Jaipuria Institute of Management,

Vineet Khand, Gomti Nagar

Lucknow – 226 010

Academic Year 2019 - 2020

Batch 2019 - 2021
Trimester 2ND Trimester
Programme
PGDM (Retail Management)
(PGDM / PGDM-FS / PGDM-RM)
Name of Course Managerial Accounting
Section E
Name of Faculty Prof. Rashmi Chaudhary

Nature of submission
Project Report
(Assignment / Project Report)
Topic of Assignment / Project
Garam Masala

Deadline for submission

14th December 2019

Group/ Learning Team Number Learning Team – E - 02

Submitted by:

Name of Student/ Enrolment

Sl. No. Contribution Signature
No.

1 Gunit Kaur Arora & JL19RM017

2 Manshi Verma & JL19RM022
Shahjahan Khatoon &

3 JL19RM043
4 Shashank Sahu & JL19RM045
5 Shivam Singh & JL19RM049
Suryansh Agrahari &

6 JL19RM056

Date of receiving at PMC Signature of PMC staff

ACKNOWLEDGEMENT
We wish to express our sincere gratitude to Prof. Rashmi Chaudhary, faculty of Managerial
Accounting of Jaipuria Institute of Management, Lucknow for providing us an opportunity to do our
project work on Garam Masala. This project bears an imprint of support of many peoples. I sincerely
thank to our project guide Prof. Rashmi Chaudhary for her guidance and encouragement in carrying
out this project work.

I also wish to express my gratitude to the officials and other staff members of Jaipuria Institute of
Management, Lucknow who rendered their help during the period of our project work. Last but not the
least, we wish to avail ourselves of this opportunity, express a sense of gratitude and love to our friends
and our beloved parents for their manual support, strength, help and for everything.

1. Gunit Kaur Arora [JL19RM017]

2. Manshi Verma [JL19RM022]
3. Shahjahan Khatoon [JL19RM043]
4. Shashank Sahu [JL19RM045]
5. Shivam Singh [JL19RM049]
4. Suryansh Agrahari [JL19RM056]

Table of Content
CHAPTER TITLE PAGE NO.

Acknowledgement

Table of Contents

1 Introduction 1
 Objectives of Management Accounting 1
 Objectives of this Study 1
 Introduction to Business 1
 Location and Target markets and Mobility 2

2 Items Required for Garam Masala 2

3 Classification Of items 3
4 Appointment of Fixed Cost 4
5 Working Notes 5
6 Allocation Of variable Cost Per Unit 6
7 Cost sheets 7

8 CVP Analysis 9

9 Learnings From the project 10

Introduction to Management Accounting

 Managerial Accounting is concerned with using information to effectively plan and control
operations and make good business decisions. Virtually all managers need to plan and control
their operations and make variety of decisions. The goal of Managerial Accounting is to provide
information they need for planning, control and decision making

Objectives of Management Accounting

Firstly, management accounting helps to measure performance of employee, also it helps to

measure the efficiency of actual performance with the standardized performance.
Management Accounting aims to assess risk in order to maximize risk to generate high profits.
Another very important objective is to allocation of resources and indirect or untraceable objects.

Objective of the Study

 To develop a business plan.
 To prepare the cost sheet of the cost object.
 To do the Pricing through cost plus analysis.
 To perform the cost volume profit analysis for the product.

Introduction to Business

1. We have chosen a small-scale manufacturing unit in which we are manufacturing garam

masala.
2. We have decided to manufacture 550 units per day.
3. We will sell our product within the range of Rs. 260.
4. We will be requiring 8 labors, 2 for loading, 2 for unloading, 2 for packing and 2
supervisors.
5. No. of working days will be 26 and we will be manufacturing 14,300 units per month.

Location and Target markets and Mobility

 We will be capturing the local retail markets and stores of Lucknow initially and will cover the
stores at patrakarpuram, alambagh, ashiyana, telibagh aminabad etc. and as our profits will
increase will reach out to big retail chain stores like Big Bazaar, Walmart, V-mart etc.
We will send properly packed and sealed products to the buyers so that they don’t face any
difficulty in further selling the product.

Items required manufacturing Garam Masala (1kg)

 coriander seeds
 cumin seeds
 black pepper
 cinnamon
 green cardamom
 black cardamom
 cloves
 nut meg
 turmeric
 red chilly
 mace
 dried bay leaves
 blending machine
 packing machine
 scissors
 weight machine

Other indirectly affecting items in the manufacturing of garam masala

 Electricity bill
 Land rent
 Telephone bill
 Salary of supervisors
 Furniture
 Wages of labor

Classification of items on the basis of Behavior, Traceability and Elements

S.no. Item Name Behavior Traceability Element Cost
1 Coriander seed Variable Direct Material 17.5
2 Cumin seed Variable Direct Material 17.5
3 Nut meg Variable Direct Material 5
4 Black cardamom Variable Direct Material 32.4
5 Green cardamom Variable Direct Material 15
6 Black pepper Variable Direct Material 15
7 Cloves Variable Direct Material 12.5
8 Mace Variable Direct Material 5
9 Dried bay leaf Variable Direct Material 2.5
10 Cinnamon Variable Direct Material 10
11 Turmeric Variable Direct Material 20
12 Red chilly Variable Direct Material 14
13 Blending machine Fixed Direct Expenses 65280
14 Packing machine Fixed Direct Expenses 6398
15 Wages for labor Fixed Indirect Labor 1200
16 Weight machine Fixed Direct Expenses 10000
17 Electricity bill Fixed Indirect Expenses 12000
18 Land rent Fixed Indirect Expenses 30000
19 Telephone bill Fixed Indirect Expenses 1500
20 Furniture Fixed Direct Expenses 6000
21 Salary of supervisor Fixed Indirect Expenses 24000
22 Scissor Fixed Direct Expenses 239

Apportionment of Fixed Cost

 Fixed cost
S.no Item Cost per unit Amount Amount per month
1 Blending machine 32640 @ 2 65280 816
2 Packing machine 3199 @ 2 6398 80
3 Wages for 6 labor 1200 PER DAY PER LAB 1200 31200
4 Weight machine 5000 @ 2 10000 125
5 Electricity bill 12000 PER MONTH 12000 12000
6 Land rent 7000 PER MONTH 7000 7000
7 Telephone bill 1200 PER MONTH 1200 250
8 Furniture 6000 6000 75
9 Salary of supervisor 12000 PER MONTH@ 2 24000 24000
10 Scissor 239 239 239
  TOTAL   133317 75785

No. of units manufactured per

550
day
14300 (No. of working
Per Month
days=26)
Annually 171600

We have used the traditional method for apportionment of fixed cost, where only one cost driver is
used to allocate the cost for the manufacture of per unit. Here, the cost driver is used by us is the no. of
units manufactured per month.
Working Notes

1.
Cost of depreciation on blending machine Amount
cost 65280
rate of depreciation 15%
depreciation per annum 9792
depreciation per month 816

2.

Cost of depreciation on packing machine Amount

cost 6398
rate of depreciation 15%
deprecation per annum 959.7
deprecation per month 79.975

3.

Cost of deprecation on weight machine Amount

Cost 10000
rate of depreciation 15%
deprecation per annum 1500
deprecation per month 125

4.

Cost of deprecation on furniture Amount

Cost 6000
rate of depreciation 15%
deprecation per annum 900
 deprecation per month 75

Allocation of Variable Cost Per Unit

Items Cost Per Unit (IN RS>)

Coriander Seed 17.5
Cumin Seed 17.5
Nut Meg 5
Black Cardamom 32.4
Green Cardamom 15
Black Pepper 15
Cloves 12.5
Mace 5
Bay Leaf 2.5
Cinnamon 10
Turmeric 20
Red Chilly 14

Cost Sheet

Direct Material QTY as PER 500g COST

Coriander Seed 125 17.5
Cumin Seed 62.5 17.5
Nut Meg 0.75 5
Black Cardamom 27 32.4
Green Cardamom 2.5 15
Black Pepper 25 15
Cloves 25 12.5
Mace 1.25 5
Bay Leaf 1.25 2.5
Cinnamon 2.5 10
Turmeric 125 20
Red Chilly 100 14

SINGLE UNIT PRICE 497.75 166.4

No of
Direct labor No of labor Lab. Sal days Salary per day
For unloading 2 200 per day 26 400.00
For loading 2 200 per day 26 400.00
For packing 2 200 per day 26 400.00
Supervisor 2 12000 per month 26 923.08
Total 2123.08
No of unit
mfg. 550
Cost per unit 3.86013986

Manufacturing
Overhead Units /Monthly Cost (Monthly)
Blending Machine
(Dep) 2 1630
Packing Machine (Dep) 2 160
Weight Machine (Dep) 2 250
Misc. Exp Monthly 3400
Dabba Monthly 11600
Electricity Bill Monthly 12000 Total Cost ₹ 172.87
Land Rent Monthly 7000 Selling Price (50% ₹ 259.30
 Profit)
Telephone Bill Monthly 1200  
Furniture (Dep) 70
Total 37310
No. Of Unit Mfg 550*26 14300
2.60909090
cost per unit 9

Cost Plus Pricing

cost plus pricing cost + profit
  172.87+50% profit
  172.87+86.43
  259.3
  260
The profit Margin decided by us is 50% on the cost plus price that will give us a profit
of approximately Rs.87 per unit

CVP Analysis
Beo+20 Beq+30 Beo+40
Item Formula used Beq Beq+10%` % % %
Beq Fc/sp-vc 806.22 886.60 967.20 1047.80 1128.40
Selling price 260.00 260.00 260.00 260.00 260.00
Variable price 166.00 166.00 166.00 166.00 166.00
Contribution 94.00 94.00 94.00 94.00 94.00
209618.0 251472.0 272428.0 293384.0
Sales Qty*sp 9 230516.00 0 0 0
Fixed cost 75785.00 75785.00 75785.00 75785.00 75785.00
Unit*contribution
Operation profit - fc 0.00 7555.40 15131.80 22708.20 30284.60
209618.0 209618.0 209618.0 209618.0
Bes Beq*sp per unit 9 209618.09 9 9 9
Margin of safety Sales - bes 0.00 20897.91 41853.91 62809.91 83765.91
Contribution/sale
PV ratio s 36.15 36.15 36.15 36.15 36.15
MOS ratio MOS/sales*100 0.00% 9.07% 16.64% 23.06% 28.55%

Learnings From the project

1. From this project, we learnt about the garam masala market, its materials and how
it is made.
2. We learnt how to differentiate between costs on the basis of traceability, behavior
and elements.
3. We learnt how to make cost sheet and various costing techniques.
4. We also learnt about how to calculate the breakeven point in which we ascertain
that there is no profit no loss to the company.
5. We also learnt how to do CVP Analysis.

Interpretation and Conclusion

1. The cost of making garam masala is Rs. 260

2. The selling price after applying cost plus pricing came to be 260, when the
profit margin is 50%
3. The number of manufacturing garam masala is 14300 in a month and annually
manufacturing is 171600
4. Variable cost per unit came is Rs. 166 and fixed cost per month is Rs. 75785
5. The break-even quantity came out to be 806.