey0s is a management model that des!ri)es B #a!tors to

organi+e a !om"any in a holisti! and e##e!ti'e way& Together these #a!tors determine theway in whi!h a !or"oration o"erates& ,anagement should ta%e into a!!ount all B o# these

#a!tors to )e sure o# su!!ess#ul im"lementation o# a strategy #or large or small organi+ation&

Bene4it $4 (/-ine"8 ;($del'

6& Diagnosti! tool #or understanding organi+ations that is ine##e!ti'e&


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( a n a & i n &D i ! e / t $ !

d % i n i t !t i $ n

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2.1 STRUCTURE

The way in whi!h the organi+ations units relate to ea!h other is !alled as stru!ture&

Organi+ation stru!ture and authority and res"onsi)ility relationshi" are in!luded in the

stru!ture& There are many #un!tional de"artments in F5I headed )y de"artment o# general

manager& Organi+ation stru!ture mainly ex"lains how the authority and res"onsi)ility #lows

#rom the to" to the )ottom&

2.* STRATEGYStrategy is the "lan o# a!tion an organi+ation "re"ares in res"onse to$ or anti!i"ation o#$

!hanges in its external en'ironment& Strategy is di##erentiated )y ta!ti!s or o"erational

a!tions )y its nature o# )eing "remeditated$ well thought through and o#ten "ra!ti!ally

rehearsed&

6& The maximum ex"ansion to unta""ed geogra"hi!al areas

. Introdu!tion o# !ost e##e!ti'e su)stitutes



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2.2 SYSTE(E'ery organi+ation has some systems or internal "ro!esses to su""ort and

im"lement the strategy and run daytoday a##airs& Traditionally the organi+ations ha'e

)een #ollowing a )ureau!rati!style "ro!ess model where most de!isions are ta%en at thehigher management le'el and there are 'arious and sometimes unne!essary re(uirements

#or a s"e!i#i! de!ision to )e ta%en&

The !om"any uses the ,anagement in#ormation system in order to maintain

a!!ounts&

2.> S-ILLS%ill re#ers to the #a!t that em"loyees ha'e the s%ills needed to !arry out !om"any2s

strategy$ training and de'elo"ment ensuring "eo"le %now how to do their jo)s and stay

u"to date with the latest te!hni(ues and te!hnology&5asi!M.eneral s%illsL

6& nowledge a)out (uality$ en'ironmental "oli!ies and o!!u"ational health and

sa#ety&


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T$6 D$9n'

6& .eneral ,anagers address all exe!uti'es at least twi!e a year to Share Com"any2s

'ision$ mission$ 'alues$ "oli!y and strategies$ )usiness s!enario$ "er#orman!e and

!om"any2s o'erall "ers"e!ti'e&


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The sta##s o# the !om"any areL

Category No& O# em"loyees

,en 644

omen


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The SOT analysis tool is great #or de'elo"ing an understanding o# an organi+ation

or situation and de!isionma%ing #or all sorts o# situations in )usiness$ organi+ations and #or

indi'iduals&The SOT analysis headings "ro'ide a good #ramewor% #or re'iewing strategy$

"osition and dire!tion o# a !om"any$ "rodu!t$ "roje!t or "erson @!areer&Doing a SOT analysis !an )e 'ery sim"le$ howe'er its strengths lie in its #lexi)ility and

ex"erien!ed a""li!ation&Aim o# a SOT AnalysisL

6& Fe'eal your !om"etiti'e ad'antages


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STRENGTHS

6& Continuous "rodu!tion and !ontinuous "ro!ess in all de"artments&


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OPPORTUNITIES6& Integrated !om"uteri+ation will result in )etter systems managementM e##i!ien!y

le'el and )etter !ustomer satis#a!tion


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?. ANALYSIS OF FINANCIAL STATE(ENT

The #o!us o# #inan!ial analysis is on %ey #igures in the #inan!ial statements and the

signi#i!ant relationshi" that exists )etween them& The analysis o# #inan!ial statements is a

"ro!ess o# e'aluating the relationshi" )etween !om"onent "arts o# #inan!ial statements to

o)tain a )etter understanding o# the #irm0s "osition and "er#orman!e&

-inan!e is the #oundation stone o# e'ery )usiness #irm in the "resent day setu"& No

)usiness !an )e started without ade(uate #inan!e nor !an it )e de'elo"ed& The su!!ess o#

e'ery )usiness de"ends u"on ade(uate sour!e o# #inan!e&

The methodology ado"ted #or the Analysis o# #inan!ial statement may 'ary #rom

one situation to another& Howe'er$ the #ollowing are some o# the !ommon te!hni(ues o# the

Analysis o# #inan!ial statementL

6& Com"arati'e #inan!ial statements


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Liuidit" Rati$'

The term li(uidity re#ers to the a)ility o# a #irm to "ay its short term o)ligation o# as

and when they )e!ome due& 1i(uidity ratio measures the a)ility o# the #irm to meet its

!urrent o)ligations @lia)ilities& It is extremely essential #or a #irm to )e a)le to meet its

o)ligations as they )e!ome due& Short term !reditor0s main interest is in the li(uidity

"osition or the short term sol'en!y o# the #irm&

The most !ommon ratios whi!h indi!ate the extent o# li(uidity areL

6& Current Fatio


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*. Det euit" !ati$'

The de)t e(uity ratio is the measure o# !ontri)ution o# owners to the long term

#inan!es o# the !on!ern as !om"ared to the !ontri)ution o# the long term !reditors on an

enter"rise& -urther it indi!ates the sta%e o# the long term !reditors as against the owners& It

is the test o# long term sol'en!y o# the !on!ern&

Debt equityratio= Totaldebt

Share holdersequity( paid up capital+reserve fund)

Tale ?.*' Det euit" !ati$'

Inte!6!etati$n'

The de)t e(uity ratio should )e6L


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Inte!6!etati$n'

The net "ro#it o# Feid 5raids India is 6&3?= #or ' St$/7 tu!n$e! !ati$'

Inte!6!etati$n'

The sto!% turno'er ratio should )e around 7 64 times& It means that the !om"any

is e##i!iently managing and selling its #inished "rodu!ts& The #aster the in'entory sells the

#ewer #unds the !om"any has tied u"& Com"anies ha'e to )e !are#ul i# they ha'e a high

in'entory turno'er as they are su)je!t to sto!% outs& The sto!% turno'er ratio in


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@. LEARNING EXPERIENCE

I had the honor to wor% in Feid 5raids India to do my "roje!t wor%& E'eryone was

'ery #riendly and !oo"erati'e& They taught me lots o# %nowledge in!luding sour!ing goods

through the Internet$ !onta!ting the su""liers& I learned time management in the

organi+ation and also the #un!tioning o# 'arious de"artments& This ga'e me an o""ortunity

to ha'e a )etter understanding o# the whole "ur!hasing !y!le&

I gained a lot through "arti!i"ating in the >roje!t wor%& I reali+ed the im"ortan!e o#

#lexi)ility while wor%ing under the real )usiness en'ironment& It was really a 'alua)le

learning ex"erien!e&

As soon as I entered$ I was as%ed to register my name as well as details a)out the

!ollege and "roje!t in a )oo% in whi!h they %ee" a re!ord o# ea!h and e'ery "erson who

enters and exits the !om"any&

I went to the administrati'e )lo!% they as%ed #or the "ermission letter and as%ed me

to meet my internal guide ,r&agananth& He s"o%e 'ery gently and with a smiling #a!e he

ga'e me a lot o# in#ormation regarding the !om"any and guided me how to undergo a

"roje!t wor%&

This "roje!t wor% has enhan!ed my %nowledge regarding the wor%ing o# the

di##erent areas o# management& I ex"erien!ed a great "leasure in 'isiting the !om"any$

manu#a!turing "lant and !ommuni!ating with the "eo"le wor%ing in the !om"any& It hasgi'en me )oth theoreti!al and "ra!ti!al %nowledge regarding the administration o# the

!om"any&

::I,S ,5A De"artment$ ,ysore


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1. GENERAL INTRODUCTION

COSTING TECHNIUES

Costing is de#ined as Jthe a""li!ation o# !osting and !ost a!!ounting "rin!i"les$

methods and te!hni(ues to the s!ien!e art and "ra!ti!e o# !ost !ontrol and the as!ertainment

o# "ro#ita)ility& It in!ludes the "resentation o# in#ormation deri'ed there #rom the "ur"ose o#

managerial de!ision ma%ingK&

Costing system hel"s inL

• >ro"er !lassi#i!ation$ allo!ation and utili+ation o# !ost&

• Estimating selling "ri!e

• Estimating "ro#ita)ility

The organi+ation !an in!rease its margin o# "ro#it either )y de!reasing the !ost o#

manu#a!turing o# "rodu!ts or )y in!reasing the )ene#its in the "rodu!t or ser'i!es to the!ustomers& This a""roa!h !alled as !ost)ene#it a""roa!h& A!!ording to this a""roa!h$ the

!om"any !an earn high return either )y a!hie'ing low !ost or adding high !ustomer 'alue

in the "rodu!ts& E'ery !om"any !annot ha'e )oth !ost and !ustomer 'alue de"ending u"on

the "rodu!ts&

In industries li%e steel$ aluminum$ were s!o"e #or inno'ation and new de'elo"ment

in "rodu!ts are 'ery less& In su!h industries$ !ost redu!tion is the only way to a!hie'e high

rate o# "ro#its&

COST

Cost is the amount o# ex"enditure$ a!tual or notional$ relating to a s"e!i#i! thing or

a!ti'ity& The s"e!i#i! thing or a!ti'ity may )e a "rodu!t$ jo)$ ser'i!e$ "ro!ess or any other

a!ti'ity&

Cost is de#ined as the P'alue2 o# the sa!ri#i!e made to a!(uire goodsMser'i!es$

measured in monetary terms )y the a!(uisition o# assets or in!urren!e o# lia)ilities at the

time the )ene#its are a!(uired&

::I,S ,5A De"artment$ ,ysore


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COSTING

Cost a!!ounting and !osting ha'e distin!tly di##erent meanings& The institute o# !ost

and management a!!ountants$ 1ondon$ has de#ined !osting as the as!ertainment o# !osts&

Costing in!ludes the Pte!hni(ues2 and P"ro!ess2 o# as!ertaining !osts& The Pte!hni(ue2 re#ers

to "rin!i"les and rules whi!h are a""lied #or as!ertaining !osts o# "rodu!ts manu#a!tured

and ser'i!es rendered& There are mainly two methods o# !osting %nown as jo) !osting and

"ro!ess !osting& The P"ro!ess2 in!ludes the day to day routine o# determining !osts within

the method o# !osting @either jo) or "ro!ess ado"ted )y a )usiness enter"rise& ithin su!h

a "ro!ess$ there !ould )e histori!al !osting$ marginal !osting a)sor"tion !osting standard

!osting et!&

COST ACCOUNTING

Cost a!!ounting$ as a tool o# management$ "ro'ides management with detailedre!ords o# the !osts relating to "rodu!ts$ o"erations or #un!tions& Cost a!!ounting re#ers to

the "ro!ess o# determining and a!!umulating the !ost o# some "arti!ular "rodu!t or a!ti'ity&

It also !o'ers !lassi#i!ation$ analysis and Inter"retationL o# !osts& The !osts so determined

and a!!umulated may )e the estimated #uture !osts #or "lanning "ur"oses$ or a!tual

@histori!al !osts #or e'aluating "er#orman!e& !ost a!!ounting as Jthe "ro!ess o# a!!ounting

#or Cost #rom the "oint at whi!h ex"enditure is in!urred or !ommitted to the esta)lishment

o# its ultimate relationshi" with !ost !enters and !ost units& In its widest usage it em)ra!es

the "re"aration o# statisti!al data$ the a""li!ation o# !ost !ontrol methods and the

as!ertainment o# the "ro#ita)ility o# a!ti'ities !arried out or "lannedK&

COST ACCOUNTANCY

Cost a!!ounting has )een di##erentiated #rom !ost a!!ountan!y& The institute o# !ost

and management a!!ountants$ 1ondon$ has de#ined !ost a!!ountan!y as the Ja""li!ation o#

!osting and !ost a!!ounting "rin!i"les$ methods and te!hni(ues to the s!ien!e$ art and

"ra!ti!e o# !ost !ontrol and as!ertainment o# "ro#ita)ility as well as "resentation o#

in#ormation #or the "ur"ose o# managerial de!isionma%ingK& A!!ording to this de#inition

the term J!ost a!!ountan!yK in!ludes !osting$ !ost a!!ounting$ )udgetary !ontrol$ !ost

!ontrol and !ost audit&

::I,S ,5A De"artment$ ,ysore ?4


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ELE(ENTS OF COST'

1. Di!e/t %ate!ial'

All materials whi!h )e!omes an integral "art o# the #inished "rodu!ts and whi!h !an

)e !on'eniently assigned to s"e!i#i! "hysi!al units is termed as Dire!t ,aterial&

*. Di!e/t la$!'

Human e##ort$ )oth "hysi!al and mental$ used #or !on'ersion o# materials into

#inished "rodu!ts is la)or& 1a)or whi!h ta%es an a!ti'e and dire!t "art in the "rodu!tion o# a

"arti!ular !ommodity is !alled as dire!t la)or&

2. Oe!#ead'

The term o'erhead in!ludes indire!t material$ indire!t la)or and indire!t ex"enses&

Thus all indire!t !osts are o'erheads& O'erhead also in!ludes all indire!t ex"enses i&e&

mis!ellaneous ex"enses whi!h !annot )e dire!tly or wholly allo!ated to !ost !entre o# !ostunits& Exam"leL ex"enses li%e rent$ lights$ and insuran!e !harges et!& o'erheads !an

)e!lassi#ied de"ending on the !on'enien!e o# the organi+ation li%e #a!tory o'erhead$ stores

o'erhead et!&

>. Indi!e/t %ate!ial'

All materials whi!h are used #or "ur"ose an!illary to the )usiness and whi!h !annot

)e !on'eniently assigned to s"e!i#i! "hysi!al units is termed as Indire!t ,aterials&

Exam"leL !onsuma)le stores$ oils et!&

?. Indi!e/t la$!'

1a)or em"loyed #or the "ur"ose o# !arrying out tas%s in!idental to goods "rodu!ed

or ser'i!e "ro'ided is indire!t la)or& Su!h la)or does not alter the !onstru!tion$ !om"osition

or !ondition o# the "rodu!t& It !annot )e "ra!ti!ally tra!ed to s"e!i#i! unit o# out"ut&

Exam"leL wages o# store%ee"er$ #oreman et!&

@. Indi!e/t ex6ene'

The ex"enses whi!h !annot )e dire!tly$ !on'eniently and wholly allo!ated to

s"e!i#i! !ost unitsM !enters are treated as indire!t ex"enses&

6& ,anu#a!turing "rodu!tion ex"enses&


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;. Indi!e/t %anu4a/tu!in& ex6ene'

These are in!urred in the #a!tory& In!luded in these are ex"enses relating to

"rodu!tion management$ su!h as rent$ rates and insuran!e o# #a!tory "remises$ "ower used

in #a!tory de"re!iation o# "lant$ ma!hinery$ and so on&

. O44i/e and ad%init!atie ex6ene'

These "ertain to management o# )usiness and in!lude o##i!e rent$ lighting and

heating$ "osting$ tele"hone$ #ax and other !harges$ de"re!iation o# o##i!e #urniture2s and

e(ui"ment2s$ legal !harges$ audit #ee$ and so on&

. Sellin& and dit!iuti$n /#a!&e'

These are in!urred #or mar%eting o# "rodu!ts$ dis"at!hing goods solid$ and Et!&

(ETHODS OF COSTING

There are two methods o# !ostingL

)$ /$tin&

o) !osting is used in those )usiness !on!erns where "rodu!tion is !arried out as "er

s"e!i#i! order and !ustomers s"e!i#i!ations& Ea!h jo) is se"arate and distin!t #rom the other

jo)s or "rodu!ts& The method is "o"ular in enter"rises engaged in house)uilding$ shi"

)uilding$ ma!hinery "rodu!tion and re"air& o) !osting has the #ollowing 'ariantsL

6& 5at!h !osting


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1. Hit$!i/al /$tin&

Histori!al !osting is system o# !osting under whi!h !osts are determined a#ter they

ha'e )een in!urred&

*. Standa!d /$tin&

Under standard !osting$ standard !osts are determined and used$ and then !om"ared

with the a!tual !osts to determine the extent o# 'arian!es so that remedial a!tion !an )e

ta%en& Standard !osts are the "redetermined !osts in !on#ormity with the most e##i!ient

o"eration and use o# the resour!es within the #ilm&

2. A$!6ti$n $! Full /$tin&

Under this !osting method$ all manu#a!turing !ost$ #ixed and 'aria)le$ are !harged

to "rodu!ts$ jo)s$ "ro!ess$ et!& and are in!luded in total !ost&

>. 0a!iale $! (a!&inal /$tin&

:aria)le !osting method !harges only 'aria)le "rodu!tion !osts to "rodu!ts or jo)s$

and thus the !ost o# the "rodu!ts or jo)s !onsists o# only 'aria)le "rodu!tion and not #ixed

"rodu!tion !osts& The #ixed "rodu!tion$ administration$ selling and distri)ution !osts are

written o## against "ro#its in the "eriods in whi!h they arise&

?. Uni4$!% /$tin&

Truly s"ea%ing$ uni#orm !osting is not a te!hni(ue o# !osting$ )ut is an attem"t )y

se'eral underta%ings and organi+ations to use similar !osting "rin!i"les and Mor "ra!ti!es&

::I,S ,5A De"artment$ ,ysore ??


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1.1 STATE(ENT OF THE PROBLE(

A tud" $n C$t and C$t Te/#niue88 at Reid B!aid +India,= Haan

Costing te!hni(ues and !ost sheet is essential to as!ertain !ost o# 'arious "roje!ts in

detail in order to e'aluate whether the "roje!t under ta%en is "ro#ita)le to the organi+ation

or it will lead to loss in #uture&

This study is !ondu!ted there#ore to !reate awareness in the organi+ation #or

o"timum utili+ation o# !osts&

Hen!e the study hel"s the management to !losely examine the utili+ation o# !ost and

eliminate the waste #ull ex"enditure$ whi!h is dire!tly in'ol'ed in the "rodu!tion and also

hel" in "ro"er !ontrol o'er the !ost as ex"enditure in!urred is identi#ied against ea!h

de"artment and re!orded in !ost sheet&

1.* SCOPE OF THE STUDY

This study hel"s in %nowing$ identi#ying$ !lassi#ying and as!ertaining !ost #or ea!h

de"artment and how e##e!ti'ely and the management !an !ontrol !ost and #ix selling "ri!e&

This study also hel"s us to %now the "resent status and the !ost a!!ounting te!hni(ue

methods$ system #ollowed )y the !om"any$ whi!h leads to )etter utili+ation o# !ost&

1.2 OB)ECTI0ES

The o)je!ti'es o# the study are toL

6& -ind out what ty"e o# !osting method is )eing #ollowed in Feid )raids India&


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1.> (ETHODOLOGY

RESEARCH DESIGN' DESCRIPTI0E RESEARCH

It is a ty"e o# resear!h$ whi!h de"i!ts the "resentation o# #a!ts as it is& It is an Ex

#a!to resear!h& There is no !han!e o# mani"ulation #rom the resear!her "oint o# 'iew&

Des!ri"ti'e resear!h in'ol'es gathering data that des!ri)e e'ents and then organi+es$

ta)ulates$ de"i!ts$ and des!ri)es the data !olle!tion& It o#ten uses 'isual aids su!h as gra"hs

and !harts to aid the reader in understanding the data distri)ution&

COLLECTION OF DATA

In this study se!ondary data were !olle!ted through the !osting se!tion in Feid

5raids India$ !ost sheets$ !osting manuals$ annual re"orts$ and !om"any we)site&

1.? LI(ITATIONS OF THE STUDY'

6& The study )eing a resear!h "roje!t o# the des!ri"ti'e and analyti!al nature$ may)e

limited in s!o"e and nature in understanding the di##erent dimensions o# "rodu!tion

and manu#a!turing&


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Tale N$ *.* C$t S#eet 4$! S#$e La/e 4$! *1*1*

*1*11 *11*1*

Pa!ti/ula! Unit A%$unt +R, Unit A%$unt +R,

Dire!t material 6464&B8 668BB&33? 9


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Tale *. 2 Di!e/t (ate!ial C$t

Yea! Di!e/t (ate!ial C$t


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Inte!6!etati$n'

Dire!t ,aterial is whi!h )e!omes an integral "art o# the "rodu!t whi!h !an )e

!on'entionally assigned to s"e!i#i! "hysi!al unit is termed as dire!t material&In Feid 5raids India dire!t material are the raw material used )y !ost !enters within

the geogra"hi!al areas o# manu#a!turing wor% order sho"s&The a)o'e gra"h shows a !om"arati'e "i!ture o# dire!t material !ost #or 3 years

#rom ri!e 'arian!e !an )e attri)uted to the nona'aila)ility o# !ash dis!ounts whi!h was

originally anti!i"ated at the time o# setting the "ri!e standards& Changes in trans"ortation

!osts and store%ee"ing !osts !ontri)uting to material "ri!e 'arian!e&

::I,S ,5A De"artment$ ,ysore ?9


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Tale' *.> Di!e/t La$!

Yea! Di!e/t La$! C$t


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Inte!6!etati$n'

1a)or that is used a!ti'ely and as raw materials in the "rimary "rodu!tion "ro!ess o#

a "arti!ular !ommodity is !alled as dire!t la)or& Dire!t la)or !osts are there#ore s"e!i#i!ally

and !on'entionally tra!ea)le to s"e!i#i! "rodu!ts&Dire!t la)or is !a"tured through the )iometri! and manually attendan!e system&

The time o##i!e !a"tures the names o# dire!t la)or hours& Usually dire!t la)or !ost is a)o'e

7= o# unit !ost& The "rodu!t "ro!esses is ha'ing state o# the art o# te!hnology with high

le'el o# automation and learn man "ower strength&The a)o'e gra"h shows a !om"ared analysis o# dire!t la)or !ost #or 3 years #rom


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Tale *.? Fa/t$!" Oe!#ead

Yea! Fa/t$!" Oe!#ead C$t


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Inte!6!etati$n'

The a)o'e gra"h shows the !om"arati'e analysis o# #a!tory o'erhead !ost #or 3

years #rom


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Tale *.@ Ad%init!ati$n Oe!#ead

Yea! Ad%init!ati$n Oe!#ead C$t


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Inte!6!etati$n'LAdministrati'e o'erhead "ertains to management o# )usiness and in!lude o##i!e

rent$ lighting and heating$ "osting$ tele"hone$ #ax and other !harges$ de"re!iation o# o##i!e

#urniture2s and e(ui"ment2s$ legal !harges$ audit #ee$ and so on& The administration !ost is

in!reased #rom year to year& It has in!reased #rom 6&B?= to


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Tale *.; C$t S#eet $4 Elati/ 4!$% **1*

** **1

Pa!ti/ula! Unit A%$unt +R, Unit A%$unt +R,

Dire!t material 6644&44 3


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Tale *. C$t S#eet $4 Elati/ 4!$% *1*1*

*1*11 *11*1*

Pa!ti/ula! Unit A%$unt+R, Unit A%$unt+R,

Dire!t material 6694&44 B783&444 6


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Tale *. Di!e/t (ate!ial

Yea! Di!e/t (ate!ial C$t


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Inte!6!etati$n''

Dire!t ,aterial is whi!h )e!omes an integral "art o# the "rodu!t whi!h !an )e

!on'entionally assigned to s"e!i#i! "hysi!al unit is termed as dire!t material& In Feid 5raids

India dire!t material are the raw material used )y !ost !enters within the geogra"hi!al areas

o# manu#a!turing wor% order sho"s&

The a)o'e gra"h shows the !om"arati'e analysis o# dire!t material !ost #or 3 years

#rom


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Tale *.1Di!e/t La$!

Yea! Di!e/t La$! C$t


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Inte!6!etati$n'

The la)or ta%es an a!ti'e and dire!t "art in "rodu!tion o# a "arti!ular !ommodity is

!alled as dire!t la)or& Dire!t la)or !osts are there#ore s"e!i#i!ally and !on'entionally

tra!ea)le to s"e!i#i! "rodu!ts& Dire!t la)or is !a"tured through the )iometri! and manually

attendan!e system& The time o##i!e !a"tures the names o# dire!t la)or hours& Usually dire!t

la)or !ost is a)o'e 7= o# unit !ost& The "rodu!t "ro!esses is ha'ing state o# the art o#

te!hnology with high le'el o# automation and learn man "ower strength&

The a)o'e gra"h is showing a !om"ared analysis o# dire!t la)or !ost #or 3 years

#rom


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Tale *.11 Fa/t$!" Oe!#ead

Yea! Fa/t$!" Oe!#ead C$t


53/58


54/58


Tale *.1* Ad%init!ati$n Oe!#ead

Yea! Ad%init!ati$n Oe!#ead C$t


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Inte!6!etati$n'

These "ertain to management o# )usiness and in!lude o##i!e rent$ lighting and

heating$ "osting$ tele"hone$ #ax and other !harges$ de"re!iation o# o##i!e #urniture2s and

e(ui"ment2s$ legal !harges$ audit #ee$ and so on& The administration !ost is in!reased #rom

year to year& It has in!reased #rom 6&88= to


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2. FINDINGS

6& -rom the analysis it was !lear to %now that most o# the ex"enses ha'e )een

mounting when !om"ared to the "re'ious year&


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>. RECO((ENDATIONS AND CONCLUSIONSRECO((ENDATIONS

6& It is )etter to #ollow !osting "rin!i"les and !ost statements as "er a)sor"tion !osting

as all manu#a!turing !osts are #ully a)sor)ed into #inished goods&


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Documents

A study on cost and cost techniques at Reid Braids India -Hassan