TABLE OF CONTENTS Page #:

Acknowledgement 2

Executive summary 3

Chapter 01: Introduction

1.1 Introduction to report 41.2 Purpose of report 41.3 Methodology of study 4

Chapter 2: Cost Accounting

2.1 Definition of cost 5

2.2 The role of cost accounting 5

2.3 Contribution of cost accounting 6

2.3.1 Planning 6

2.3.2 Controlling 6

2.3.3 Evaluation of alternatives 6

2.3.4 Inventory management 7

2.3.5 Pricing of products and projects 7

2.3.6 External Reporting 7

2.3.7 Analysis of financial statements 7

Chapter 3: Mountain Fruits (pvt.) Limited. 8-10

Chapter 4: Departmental arrangements

4.1 Overview of the company 11

4.2 Organizational chart 11

4.3 Management List 12

4.3.1 Staff List 12

4.4 Major Departments 134.4.1 Production department 13-144.4.2 Accounts Department 144.4.3 Marketing Department 15

Chapter 5: Cost Elements

5.1 Elements of cost 165.1.1 Direct Material 16-175.1.2 Direct Labor 17-185.1.3 Overheads 18

Chapter 6: Classification of cost

6.1 Classification 196.1.1 Cost in relation to a product 196.1.2 Cost in relation to volume of production 20

6.2 Chart of accounts 21-23

Chapter 7: Budgeting

7.1 Definition of Budget 247.2 Budget Status 247.3 Budget Period 247.4 Production budget 24-26

Chapter 8: Financial Analysis

8.1 Financial Statements 278.1.1 Balance Sheet 27-288.1.2 Profit and Loss Account 29

Chapter 9: SWOT Analysis

9.1 Strengths 309.2 Weaknesses 309.3 Opportunities 319.4 Threats 31

CONCLUSIONS 31

RECOMMENDATIONS AND FINDINGS 31

REFRENCES 31

2

Executive Summary

MFL was a project of Aga Khan Rural Support Program (AKRSP). AKRSP is a non denominational organization established by the AKF to improve economic situation in the Gilgit Baltistan, the objective of MFl is top support small scale fruit producers in the remote valleys of Karakorum, Hindukush and Western Himalayas through skills training in production and post harvest techniques, micro credit and market information to process and market their produce in the national and international markets. Their main partner is in UK is the “Tropical Whole foods”

MFL works as a professional channel, establishing quality benchmarks and ensuring market for a large no of small grower associations through this network, we produce and market a variety of high quality specialty products, including dry apricots ,tomatoes apricots kernels, almond, walnuts and vegetable seeds .

These products are grown in the pristine mountain valleys of Hunza ,Nagar, Gilgit ,Chitral ,Ghizer and Baltistan. The transaction of growing these fruits goes back thousands of years in these valleys ,in the past these fruits served as an important food supplement to the highly food deficit mountain communities living in these remote valleys. Today, using new farming techniques introduced by AKRSP, farmers are available to significantly increase their production levels and sale their surpluses to supplement their income, which is invested in the education of their children ,particularly girls which is new trend in this area.

The fruits grow in these valleys are unique in terms of their natural flavor, taste and serve as a rich source of vitamins, minerals and dietary fibers. They are also known to provide natural defense against various diseases. Experts also see a link between the longevity trends of local population and their dietary habits, particularly the consumption of apricot.

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Chapter 1

INTRODUCTION

1.1 Introduction to Report

It is very important for students to get practical insight in any organization after a long theoretical work in University. We went Mountain Fruits (pvt.) Limited to see the practices of cost accounting in the organization.

After visiting and interviewing from the Chief Executive Officer, employees and manager accounts and administration in Mountain Fruits (pvt.) Limited. We have written this report with extreme possible attention.

1.2 Purpose of the Study

It is necessary for the student of Business that they should be familiar with the practical application of Business studies and should gain experience. The main purpose of this report is to fulfill the practical knowledge and experience of cost accounting in manufacturing concerns. It may be through, to gain a good amount of confidence and to become aware of the policies and practices of the organization by working and dealing with the officers.We select Mountain Fruits (PVT.) Ltd. to see the practices of cost accounting in the company and in return we get some knowledge that how Cost accounting activities will be performed in the company.

1.3 Methodology of Study

The quality information was real objective which we tried to collect. We had to use different techniques/methodologies to collect the data.

The sources of data were as follows; Interview with Chief Executive Officer Interviews with the Manager Accounts and Administration Interview with supervisor Personal observation through visiting the production department.

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CHAPTER 2

COST ACCOUNTING

2.1 Definition of Cost

The committee on Cost concepts and standards of American Accounting Association has given a broad definition of cost, so that it may cover all of the various types of the costs as are used by accountants. The committee defines cost as follow:

"Cost is foregoing, measured in monetary terms, incurred or potentially to be incurred to achieve a specific Cost object or Cost objective".

2.2 The Role of Cost Accounting

Cost accounting furnishes management with the necessary accounting tools for planning and control of activities. Specially, the collection, presentation and analysis of cost data helps management accomplish the following tasks;

1. Creating and executing plans and budgets for operating under expected competitive and economic conditions.

2. Establishing costing methods and procedures that permit control and of possible, reductions or improvements of costs.

3. Creating inventory values for costing and pricing purposes and, at times, controlling physical quantities.

4. Determining company costs and profits for an annual accounting period or a shorter period.

5. Choosing from among two alternatives which might increase revenue and decrease cost.

2.3 Contribution of cost accounting to management

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Cost accounting is now used not only by manufacturing organizations but by service and trading organizations as well, both in profit and non-profit sectors of economy. It is used as an aid for planning and controlling of on going operations, for evaluation of alternatives and projects, for pricing, for special and non-routine decisions and for external reporting.

2.3.1Planning:

Planning is the process of setting objectives and then determining the steps needed to attain them.

In planning management is interested in future costs. To supply appropriate information cost accountant makes make analysis of cost of past operations. These historical costs are adjusted to reflect changes in products, technology, volume, production efficiency, input cost etc. In the planning process Budgeting is the area where contribution of cost accounting is most visible.

2.3.2Controlling:

Controlling if the process by which management makes sure that intended and desired results are consistently and continuously achieved.

The controlling process consists of the following three steps:

i. Establishment of standards.

ii. Comparison of results against standards and

iii. Correction of deviation.

In these activities cost accounting assists management by developing standards, collecting data of actual results, preparing performance reports and by analyzing variance.

2.3.3Evaluation of alternatives:

Management is frequently confronted with decisions involving choice from different alternative course of actions. Cost accounting provides information as to how future costs and revenues will be affected under each alternative thus assists management in making appropriate selection.

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2.3.4 Inventory management:

Cost accounting assists in inventory management by keeping complete record of materials from the time they enter into the premises till the time they are sold in the form of finished products.

Quantitative models for materials planning and management developed by cost accounting enable management to keep stocks to a minimum and, at the same time, guard against being out of stock.

2.3.5Pricing of products and projects:

Pricing involves determination of prices of new products, adjustments in the prices of existing products as well as determination of bid prices for contracts.

2.3.6External reporting:

Cost accounting also serves the purpose of external reporting. While making an upward adjustment in the rates of public utilities e.g. electricity, gas, petrol, etc. the government must justify the increase before the opposition in the legislative assemblies and before the general public.

2.3.7Analysis of financial statements

Financial statements of a business organization are analyzed by external users and by management to arrive at quantitative decisions regarding profitability, financial strengths, trend etc. Cost accounting assists management in such analysis by providing detailed information about sources of profit or loss as revealed by the financial statements.

CHAPTER 3

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MOUNTAIN FRUITS PRIVATE LIMITED

After three months debate the AKRSP in March 2000 management finally agreed to pool funding of PKRs 2.00 million to initiate training project for quality improvement of dried apricots in Gilgit region. A separate small office was established in Gilgit town with total six staff members. The project aimed to change the traditional unhygienic sun drying method to produce an internationally acceptable food product. Although it seemed impossible under prevailed conditions of resources in the northern areas but it happened in just few years. The project was then shifted in to a purposely built (leased for 10 years) factory at Danyore where the factory has access to spring water to wash over 100 tons of dry apricots in a season.

In November 2004, the Dry Fruit Project was converted in to a formal dry fruit export business, Mountain Fruits (pvt.) limited with net assets of 6.5 million after repaying PKRs 3.5 million to the mother organization, AKRSP. By then the Company was exporting over 65 tons of dried apricots, apricot kernels, dried apples and nuts on test basis. Apart from the success of dry fruit business the company employed seasonal women workers in processing of fruits with special focus on the socio economic conditions of the workers.

Since the primary objective of the project was to bring economic change at micro level by increasing the income of poor farmers. The company started buying dried apricots at the best market price in 2000 that was PKRs 35 per kilogram, the company increased farm gate price for dried apricots gradually and paid PKRs 87/kg. The company trained over 2000 farmers in improved apricot drying in year 2006 a new company was also established in Gilgit and the prices for the improved quality dried apricots was gone up to PKRs 150 per kilogram at farm gate. This was revolution in the history of farmer’s income in dry apricots.

The company not only focused in dry apricots business but also increased product line by adding walnuts and almonds in 2005-6. The company believes value addition is the only tool to increase income and market share therefore from the very beginning the concept of organic production and fair trade certification has been the mandate of the company.

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To increase farm income of small farmers, AKRSP focused to help in increasing agriculture productivity, introduced cash crops; improve quality of farm products, value addition and linking surplus production to high value market. Dry fruits and nuts have been main horticultural products of farmers. Before opening of the Karakrum Highway the people of northern area have to sustain on what ever they produce in their limited lands. There was no source of food supply from out side and the local population has to supplement dry fruits to their food stuff. After opening of the KKH the farmers got access to outside markets to sell dry fruits and import food grains from planes of Pakistan.

Since the market for fresh fruits was far away and it was not possible to market perishable fruits e.g. apricots even in nearest markets in Pakistan therefore farmers have been using un-hygienic sun drying techniques to preserve fruits and nuts. The production of fresh apricots in northern areas has been reported 45,000 to 60,000 tons; about 30% is being wasted before sun drying for various reasons. The conventional sun dried apricots halves are exposed to open atmosphere for a week and the product so dried is full of biological and physical contamination. AKRSP has been working on hygienic drying of fruits and link the product to domestic market but it could not be much successful for quality control reasons

In 1999, a staff member of the AKRSP joined North South Seed; a project of the AKRSP and voluntarily did research in production and marketing of whole dried (sulfur treated) apricots. After being success in development of international quality standard product and recognizing the quality of the product from a UK based company, Tropical Whole foods a project proposal named “Dry Fruit Projects” was presented to AKRSP management. In March 2000, the AKRSP management approved to finance rupees 2.0 million to initiate the project (a training program to improve sun drying of fruits in the region).

AKRSP enterprise section pooled seed money for the project and the project was initiated as a training program but the hidden mandate of the project leader was to establish dry fruit export business.

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After two years, in year 2002 the project made break even and it was physically shifted to a food processing factory having annual capacity to produce 100 tons of dry fruits.

The Tropical Whole foods, UK were an established business company they provided technical assistance to the project staff and now the project is a registered company named as “Mountain Fruits (pvt) limited”. The company has increased its product line including dried apples, walnuts halves, dried tomatoes, apricot kernels in addition to sulfured and non-sulfured apricots. Mountain Fruits (pvt) limited is the only factory in the northern areas where more than 50 ladies workers have chance to find seasonal work. About 2000 families are benefiting selling their products to the company. Following are statistical information of the company

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CHAPTER 4

DEPARTMENTAL ARRANGEMENTS

4.1 Overview of the company

The management of the company consists of a Chief Executive Officer and 3 Board of directors besides the managerial staff, supervisors, and working labors. The working labors in the production department are only female labors.

4.2 ORGANIGATIONAL CHART

Chief Executive

Officer

Manager Accounts and Administration

Factory Manager Field Manager

SupervisorAssistant Field

Manager

Marketing Manager

Data Entry Officer

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4.3 Management List

Names Designations

Sher Ghazi Chief Executive Officer

Brett Adam Director

Friend Richard Director

Sakhi Murad Honorary Director/ Manager Accounts & Administration

4.3.1 Staff List:

S. Admin Section  

No.Name of

Employee Designation1 Sher Ghazi CEO2 Sakhi Murad Manager Accounts3 Amir Shah Watchman 4 Salman Khan Electrician

 S. Production section  

2 Jamila khatoon Asst.QCO3 Shahina Perveen Processing Incharge4 Farman Driver5 Azeem ullah Purchasing officer6 Iftikhar Ali Asst.PO7 Rahim ullah Asst. field8 Bahadur Murad Asst. field

4.4 Major departments:

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4.4.1 Production Department

Purchasing of Raw material

Production department deals with the purchasing of raw material (i.e.) apricots, walnuts, almonds and fresh apples. These are purchased from different districts of Gilgit-Baltistan likely apricot, almonds and fresh apples from district Hunza-Nager, walnuts from district Sakardu. These items are purchased by the field assistants, who go to the farmers and purchase them. The raw material when received into the company the dat entry officer records the quantity and the area and the name of farmer from which the material has been purchased in the field and then the material is sent to the warehouse from where it is forwarded for the processing.

Grading of raw material

The grading of the raw material is made according to its quality for future processing. The processing in charge of the company has the responsibility of grading the raw material according to its quality and quantity.

Processing of raw material

After the grading of raw material it is sent to for processing in accordance of the demand for a product in the market. The raw materials are processed at different stages, e.g. Raw material of apricots are first washed in water in special type of electric machine

Mountain Fruits (pvt.) Limited

Production

Department

Accounts

Department

Marketing

Department

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called apricot washer machine then the wet apricot are send to the electric dryer for few hours and then the apricots are let dry in the solar drying system which they called the tunnel. After drying of the apricot its sent for re-grading, where the women labors give their services of re-grading the apricots into three different categories which are,

"A" Grade for the best apricots.

"B' Grade for the better apricots.

"C" Grade for the not for export quality apricots.

After this process the apricots are sent for packing and labeling of the product which different denominations of weights in cartons. After packing and labeling of the product it is sent to the finished goods inventory store from where they are consigned towards the consignee.

4.4.2 Accounts Department

The accounts department of Mountain Fruits (pvt.) limited, have the responsibilities of dealing with the controlling and planning of the financial resources of the company to achieve the organizational objectives. The accounts department is being handled by the Manager Accounts and Administration and the data entry officer.

The planning and controlling of the financial resources means to plan and control the costs and expenditures of the company to gain maximum profit.

Exporting of products

The consignments procedure of products to other countries is also executed here in the accounts department. The accounts department prepares sales invoice, Form "E" and other requirements of exporting products. Here the orders 50% advance payment is received from the purchasing party of the product in Europe or other country. After receiving 50% advance payment of the shipment the goods are consigned through Karachi Sea Port where the clearing agent of the company clears all the affairs and requirements, and then the clearing agent sends the Bill of lading to the consigner and consignee both. After receiving the consignment their consignee sends the

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payment in full settlement in the name of company to the bank where Mountain Fruits (pvt.) Limited has the account. Due to the fluctuations in the currency rates of different countries the company has,

Capital Gain.

Capital Loss.

4.4.3 Marketing Department

The marketing department deals with marketing of the products of the company abroad and locally in Pakistan. It is done through sending delegations to different countries and different cities. It ensures the attraction of new customers and retaining of the customers by giving customer value. Through different marketing tools and strategies the marketing of different products are marketed in different countries and cities.

CHAPTER 5

COSTING ELEMENTS

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5.1 Elements of Cost

The elements of cost are the components which are used to acquire the finished product after processing in the manufacturing companies. Mountain Fruits (pvt.) Limited also uses the following elements of cost;

1. Direct Material

2. Direct Labor

3. Overhead

5.1.1 Direct Material

Direct Material is the raw material purchased by the company form the field in form of,

Apricots

Walnuts

Almonds

Fresh Apple

Procedure of Material Purchasing:

Procedures for material procurement and use involves forms and records necessary for general ledger, financial accounting as well as those necessary costing a job, process, or department, and for maintain inventories and other statistical summaries.

Purchases of raw material

The actual purchase of all materials is usually made by the purchasing department headed by a general purchasing assistant. The purchasing department receives purchase requisition for raw material and supplies. The types pf purchasing form used in the company are as under,

o Purchase Requisition

o Purchase Order

Receiving of material

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The function of the receiving material is performed here is as,

i. Unloading and unpack incoming material

ii. Check quantities received against the shipper's packing list

iii. Identify goods received with descriptions on the purchase order

iv. Prepare a receiving report

v. Arrange for inspections if necessary

vi. Route accepted materials to the appropriate factory locations.

Electronic Data Processing for purchases

In a electronic data processing (EDP) system, the computer data base is used to record the material purchased and recived into the factory. The Data Entry Officer makes the entries in the computerized software about the receipts of raw material from the field with their quantity and other necessary information in the data base.

5.1.2 Direct Labor

No work can be performed without employment of staff and workers. Women who working the production in Mountain fruits (pvt.) Limited is generally called labor. Labor in cost accounting of men working in a factory, though they may be working as C.E.O, managers and workers. The main categories of labor for costing purpose are as under;

i. Direct labor

The workers employed in the company who directly work on production of goods for sale are classified as Direct labor.

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ii. Indirect labor

Beside direct labor, there are some general workers who also work in the production such as movement of materials from one place from another place, supervision etc. Their wages can't be allocated directly to a product under process. These personnel are termed as indirect labor.

5.1.3 Over heads

In the earlier two cost elements we described about direct material and direct labor whose cost are directly identifiable with specific products. There are, however, many indirect expenses such as electricity, repair and maintenance etc. which can't be directly related to a specific product, yet these have to be taken into consideration to have the cost of production of each finished goods are realistic. Such indirect costs are termed as overheads.

These indirect expenses or overheads are usually classified as;

Factory overheads

Administrative overheads, and

Selling and distribution overheads.

CHAPTER 6

CLASSIFICATIONS OF COST

6.1 Classification

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At mountain fruits (pvt.) Limited the classification of cost is being under the following relationships of cost to achieve the company's objectives;

1. The product

2. Volume of production

6.1.1 Costs in relation to a product

At Mountain Fruits (pvt.) Limited, total operating cost consists of,

Manufacturing Costs

Commercial Costs.

6.1.1.1 Manufacturing Costs

Manufacturing cost is the sum of the elements of costs, which are direct material, direct labor and overhead. Direct material and direct labor are combined into another classification called prime cost. Direct labor and overhead may be combined into classification called conversion cost, which represents the cost of converting direct material into finished products.

Manufacturing costs are classified into the following categories;

Direct Material

Direct Labor

Overheads

Indirect material

Indirect labor

6.1.1.2 Commercial Expenses

Commercial expense falls into two large classifications;

Marketing and selling expenses

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Administrative and general expenses

6.1.2 Costs in relation to volume of production:

Some costs vary directly in relation to changes in the volume of production or output, while others remain constant. The costs which vary and remain constant in Mountain Fruits (pvt.) Limited are as under,

Variable costs:

The following list identified overhead costs of Mountain Fruits (pvt.) Limited which are usually classified as Variable costs;

Fuel etc Repair & Maintenance Others Generator Fuel Generator Repair Office Supplies Utilities Entertainment Daily Wages Rent & Maintenance Communication

Fixed Costs:

The following list identified overhead costs of Mountain Fruits (pvt.) Limited which are usually classified as fixed costs;

Salaries of regular staff

Depreciation

Insurance

Rent

6.2 Chart of Accounts

Account ID Account Description10000 Goodwill

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10200 Cash at SBL - PLS 5000-110300 Petty Cash10500 Security Deposit10600 Cash at ABL - C/A 287810650 ABL Saving 01-151-0010-910700 Cash at ABL - FC A/c10900 SBL 11024-0110950 SBL FC/Ac11024-0311000 Accounts Receivable11100 Provision for Doubtful Account11200 Other Receivables12000 Prepaid Rent12100 Advance to Supplier – Hunza12200 Advance to Supplier – Gilgit12300 Advance to Supplier – Ghizer12400 Advance to Supplier – BLN12600 Advance to Supplier – Punjab12820 Advance to Supplier – Zulfi12830 Advance to Supplier - Azeem-Apri12900 Advance to Supplier – Kamal16000 Inventory-Apricot16200 Inventory-Dried Apple16210 Inventory-Fresh Apple16500 Inventory -Apri. Kernel Sweet16800 Inventory - Walnuts (in shell)16900 Inventory - Walnuts Shelled17000 Inventory Apricot – Open17010 Inventory – Almonds17015 Inventory Almonds Shelled17020 Inv. Almond Oil17100 Packaging Material17200 Chemical17300 Training Inputs17400 Packages – Raw material20100 Computer & Accessories20200 Equipment & Appliances20300 Furniture & Fixture20400 Plant & Machinery20500 Vehicles

22100Acc. Dep-Computer & Accessories

22200Acc. Dep-Equipment & Appliances

22300 Acc. Dep-Furniture & Fixture

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22400 Acc. Dep-Plant & Machinery22500 Acc. Dep-Vehicles23000 Share Capital24100 Retained Earnings25000 Accounts Payable25050 Other Payable25300 Income Tax Payable25700 Expenses Payable25800 Advance from Customers25900 Accumulated Amortization26000 CPF Payable26100 CPF Installment Payable26200 CPF Loan Installment Payable27000 Staff Salaries-Admin27100 Staff Salaries-Production27300 Staff Travel - Admin.27310 Staff Travel - Production27330 Staff benefits - Admin27340 Staff benefits - Production27400 Fuel etc27500 Repair & Maintenance Others27700 Generator Fuel27800 Generator Repair27900 Office Supplies29000 Utilities29100 Entertainment29300 Daily Wages29400 Rent & Maintenance29800 Communication29900 General Expenses30000 Bank Charges30600 Export Charges - Apricot30620 Export Charges - Dried Apple30650 Export Charges - Walnut Shelled30670 Export charges - Almond30700 Research & Development30800 Loss on Exchange31100 Vehicle Operation31400 Transportation Outward31800 Training & Support32100 Dep. - Computer & Accessories32300 Dep. - Equipment & Appliances32400 Dep. - Furniture & Fixture32500 Dep. - Plan & Machinery

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32600 Dep. - Vehicles35000 Sales-Apricot-A35100 Sales-Apricot-B35200 Sales-Apricot-C35600 Sales- Dried Apple-A35700 Sales-Dried Apple-C35710 Sales Fresh Apple35900 Sale - Apricot Kernel Sw-A35950 Sales - Walnuts Shelled-A35955 Sales Walnut Shelled - (In) B35960 Sales - Walnuts Shelled- (In)C35980 Sales Apricot - Open35990 Sales Walnut In shell35995 Sales - Almond, Kernel Oil36000 Other Income36100 Profit on Deposits36200 Sales Return36300 Sales Discount36400 Gain on Exchange36500 Nursery Income37000 Sales - Almond A37050 Sales Almond Shelled37100 Sales - Almond Pieces38300 Direct Labor - Apricot38321 Direct Labor - Dried Apple38360 Direct Labor - Walnut Shelled38380 Direct Labor Almonds38400 Transportation-In - Apricot38470 Trans. In - Walnut in shell38480 Transportation In - Packages &38500 MT Commission - Apricot38600 Factory Overheads

CHAPTER 7

BUDGETING

7.1 Budget

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A budget is a quantitative and financial expression of policies to be pursed and strategies to be employed during a prescribed future period of time in order to achieve an objective.

7.2 Budget Status

The budget at Mountain Fruits (pvt.) Limited is centralized. It's forecasted on the basis of orders received from the customers in the previous period or by past experience. The budget is in control of Chief Executive Officer and the Manager Accounts and administration. A budget for production is forecasted for every financial year of the company.

7.3 Budget Period

The period of time to be covered by the budget is to be specific- a year or less. At Mountain Fruits (pvt.) Limited the budget period is for one accounting period that is 1st July to 30th June.

7.4 Production Budget

Mountain Fruits (Pvt.) Ltd. Production Budget For the year 2009 Direct material 1.1 Purchases Product Line Purchase Forecast

  Units

Kg. Av.Rate Amount

Apricot 79,341

80.00

6,347,280

Apricot kernels -

-

-

Walnuts 82,083

65.00

5,335,395

Almond 78,533

80.00

6,282,640

Fresh Apple 15,000

15.00

225,000

Grand Total 254,957   18,190,315

1.2 Transportation

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Inwards

Apricot 79,341

0.92

72,850

Apricot kernels -

1.83

-

Walnuts 82,083

0.78

64,030

Almond 78,533

0.78

61,261

Fresh Apple 15,000

1.83

27,450

254,957 225,591

1.3 Master Trainer Remuneration

Apricot 79,341

1.00

79,341

Apricot kernels -

1.00

-

Walnuts 82,083

2.00

164,166

Almond 78,533

2.00

157,066

Dried Apple 15,000

2.00

15,000

254,957 415,573

1.4 Packages

Apricot 79,341

0.60

47,605

Apricot kernels -

1.00

-

Walnuts 82,083

1.00

82,083

Almond 78,533

1.00

78,533

Dried Apple 15,000

1.00

15,000

254,957 223,221

1.5 Loading & Unloading

Apricot 79,341

1.00

79,341

25

Apricot kernels -

1.00

-

Walnuts 82,083

1.00

82,083

Almond 78,533

1.00

78,533

Dried Apple 15,000

1.00

15,000

254,957 254,957

Total 254,957

75.74

19,309,656

CHAPTER 8

FINANCIAL ANALYSIS

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8.1 Financial Statements

8.1.1 Balance Sheet

MOUNTAIN FRUITS (PRIVATE) LIMITEDBALANCE SHEET AS AT 30TH JUNE 2009

2009 2008 Rupees Rupees

ASSETS

Non Current Assets

Fixed assets – tangible 747,

604 708,109

Intangible asset – Goodwill 1,882,

514 1,882,514

Current assets

Stock in trade 804,

032 8,802,

450

Trade debts 720,

176 3,053,

840

Advances, deposits, prepayments and other receivables 3,479,

625 1,325,

147

Cash and bank balances 10,980,

370 4,005,

251 15,984,

203 17,186,688

18,614,320.43

19,777,311

Authorized Capital

669,700 (2006: 669,700) ordinary shares of Rs.10 each 6,697,

000 6,697,000

Issued, Subscribed and paid up Capital    650,000 (2006: 650,000) ordinary shares of Rs. 10 each 6,500, 6,500,

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000 000

Accumulated profits 4,251,

743 3,298,

190 10,751,

743 9,798,190

LIABILITIES

Current liabilities

Short term borrowing -

2,500,000

Creditors, accrued and other liabilities 735,

982 810,044

Advances from customer - associated company 7,126,

596 6,669,077

18,614,320.43

19,777,311

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8.1.2 PROFIT AND LOSS ACCOUNT

PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED JUNE 2009

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2009 2008 Rupees Rupees

Sales

Export sales 13,578,416 20,596,832

Less: Export charges (742,204) (1,282,918

)Sales Discount - -

12,836,212 19,313,914

Local sales 556,397 1,788,806

13,392,609 21,102,720

Cost of sales (11,371,093) (17,835,717)

   

Gross profit 2,021,516 3,267,003

Administration and selling expenses (1,389,050) (2,374,898)

Financial expenses (13,415) (91,072)

Other operating income 334,502 460,264

 

Profit/(loss) for the year 953,553 1,261,297

Accumulated profit at beginning of the year 3,298,190 2,036,893

Accumulated profit at end of the year 4,251,743 3,298,190

CHAPTER 9

SWOT ANALYSIS

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9.1 Strengths:

The following are strengths of MFL:

a) MFL has the latest employee training and development approaches. Therefore it can adapt to all sorts of change and bring immediate improvement in work practices whenever the need arises.

b) MFL have highly qualified management and exceptionally intelligent and energetic people. This result in lesser problems in maintaining high quality and production levels take constructive criticism and focus on personal and professional development by focusing solely on achieving their work.

c) MFL believes in making people realize their full potential and capabilities of household women, thus giving women new opportunities of income generation.

d) MFL also have great production techniques and machinery because of their alliance with an international company.

9.2 Weaknesses:

It is very difficult to find any weaknesses in the company; however some weaknesses can be pointed out.

a) The workers, especially cracking labors are supposed to under sky as the company do have its own proper building yet. This may affect their performance level.

b) According to given information the daily waged labors are not subjected to bonuses or rewards, which may reduce their working moral.

c) The company is not giving proper attention to marketing activities.

9.3Opportunities:

As the company has monopoly in the region in production and export of dry fruits, it can expand its operations around the region and greatly increase its profit margins.

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9.4 Threats:

Although the company is facing no major threats at present, but they might loose their market shares if new companies start operating in region, and MFL fails to keep their pace with changing environment.

CONCLUSIONS

Through our personal observation we concluded:

MFL is a highly hygienic dry fruit processing Export Company, meeting international standards o quality and hygiene.

MFL has raised employment level to great extend especially for mostly illiterate women of lower income families especially in danyore area.

MFL is maintaining high standards of production and processing.

The company also maintains proper material procurement procedures maintaining all records.

RECOMMENDATIONS AND FINAL FINDINGS

To further excel in dry fruit production and export the firm should:

Try to maintain all records and transactions computerized especially data and activities related to labors.

Give proper attention to marketing.

Facilitate workers(cracking labors) with proper shelter

REFRENCES:

Company Journals

Financials Reports

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