Year/semester| 2010-2012 – II Semester| Level:| ACL II| Assignment Type| Assignment B| Module Name:| Costing MIS & Budgetary Control| Assessor’s Name| | Student’s Name:| SRIN IVAS M| Reqd Submission Date| | e-mail id & Mob No| Srinivas. [email protected] com9581049058| Actual Submission Date| | Stream| Business| Submitted to 😐 | Certificate by the Student: Plagiarism is a serious College offence. I certify that this is my own work. I have referenced all relevant materials. Student’s Name/Signatures) Expected Outcomes| Assessment Criteria| Grade based on D,M,P,R system| Feedback| General Parameters| Clarity | Clear understanding of the concept| | | Analytical Thinking- | Ability to analyze the problem realistically| | | Research Done- | Research carried out to solve the problem| | | Formatting & Presentation- | Concise& clear thinking along with presentation| | | Subject Specific Parameters| 1. Understanding the procedures of Costing| Clarity of concept| | | 2.
To be able to calculate the unit cost and prepare costing Profit & Loss statement| Precision in cost calculation and preparation of cost sheet| | | Grades| Grade Descriptors| Achieved Yes/No (Y / N)| P| A Pass grade is achieved by meeting all the requirements defined. | | M| Identify & apply strategies/techniques to find appropriate solutions| | D| Demonstrate convergent, lateral and creative thinking. | | Assignment Grading Summary (To be filled by the Assessor) OVERALL ASSESSMENT GRADE:| |
TUTOR’S COMMENTS ONASSIGNMENT:| | SUGGESTED MAKE UP PLAN (applicable in case the student is asked to re-do the assignment)| | REVISED ASSESSMENT GRADE| | TUTOR’S COMMENT ON REVISED WORK (IF ANY)| | Date:| Assessor’s Name / Signatures:| 1. Answer. Manufacturing Industry- Nestle India Ltd. Profile: Nestle India is a subsidiary of Nestle S. A. of Switzerland. Nestle India manufactures a variety of food products such as infant food, milk products, beverages, prepared dishes & cooking aids, and chocolates &confectionary.
Some of the famous brands of Nestle are NESCAFE, MAGGI, MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID, NESTEA,NESTLE TOMATO KETCHUP, NESTLE Milk, NESTLE SLIM Milk, NESTLE Fresh ‘n’ Natural Dahl and NESTLE Jeers Rita. Cost procedure followed in Nestle India Ltd. – TOMATO KETCHUP And CHOCOLATES A company’s production process helps in determine the best way of accounting for its costs. Process costing works well whenever relatively homogeneous products pass through a series of processes and they receive similar amount of manufacturing costs. Nestle accounts for its vast chocolate chips production by using a process costing system.
Sequential Processing: The units typically pass through a series of manufacturing or producing departments, in each departments or process is an operation that brings the product one step closer to completion. Parallel Processing: This pattern require two or more sequential processes to produce the finished goods. Partially completed units are worked on simultaneously in different processes and then brought together in a final process for completion. FLOW OF MANUFACTURING COSTS THROUGH THE ACCOUNTS OFPROCESS COSTING(Tomato Ketchup). COST SHEET Nestle India ltd. chocolates) Total output = 4,50,000 units particulars| Costs per unit| Total cost| Raw material| | | Cocoa butter| | | Sugar = 3,00,000| | | Cocoa solids = 3,20,000| | | Pea nuts = 2,00,000| 5. 16| 23,20,000| Chocolate coated resins = 4,00,000| | | Almonds = 3,00,000| | | Vanillin =1,00,000| | | Honey = 50,000| | | Boston baked bean = 1,50,000| | | Direct labour = 7,00,000| 1. 56| 7,00,000| Carriage on material = 2,42,500| 0. 53| 2,42,500| Prime cost| 7. 25| 32,62,500| Factory expenses| | | Fixed| | |
Depreciation on plants & machinery = 2,57,500| | | Rent =1,50,000| | | Power& consumables stores = 1,50,000| | | Factory insurance = 1,50,000| | | Supervisors salary =50,000| 2. 35| 10,,57,500| | | | Variable;| | | Electricity charges = 50,000| | | Power& consumable stores= 1,00,000| | | Running expenses of machines= 1,50,000| | | | | | Factory cost| 9. 60| 43,20,000| Office staff salary =10,00,000| | | Rent = 80,000| | | Computer = 1,20,000| | | Furniture = 3,00,000| 4. 40| 19,80,000| Telephone = 10,000| | | Carriage outward = 20,000| | |
Depreciation on furniture ,= 50,000| | | Salaries of administrative = 3,70,0,00| | | Rent,rates& taxes = 30,000| | | Office and administration costs| 14. 00| 63,00,000| Selling& distribution expenses| | | Advertisement (print &local tv channel)= 4,00,000| | | Petrol = 1,00,000| | | Delivery vehicles = 2,50,000| 2. 00| 9,00,000| Maintenance of delivering vehicles = 2,50,200| | | Packing rates = 50,000| | | Bad debts written off = 1,00,000| | | Total cost| 16. 00| 72,00,000| Net profit(20% on selling price)| 4. 00| 18,00,000| Sales| 20. 0| 90,00,000| | | | 2. answer Techniques of Marginal costing :Profit/volume ratio (P/V Ratio) When the contribution from sales is expressed as a percentage of sales value, it is known as Profit/Volume ratio (or P/V ratio). It expresses relationship between contribution and sales. Better P/V ratio is an index of sound ‘financial health’ of a company’s product. This ratio reflects change in profit due to change in volume. Broadly speaking, it show large the contribution will appear, if it is expressed on equal footing with sales. P/V ratio may be expressed as:
P/V ratio = (Sales – Marginal cost of sales)/Sales or = Contribution/Sales or = Change in contribution/Change in sales or = Change in profit/Change in sales Marginal Costing and CVP Analysis Cost-Volume -Profit analysis is an important tool for profit planning. It provides information about the following matters: a)The behavior of cost in relation to volume .b) Volume of production or sales, where the business will break even . c)Sensitivity of profits due to variation in output. d) Amount for profit for a projected sales volume. e)Quantity of production and sales for a target profit level.
Cost-Volume-Profit analysis may therefore be defined as a managerial tool showing the relationship between profit planning, viz. , cost (both fixed and variable), selling price and volume of activity. Break –Even Analysis Break-even analysis is a widely used technique to study Cost-volume-profit relationship. The narrower interpretation of the term Break even analysis is defined as a system of determination of that level of activity where total cost equals total selling price. The broader interpretation refers to that system of analysis which determines probable profit at any level of activity.
Break even point (of output) = Fixed Cost/Contribution per unit Break even point(of sales) = Fixed Cost/contribution per unit *selling price per unit= fixed Cost/P/V ratio COSTING PROFIT AND LOSS ACCOUNT Particulars| AmountsRs| Particulars| AmountsRs| To material consumed| 7,08,000| By sales| 15,00,000| To wages| 3,71,000| By closing stock| | To work overhead| 2,15,000| Finished good| 40,000| To administrative overhead| 93,000| WIP| 30,000| To selling& distribution| 1,20,000| | | To net profit| 62,200| | | | 15,70,000| | 15,00,000| RECONCILIATION STATEMENT | Amount (Rs)| Amounts (Rs)|
Profit as per cost account| | 62,200| Add;over absorbed overgead| | | Excess factory overhead| 2,800| | Selling&distribution| 6,500| 9,300| | | 71,000| Less; under absorbed overhead| | | Administritive expenses| | 2,500| Profit as per financial accounts| | 69,000| WORKING NOTES COST SHEET Material consumed| 7,08,000| Wages| 3,71,000| primecost| 10,79,000| Work overhead(20% of prime cost)| 2,15,000| Work cost| | Less:cost of work-n-progress| 30,000| Work cost | 12,64,800| Add: administrative overhead| 93,000| Cost ofProduction| 13,57,000| Less:closing stock of finished goods| 40,000|
Cost ofGoods sold| 13,17,800| Selling& distribution overheads(1,20,000| 1,20,000| | | Cost of sales| 14,37,800| | | profit| 62,200| | | sales| 15,00,000| | | | | Total Finished good units during the year = Unit sold-Openingstock + Closing stock = 30000 – 0 + 1000= 31000 Administration overheads have been recovered as Rs. 3 perfinished unit= 31000*3= 93000 . 3 . ANSWER Cost of buses= Rs. 50,000 + 1,20,000 + 45, of Depreciation 000 + 55,000 + 80,000= Rs. 3,50,000 Yearly Depreciation(20% of cost) = Rs. 70,000 Yearly Repairs(80%) = Rs. 56,000 operating Cost- Sheet For the year 2006-2007. Particulars| Amount(rs)| Amount(rs)| )standing charges| | | Wages of drivers(10*12*100)| 12,000| | Wages of cleaners(20*50*12)| 12,000| 24,000| | | | Intrest (4% on capital)| | 14,000| Directors fees(rs 400*12)| | 4,800| Licence& taxes(rs100*2)| | 2,000| Office establishment(rs 100*12)| | 12,000| Garage rent(6*50*12)| | 3,600| | | 60,400| b)maintenance charges| | | Repairs,spare parts etc| | 56,000| (-)sale proceeds from old tyres& tubes| | 6,400| | | 49,600| c) operating charges| | | Depreciation| | 70,000| Total(a+b+c)| | 1,80,000| e) passenger kmcarried(900*1600)| | 14,40,000| | | | f) cost per passenger kmrs (1,80,000/14,40,000)| | 0. 125|