Chethan Kumar K 17BTCOM009

A PROJECT REPORT ON
“ A STUDY ON OPERATING COSTING WITH

REFERENCES TO HINDUSTAN COCA-COLA
BEVERAGE PVT LIMITED”
A dissertation report submitted to Bangalore University in partial fulfilment of the
requirements for the award of the Degree of
MASTER OF COMMERCE
AT
BANGALORE UNIVERSITY
Submitted By
CHETHAN KUMAR K
Reg. No. 17BTCOM009
Under the guidance of
Asst Prof. A. V PROMOD

Principal
Seshadripuram Institute of Commerce and Management
SESHADRIPURAM COLLEGE
Post Graduate Department of Commerce and Management
#27 Nagappa Street, Seshadripuram
Bangalore – 560020
2017-2018
DECLARATION BY THE STUDENT
I hereby declare that “A STUDY ON OPERATING COSTING WITH REFERENCES TO

HINDUSTAN COCA-COLA BEVERAGE PVT LIMITED” is the result of the project work carried
out by me under the guidance of Asst Prof. A. V PROMOD. in partial fulfillment for the award of
Master’s Degree in Commerce by Bangalore University.
I also declare that this project is the outcome of my own efforts and that it has not been submitted to any
other university or Institute for the award of any other degree or Diploma or Certificate.
Date : Name : Chethan Kumar k

Place : Bengaluru Reg. No :17BTCOM009
CERTIFICATE OF ORIGINALITY
This is to certify that the project titled “A STUDY ON OPERATING COSTING

WITH REFERENCES TO HINDUSTAN COCA-COLA BEVERAGE PVT
LIMITED” is an original work of Mr. Chethan kumar k . bearing University
Register Number 17BTCOM009 and is being submitted in partial fulfilment for the award
of the Master of Commerce Degree at Bangalore Central University. The report has not been
submitted earlier either to this University/ Institution for the fulfilment of the requirement of
a course of study.
Signature of Principal Signature of Director
Dr. Anuradha Roy Dr. Bhargavi V.R.

GUIDE CERITIFICATE
This is to certify that Mr. Chethan kumar k . bearing university
register number 17BTCOM009 has completed this project titled “A

STUDY ON OPERATING COSTING WITH REFERENCES TO
HINDUSTAN COCA-COLA BEVERAGE PVT LIMITED” under
my guidance. This project is based on the original study conducted by
her and the report has not formed a basis of awarding any other Degree/
Diploma/ Certificate by this University or any other University.
Place: Bengaluru SIGNATURE OF GUIDE
DATE:
ACKNOWLEDGEMENT
I take this as an opportunity to express my profound gratitude to who has been a significant
part of this project.
I express my deepest sense of gratitude to Asst Prof. A. V Promod . faculty

for his valuable guidance, suggestions and constant support.
I heartily thank Dr. Bhargavi V.R., Director, Post Graduate Department of Commerce and
Management, Seshadripuram College for her encouragement and co-operation in all matters
related to my project.
I express my deepest sense of gratitude to Ms. Reshma B. and Mr. Swaroop R. faculty for
their valuable guidance, suggestions and support.
I wish to thank my parents, friends and family who always believed me and had faith in me
whatever I wished to do.
Place: Bangalore Name: Chethan Kumar k

Date: Reg No: 17BTCOM009
Table of contents
Table No. Description Page

No.
1 Introduction 1 – 15
2 Research design 16 – 19
3 Company profile 20 – 34
4 Data analysis and interpretation 35 – 54
5 Summary of findings, suggestions and conclusion 55 - 57

LIST OF TABLES
Table No. Description Page No.
4.1 Showing the inventory to working capital 39
4.2 Showing the current assets to net worth ratio 41
4.3 Showing the fixed asset ratio 43
4.4 Showing the inventory turnover ratio 45
4.5 Showing the operational ratio 47
4.6 Showing the operational expenses ratio 49
4.7 Showing the operational profit ratio 51
4.8 Showing the stock turnover ratio 53

LIST OF GRAPH
Table Description
Page
No.
no.
4.1 Showing the inventory to working capital
40
4.2 Showing the current assets to net worth ratio
42
4.3 Showing the fixed asset ratio
44
4.4 Showing the inventory turnover ratio
46
4.5 Showing the operational ratio
48
4.6 Showing the operational expenses ratio
50
4.7 Showing the operational profit ratio
52
4.8 Showing the stock turnover ratio
54
A STUDY ON OPERATING PROFIT WITH REFERENCE TO HCCBPL
CHAPTER -1
INTRODUCTION
1.1 INTRODUCTION TO COSTING
Cost accounting is the process of determining and accumulating the cost of

product or activity. It is the process of accounting for the incurrence and the
control of costs. It also covers classification, analysis, and interpretation of cost. In
other words, it is a system of accounting, which provides the information about
the ascertainment, and control of costs of products, or services. It measures the
operating efficiency of the enterprise. It is an internal aspect of an organization.
Cost accounting is accounting for cost aimed at providing cost data, statement and
reports for the purpose of managerial decision making. The costing includes “the
techniques and processes of ascertaining costs.” The techniques refer to principles
which are applied for ascertaining costs of products, jobs, processes, and services.
The process refers to day to day routine of determining costs within the method of
costing adopted by a business enterprise.
Costing system identifies, collects, measures, classifies and reports information

that is useful to managers in cost planning, controlling and decision making. It
should be noted that cost management and financial accounting information
system are part of total accounting information system.
Traditional cost accounting is focussed on determining the cost of goods and

services produced and sold. Companies need accurate cost information to
integrate product of servicing customers and the cost of being serviced, by
suppliers. Costing system aims to produce information for internal users. One
thing is common. All decisions are based on cost benefit comparison.
There is a direct relationship among information needs of management, cost

accounting objective and techniques and tools used for analysis in costing by the
cost management. Costing system also helps the management at the time of
determining products costs and also supplies information for various decisions and
facilitates for the purpose of planning and controlling business activities.
SESHADRIPURAM COLLEGE Page 1

Present day costing is growing very faster because of growing competition in the
market. And now companies want to reduce the cost of the product by adopting
different costing methods, which leads to company’s profit maximization and
provides easy platform to quote for any contracts.
Costing system also deals with analysis of expenses, measurement of production

of different products at the different stages of manufacture. It may also lead to
reducing cost of goods or services. It may also adopt audit principles and rules to
be applied correctly. They also play a vital role in case of cost control.
1.2 ELEMENTS OF COSTING
 Material
 Labour
 Other direct expenses
Costing also includes different heads, they are, direct materials, indirect materials,
direct expenses, indirect expenses, factory overhead, administration overhead and
selling and distribution overhead. Today costing system techniques are adopted by
most of the company, to know the cost of sales of the product with the help of cost
sheet. It is a statement designed to show the output of a particular accounting
period along with breakup of costs. The data incorporated in cost sheets are
collected from various statements of accounts which have been written in cost
accounts either day to day or regular records the information to be incorporated in
cost sheets would depend upon the requirement of management for the purpose of
control. It is a memorandum statement therefore it does not form part of double
entry cost accounting records. It is mainly helps the manufacture in fixing up the
selling price accurately, most of the company following this method while fixing
the selling price of the products.
Marginal cost also plays a significant role in case of costing, because it

differentiates between fixed cost and variable cost. It also includes direct cost and
variable costs.
Costing system principles, methods, and techniques helps in ascertainment of

costs and profitability on product or service, sometime it may also differ from the

industry to industry and time to time. Costing system also helps in case of
inventory control. The main purpose of inventory control is availability of
materials in a regular basis at reasonable price in proper quality there is also no
over stocking or under stocking of goods. This is mainly controlled by the
company by adopting the costing techniques procedure.
Today most of the companies adopting costing techniques to easily know the
contribution to the product with the help of sales and variable cost. But in case of
financial accounting it is difficult to know contribution. Costing also describes the
activities that take place in a business and relate them to an analysis of the
competitive strength of the business.
The cost of the activities and processes do not appear on the financial statement,
yet knowing these costs and their underlying causes is critical for companies
engaging in such tasks as cost management and quality management.
1.3 COSTING
 MEANING:
Costing is the system of computing cost of production or of running a

business, by allocating expenditure to various stages of production or different
operations of a firm.
Costing is the techniques and process of ascertainment of cost.
 DEFINITION:
According to WELDON, “Costing is the classifying, recording and
appropriate allocation of expenditure for the determination of costs of
products or services; and for suitably arranged data for the purpose of
control and guidance of the management. It includes the ascertainment of
the cost of every order, job contract, process, service as may be
appropriate. It deals with the cost of production, selling and distribution.”
Thus, costing simply means cost finding by any process or technique. It

consists of principles and rules which are used for determining:

 The cost of manufacturing a product e.g. motor car, furniture, chemical.

 The cost of providing a service e.g. electricity, transport, education.
1.4 COST ACCOUNTING:
 MEANING:
A method of accounting in which all costs incurred in carrying out an activity

or accomplishing a purpose are collected, classified, and recorded. This data is
then summarized and analyzed to arrive at a selling price, or to determine
where savings are possible.
In contrast to financial accounting (which considers money as the measure of

economic performance) cost accounting considers money as the economic
factor of production.
It is a formal system of accounting for costs in the books of accounts by means

of which costs of products and services are ascertained and controlled .
 DEFINITION:
According to CIMA of UK “Cost accounting is the process of accounting for

costs from the point at which expenditure is incurred or committed to the
establishment of its ultimate relationship with cost centres and cost units. In its
widest usage, it embraces the usage of statistical data, the application of cost
control methods and ascertainment of profitability of activities carried out or
planned.”
1.5 COST ACCOUNTANCY
 MEANING:
The practice of recording all the costs incurred by a business, especially so as to

improve the management of expenditures.

Cost accountancy includes the principles, conventions, techniques and systems

which are employed in a business to plan and control the utilization of its
resources.
 DEFINITION:
It is defined by CIMA of UK as “the application of costing and cost accounting

principles, methods and techniques to the science, art and practice of cost control
and the ascertainment of profitability. It includes the presentation of information
derived there from for the purposes of managerial decision making.”
‘COST ACCOUNATNCY AS A SCIENCE’
The term science requires a systematic body of knowledge having certain basic
principles and practices which are static in nature. Cost accounting is also
governed by a number of principles, practices, conventions etc. so cost accounting
is said to be a science.
‘COST ACCOUNTANCY AS AN ART’
The term requires a systematic knowledge and skill with which a cost accountant
discharges his duties and responsibilities.
1.6 COST
Cost is the amount of expenditure (actual or notional) incurred on or attributable

to a given thing.
Types of cost:
 Fixed cost :
The cost which do not vary with the changing output. Fixed costs might
include the cost of building a factory, insurance and legal bills. Even if
your output changes or you don’t produce anything your fixed cost stays
the same.

 Variable costs:
Costs which depend on the output produced. For example, if you produce
more cars, you have to use more raw materials such as metal. This is a
variable cost.
 Semi-variable costs:
Labour might be a semi variable cost. If you produce more cars, you need
to employ more workers; this is a variable cost. However, even if you
didn’t produce any cars, you may still need some workers to look after
empty factory.
Total costs (TC) =fixed+ variable costs
 Marginal costs:
Marginal cost is the cost of producing an extra unit. If the total cost of 3
units is 1550, and the total cost of 4 units is 1990. The marginal cost of the
4th unit is 350.
 Opportunity costs:
Opportunity cost is the next best alternative foregone. If you invest 1
million in developing a cure for pancreatic cancer, the opportunity cost is
that you can’t use that money to invest in developing a cure for skin
cancer.
 Economic costs:
Economic costs include the actual direct costs (accounting costs) plus the
opportunity cost. For example, if you take time off work to a training
scheme.
 Accounting costs:
This is the monetary outlay for producing a certain good. Accounting costs
will include your variable and fixed costs you have to pay.
 Sunk costs:
These are cost that have been incurred and cannot be recouped. If you left
the industry, you could not reclaim sunk costs. For example, if you spend
money on advertising to enter an industry, you can never claim these costs
back. If you buy a machine, you might be able to sell if you leave the
industry.

 Avoidable costs:
Costs that can be avoided. If you stop producing cars, you don’t have to
pay for extra raw materials and electricity. Sometimes known as an
escapable cost.
1.7 COST CONCEPTS:
 Cost unit
Cost unit is a device for the purpose of breaking up or separating cost into
smaller divisions attributable to products and services. According to ICMA
“Cost unit is a quantitative unit of product, service or time in relations to which
costs are ascertained”.
The quantity upon which cost can be conveniently allocated is known as cost
unit.
E.g. per person, per piece, per kg etc.
 Cost centre:
A defined area, machine or person to whom direct and indirect cost are allocated.
Also known as cost pool or expense centre.
It is a department within a company that does not produce direct profit and adds to
the cost of running a company.
The manager and employers of a cost centre are responsible for revenues or
investment decisions.
According ICMA cost centre is a location a person or an item of equipment (or a
group of these) for which costs may be ascertained and for the purpose of cost
control.
 Cost control
“Cost control is the practice of identifying and reducing business expenses to
increase profits, and it starts with the budgeting process. A business owner
compares actual results to the budget expectations, and if actual costs are higher
than planned, management takes action”.
As an example, a company can obtain bids from other vendors that provide or
service, which can lower costs.

1.8 COST REDUCTION:

Meaning
“Cost reduction is the process used by companies to reduce their costs and
increase their profits. Depending on a company’s services or product, the
strategies can vary. Every decision in the product development process affects
costs.
1.8.1 Techniques of Costing or types of costing:
Following are the main types or techniques of costing for ascertaining costs:
 Uniform costing:
It is the use of same costing principles and/or practices by several
undertakings for common control or comparison of costs.
 Marginal costing: It is the ascertainment of marginal cost by
differentiating between fixed and variable cost. It is used to ascertain the
effect of changes in volume or type of output on profit.
 Standard costing: A comparison is made of the actual cost with a pre-
arranged standard cost of any deviation (called variances) is analysed by
causes. This permit management to investigate the reasons for these
variances and to take suitable corrective action
 Historical costing:
It is ascertainment of costs after they have been incurred. It aims at
ascertaining costs actually incurred on work done in the past. It has a
limited utility, though comparisons of costs over different periods may
yield good results.
 Direct costing:
It is the practice of charging all direct costs, variable and some fixed costs
relating to operations, processes or products leaving all other costs to be
written off against profits in which they arise.
 Absorption costing:
It is the practice of charging all costs, both variable and fixed to
operations, processes or products. This differs from marginal costing are
excluded.
Any of the methods of costing like unit or output costing, service costing,
process costing etc. can be used under any techniques of costing.

1.9 COST ASCERTAINMENT AND COST ESTIMATION

Cost ascertainment:
Cost ascertainment is the process of determining costs on the basis of actual data.
Hence, computation of historical costs is cost ascertainment while computation of
future costs is cost estimation. Cost estimation as well as cost ascertainment both
are inter-related and are of immense use to the management.
Moreover the ascertained cost may be compared with the pre determined costs on
a continuing basis and proper and timely steps be taken for controlling costs and
maximizing profits.
The ascertainment of actual cost has very little utility because of following
reasons:
 Actual cost cannot be used for the purpose of price quotation and filing
tenders.
 Actual cost has practically no utility for control purpose.
 Actual costs are ineffective as means of measuring performance efficiency.
Cost estimation:
Cost estimation is the process of pre-determining cost of certain product job or
order. Such pre-determination may be required for several purposes. Some of the
purposes are as follows:
 Budgeting
 Measurement of performance efficiency
 Preparation of financial statements (valuation of stock etc.)
 Make or buy decisions
 Fixation of the sale prices of products

1.10 INTRODUCTION TO OPERATING COSTING

Cost accounting has been traditionally associated with manufacturing companies.
However, in the modern competitive market, cost accounting has been
increasingly applied in service industries like electricity generating company’s
banks, insurance companies, transportation organizations, hotels, road
maintenance, educational institution and other service organizations. The costing
methods applied in these industries are known as operating costing.
Operating costing is a method of costing applied by undertakings which provide
service rather than production of commodities. Like unit costing and process
costing, operating costing is thus a form of operation costing.
The emphasis under operating costing is on the ascertainment of cost of rendering
services rather than on the cost of manufacturing a product. It is applied by
transport companies, gas and water works, electricity supply companies, canteens,
hospitals, theatres, schools etc. within an organization itself certain departments
too are known as service which provide ancillary services to the production
departments. For example: maintenance department; power house; boiler house;
canteen; hospital; internal transport.
Operating costing offers better scope for control. It facilitates the computation of
unit operation costing at the end of each operation by dividing the total operation
cost by total input units. It is the category of the basic costing method, applicable,
where standardized goods or services results from a sequence of repetitive and
more or less continuous operations, or processes to which costs are charged before
being averaged over the units produced during the period. The two costing
methods included under this head are process costing and service costing.
1.10.1 Definition of Operating Costing
CIMA has defined ‘operating costing’ “As that form of operation costing which
applies when standardized services are provided either by an undertaking or by a
service cost centre within an undertaking”.
Cost accounting standard-1 by ICWA defines ‘operating cost’ “as the cost
incurred in conducting a business activity. Operating costs refer to the cost of
undertakings, which do not manufacture any product but which provide services”.

1.10.2 Meaning:
Operating costing is a method of costing applied by undertaking which provide
service rather than production of commodities. Like unit costing and process
costing, operating costing is thus a form of operating costing.
Operating cost is the expenses associated with administering a business on a day
to day basis, operating costs include both fixed cost and variable costs. Fixed costs
such as overhead remain the same regardless of the number of products produced;
variable costs such as materials can vary according to how much product is
produced.
For example:
 Transport undertakings (road, railways, airways and shipping companies).
 Electricity companies.
 Hospitals.
 Steam undertaking companies.
 Cinema.
1.10.3 Features / characteristics of operating costing are as
follows:
 Uniform service is provided to all the customers.
 The costs are classified into fixed and variable.
 The fixed and variable cost classification is necessary to ascertain the cost
of service and the unit cost of service.
 There is no physical stock of article if an undertaking renders a service.
 If a cost centre is operating for an undertaking, there is no sale of service
but render the service. In other words, if a cost centre is operating for public, it
sells its services to public.
 The cost unit may be simple in certain cases or composite or compound in
other cases like transport undertakings.
 Total costs are average over the total amount of service rendered.
 The costs are collected from the authentic documents like daily log sheet,
operating cost sheet, boiler house costs sheet, canteen cost sheets etc.
 Operating cost is the cost of rendering service.
 Operating costing is the method of ascertaining costs.

 The productive enterprises can quote prices by ascertaining cost data.
1.10.4 Classification of operating costing:

Operating costs are classified and accumulated under the following three heads:
 Fixed or standing charges:
These are expenses which are more or less fixed in nature. For example in case
transport service garage charges, insurance, taxes, license and depreciation are
standing cost. In case of hospital the depreciation pertaining to the cost of
building, equipment, beds insurance etc. are fixed charges. These expenses are
constant and are incurred irrespective of the extent of service.
 Maintenance charges:
These are costs of semi- variable nature and include expenditure on repairs,
maintenance, tyres, tubes, accessories and spares.
 Running or operating charges:
These are variable cost. For example in case of hospital, the cost of medicine, diet,
laundry etc. will represent the running charges. In case of transport service petrol
or diesel, lubricating oil, wages of driver or cleaner are operating or running
charges.
1.10.5 Application of operating costing
Operating costing is applied by an organization, which provides service to the
public as a whole instead of manufacturing an article, and sells the same. For
example, transport undertaking, electricity supply, theatre, hospitals, schools etc.
similarly, the same type of an organization or cost centre renders services to
production departments. For example, electricity, powerhouse, canteen etc.
The service cost in operating cost should be found out to understand whether an
organization or cost centre render services to the general public. If the services are
sold, the operating expenses and the extent of services rendered are taken into
consideration to find out the service cost. On the other hand, if the services are
sold, the service expenses should be apportioned to the production department on
a suitable basis.
Generally the basis may be the extent of service availed by the production
departments. It may also become necessary to compare the cost of such a service
with the cost of an outside service for deciding whether it is profitable to buy a

service from outside rather than make the same available from within an
organization.
1.10.6 Objectives of operating costing

The objectives of operating costing are listed below:
 To supply the information through which the efficiency in rendering

service is
improved.
 To provide a basis for fixing accurate quotation and fare.
 To ensure that the services are provided in proper time.
 To control the fuel consumption and its expenses.
 To ensure that the service equipments are properly maintained.
 To provide cost comparison between own service and alternative service
i.e. hiring.
 To compare the cost of one service centre with another.
 To determine the apportionment cost if the services are provided within an
organization.
 To decide the price that can be charged for use of vehicle.
 To control the cost of maintenance and repairs.
 To select efficient and suitable routing of vehicles to reduce the costs to
production departments that uses the services.
 To avoid the under utilization of capacity and idle time of the work force.
 To absorb the fixed costs proportionately and systematically that is
allocated to the units of services.

1.10.7 Components of operating cost

Operating cost includes the following components:
 Accounting and legal fees

 Bank charges
 Sales and marketing costs
 Travel expenses
 Entertainment costs
 Non-capitalized research and development expenses
 Office supply costs
 Rent
 Repair and maintenance costs
 Utility expenses
 Salary and wage expenses
 Municipal and village panchayat services.
1.10.8 Classification of operating cost

Operating costs are classified and accumulated under the following three heads:
a. Fixed or standing charges:
These are expenses which are more or less fixed in nature. For example in case
transport service garage charges, insurance, taxes, license and depreciation are
standing cost. In case of hospital the depreciation pertaining to the cost of
building, equipment, beds, beds insurance etc. are fixed charges. These expenses
are constant and are incurred irrespective of the extent of service.
b. Maintenance charges:
These are costs of semi-variable nature and include expenditure on repairs,
maintenance, tyres, tubes, accessories and spares.
c. Running or operating charges:
These are variable cost. For example in case of hospital, the cost of medicine, diet,
laundry etc. will represent the running charges. In case of transport service petrol
or diesel, lubricating oil, wages of driver or cleaner are operating or running
charges.

1.10.9 Ways to reduce operating costs:

Eight ideas that can help you reduce the operating costs for business and enable to
generate more revenue and reduce overhead.
 Reduction operating costs by embracing technology
 Reduce costs with outsourcing
 Lower operating costs by shopping around
 Pay invoices early or on time
 Identify inefficiencies to decrease costs
 Cancel unused services
 Go green to reduce operating costs
1.10.10 Advantages of operating costing:
 Investing in more training for employees will reduce the number of errors
that are made, which will inevitably save money for the company.
 Cut office supply expenses. Reducing supply expenses can significantly
reduce operating expenses and improve bottom line.
 Rent or lease equipment as opposed to purchasing new equipment. Leasing
business equipment and took preserves capital and provides flexibility.
 Outsource administrative functions. Consider outsourcing functions such
as accounting and payroll to reduce the business expenses.
 Reduce staff, this doesn’t necessarily mean completely laying off your
workers. Instead, consider rehiring your workers on a contract basis as a
temporary employee.
1.10.11 Disadvantages of operating costing:
 Based on estimates
 Lack of uniformity
 Many conventions
 Expensive
 Result requires reconciliation
 Dependent
 Does not include all items of expense and income
 Not an exact science.

A STUDY ON OPERATING COSTING WITH REFERENCE TO HCCBPL
CHAPTER 2
RESEARCH DESIGN
2.1 : REVIEW OF LITERATURE:
Rajeshwari guadam (1988):
In this book title “public sector performance of state road corporation”. It

examines both financial and social performance of state and corporation both at
the state regional levels.
Seiraman bagchi (1997):
In their study state that transport centre comprising the railways, roads, ports and
civil aviation as been one of the principle areas of state intervention in India.
Sanjay sing (1997):
In this article “estimating the level of rail based and road ways passenger mobility
in India” has forecasted the level of road base passenger mobility for the next 20
years. Shaped growth curves have been used to model the development in
passenger mobility in India.
Sri ramam (1997):
Made a study on state road transport in India that reveals the financial
performance of the state roads the past decades the author attributed the losses
partly to the inefficiency and partly to the uncompensated burden of social
obligation and constraint operating environment.
Rajeshwar (1996):
He studies the management effectiveness in transport operation has stated that

Delhi transport corporation was not been manage properly, due to
mismanagement, the corporation was running into losses.

2.2:TITLE OF THE STUDY
“Operating Costing system in Mechanical industry with reference to Hindustan

Coca-Cola Beverage Pvt Ltd.”
2.3: INTRODUCTION:
Cost accounting has been traditional associated with manufacturing companies.

However in the modern of competitive market, cost accounting has been
increasingly applied in service industries like electricity generating companies,
banks, insurance companies, transportation organization, manufacturing
organization, hospital, passenger transport and railways, hotels, road maintenance,
educational institutional , road lighting, canteens, port trust and several other
service organizations. The cost method applied in these industries is known as
operating costing.
Operating costing is a method of costing applied by undertakings which provide

service rather than production of commodities like unit costing and process
costing is thus a form of operating costing.
2.4 : SCOPE OF THE STUDY:
The operating costing is highly significant for the successful cost management of
any company; therefore a detailed study of each component of the control will be
highly feasible. The study, the adequacy and optimal level of operating costing of
each production of beverages and also to fix the rate for carriage of finished
goods.
The scope of the study is restricted to extend of finding out the operational cost
incurred by HCCBPL and revaluation of its performance in maximising cost.

2.5 : STATEMENT OF PROBLEM
The term operating costing is associated with service industry. The title is chosen
in a manufacturing. Unit taking the consideration of all activities from the time
procurement to point of sale.
In the highly competitive market, operating costing is the way to maximize

earning in a competitive economy, a firm will have very little control over the
prices of its products, the firm has to operate its cost and keep them below the
price to earn profits.
It is possible to translate the plans in reality by simply preparing budget. The

project of executives is to simply prepare analytical, functional budgets of
different level as the basis for planning. Operating, control and decision making to
save costs and the performance of the company.
The findings and the information are based on the response of the respondents.
2.6 : OBJECTIVES
 To study about the operating costing and its significance with reference to
Hindustan Coca-Cola Beverage Pvt Ltd.
 To understand the different types of operating costing with reference to
Hindustan Coca-Cola Beverage Pvt Ltd.
 To understand the methods and techniques of operating costing.
 To identify the measure for improving operating costing system with
reference to Hindustan Coca-Cola Beverage Pvt Ltd.
2.7 : RESEARCH METHODOLOGY:
The analytical research has undertaken to study about the operating costing with
reference to Hindustan Coca-Cola Beverage Pvt Ltd.
The main sources of data are collected through primary and secondary data.

2.8: COLLECTION OF DATA:
 Primary data: primary data has been collected through interaction with
the employees of Hindustan Coca-Cola Beverage Pvt Ltd.
 Secondary data: secondary data has been collected through financial
statements of the company and various books, articles and websites.
2.9 : SAMPLING TECHNIQUES
Simple random convenient sampling has undertaken for the study.
2.10 : TOOLS OF DATA COLLECTION
Ratio and trend percentage has been used for analysing the data and presented
through graphs and charts.
2.11 :LIMITATIONS OF THE STUDY
 The study was based on information provided by the company executives

and records that are assume to be true.
 The period of study is not sufficient to collect all the information.
 The findings and the information are based on the response of the
respondents.
The study covers only appears the cost effectives and operating costing.

CHAPTER 3
COMPANY PROFILE
3.1 HISTORY
Pharmacist John Stith Pemberton invented a cocawine called Pemberton's French
Wine Coca in 1884. He was inspired by the formidable success of French Angelo
Mariani's cocaine, Vin Mariani. The following year, when Atlanta and Fulton
County passed Prohibition legislation, Pemberton began to develop a non-
alcoholic version of the French Wine Coca. He named it Coca-Cola, because it
included the stimulant coca leaves from South America and was flavoured using
kola nuts, a source of caffeine. Pemberton ran the first advertisement for the
beverage on May 29 that year in the Atlanta Journal. In 1887, while suffering
from an ongoing addiction to morphine, Pemberton sold a stake in his company to
Asa Griggs Candler, who incorporated it as the Coca Cola Corporation in 1888. In
the same year, Pemberton sold the rights a second time to three more
businessmen. Meanwhile, Pemberton's alcoholic son Charley Pemberton began
selling his own version of the product. Three versions of Coca-Cola — sold by
three separate businesses. In 1899, Candler sold the exclusive rights, for $1 (USD)
to bottle Coca-Cola in most of the United States to two entrepreneurs from
Chattanooga, TN, Benjamin Thomas and Joseph
B. Whitehead who subsequently founded the Coca-Cola Bottling Company. In
1919, Candler sold his company to Atlanta banker Ernest Woodruff. When the
United States entered World War II, The Coca-Cola Company began providing
free drinks for soldiers of the United States Army The popularity of the drink
exploded as American soldiers returned home from the war with a taste for the
drinking the 1930s, Robert W. Woodruff became president of the Coca-Cola
Company, presiding over the drink and its destiny until his death in 1985 .
SESHADRIPURAM COLLEGE PAGE 20

3.2 NATURE OF THE BUSINESS CARRIED

The Coco Cola company is a beverage company whose products are mostly
aerated drinks. WHAT COCA-COLA DOES
We are still committed to benefiting and refreshing people everywhere. Brand
Coca-cola is still the heart of our company. But we have more than 230 other
brands around the world. Many times a day six billion people decide what to
drink. The more choices we offer, the more we are beverage of choice.
As part of our new orientation, we moved key decision making closer to local
communities. A talented and, highly experienced worldwide management team
focuses on accelerating growth in our core-carbonated business.
3.3 VISION, MISSION

VISION:
“Efficiently reduce, re-use, recycle, & recharge water as a responsible corporate
citizen “
Vision for Sustainable Growth:
Provide exceptional strategic leadership in the Coca-cola India System- resulting in
consumer and customer preference and loyalty, through Coca-Cola‘s commitment to
them, and in a highly profitable Coca-cola corporate branded beverages system.
Profit: Maximizing return to shareowners while being mindful of our overall
responsibilities.
People: Being a great place to work where people are inspired to be the best they can
be.
Portfolio: Bringing to the world a portfolio of beverage brands that anticipate and
satisfy peoples‘desires and needs.
Partners: Nurturing a winning network of partners and building mutual loyalty.
Planet: Being a responsible global citizen that makes a difference.
MISSION:
“We the team of the HCCBPL, Bidadi shall ensure efficient & effective use of
water during beverage manufacturing process in our plant by continually
improving the infrastructure, Monitoring& controlling the consumption of
water in individual area & imparting training to our associates “
The mission of the Coca-Cola Company is to increase value-owner value over

time. The company accomplishes the mission by working with its business

partners to deliver satisfaction and value to customer and consumer through

worldwide system of superior brands and services, thus increase brand-equity on a
global basis.
To create consumer products, services and communications, customer service and
bottling system strategies, processes and tools in order to create competitive
advantage and deliver superior value to :
1. Consumers as a superior beverage experience
2. Consumers as an opportunity to grow profits thru use of finished drinks
3. Bottlers as a opportunity to grow profits in volumes
4. TCCC: As trade mark enhancement and positive economic value-added
Suppliers as an opportunity to make reasonable profits when creating real value-

added in an environment of system-wide team work, flexible business system and
continuous improvement
3.4 CORE VALUES AND BELIEFS:-

Commitment to professional and fair business practices and customer confidence.
Care and Values our employees, encourage
Proactive leaning and empowerment of our Human resources interactive working
environment continuous improvement and improvement and innovation in
products and services through a common mind set, team spirit with a partnering
approach total quality control. Inspired leadership to deliver consistent quality
essential for profitable and long term growth.
3.5 OBJECTIVES:
 Continued training of personnel to imbibe quality as a culture in its
people.
 Strictly adhering to the quality manual in all its operations.
 To be abreast of the latest technology to become innovative.

 To be benchmark in work environment to maintain good housekeeping
3.6 COMPANY AWARDS:-

 Coca-Cola India received Delhi government's Bhagidari Award in
recognition for corporate contributions to civic life
 Hindustan Coca-Cola Beverages Private Limited (HCCBPL) units

received recognition for environmental initiatives,
 The Coca-Cola Company received top score in social reporting

transparency from Roberts Environmental Canter,
 Hindustan Coca-Cola Beverages Pvt. Ltd. received Best Management

Award in the State by government of Andhra Pradesh for people
management practices
 Coca-Cola India plant in Ameenpur, Hyderabad, took second place at

prestigious Golden Peacock National Quality Awards
 Coca-Cola India ranked as top 10 most respected company in India
 Thai Pure Drinks awarded Royal Garuda in recognition of corporate

citizenship efforts and important role in Thai society.
 The Coca-Cola Company placed first in Food and Beverages segment of

"World's Most Respected Companies Survey 2004" and fifth overall
(Financial Times/PricewaterhouseCoopers)
 Coca-Cola India placed in top ten of most respected companies survey

(Business world, India's only business weekly)
 F&N Coca-Cola (Singapore) Pte Ltd received Ministry of Health Bronze

HEALTH Award (2004)

 The Coca-Cola Company received America's Second Harvest Donor of the

Year Award (2004 Hunger's Hope Awards)
 Coca-Cola India recognized by Rajiv Gandhi Foundation (RGF) for

participation in motorized tri-wheeler scheme for the disabled Hindustan
Coca-Cola Beverages in India honoured as "best private company" in the
state by Government of Tamil Nadu for providing employment
opportunities to physically challenged people
 Hindustan Coca-Cola Beverages Dasna plant in India received Golden

Peacock Environment Management Award 2004
 The Coca-Cola Company ranked most respected food/beverage company

of 2003 (Financial Times)
 The Coca-Cola Company named "Most Admired" company by South

African consumers (Sunday Times survey)
 Coca-Cola Amatil received AA rating in social responsibility (RepuTex

index, 2003)
 International Standardization Organization (ISO) 14001 certificate to

Coca-Cola Bottling Indonesia for environmental protection programs at its
plants
 Coca-Cola India received a water conservation and pollution control award

from Andhra Pradesh Government on World Environment Day (June
2003)
 The Coca-Cola Company named fourth in ranking of top multinational

companies in Asia-Pacific region (2002 survey by Far Eastern Economic
Review (FEER), Hong Kong)

 The Coca-Cola Company ranked #3 for Best Reputation 2002 by the

Harris Interactive Inc. survey
 Golden Peacock Award for Global Excellence in Corporate Governance,

by the World Council for Corporate Governance (India, 2002)
 2002 U.S. Environmental Protection Agency's (EPA) Environmental

Achievement Award.
3.7 ACHIEVEMENTS OF HCCBPL:
The plant is proud to have achieved its highest production of 18,392 cases of
Thums-up, 1.5 liters in 24 hours and also the highest production of 10,037 cases
of coke 500ml in 24 hours with a mechanical efficiency of 100% in November
1999. The multi server line achieved a record production of 23,010 cases of Coke
300ml with a mechanical efficiency of 99.50% in 15,41 bottling hours on 26th
Feb 2000. The Maaza line achieved its highest production of 6,368 cases with a
mechanical efficiency of 100.23% in 16 hours of operation on 17th April 2000.
This is the first PET plant system in India to secure ―Single Penalty‖ status in the
SLP audit.
Apart from its many other achievements, the Bidadi plant is the first plant in India
to get BIS certification Kinley in the Coke system on 20th March 2to produce
Kinley water.
The Bidadi plant has recorded its highest shipment of 1, 06,320 cases in a single
day on 29th March 2001.
Besides this in order to motivate and develop the morale of the employees
HCCBPL conducted safety week on March 4th –10th 2001, family day on Nov
11th 2000, picnics, blood donation camps, personality development programmes,
training on hygiene and health etc
3.6.1 Growth Outlook
meet its full- year 2001 target of 6-7% unit case volume growth. One can't help
but be jaded by the fact that Coke's sales have grown only 4.3% annually since
1998.
on 12th Feb 2000 at Bidadi. Almost 400 persons were present for this auspicious
occasion. The Bidadi unit is spread over an area of 15 acres. This is the State of

the art bottling facility with four lines one of which is a pet line. The plant can
operate at a capacity of 1550 bottles per minute and it has distinction of being the
largest The forward-earnings valuation analysis is only meaningful if these
companies deliver on their growth expectations. Over-promising and under-
delivering has been the way of Coca-Cola for the past three years. That said, new
CEO Doug Daft has been shaking things up internally in order to right the ship.
On Thursday, Coca-Cola announced that its first-quarter unit case volume (the
company's standard measure of beverage shipments) would grow 4-5%. The
company is counting on accelerating growth in the remaining quarters of this year
in order to plant of its kind in India This is the first pet plat in the system in India
to secure‘Single Penalty‘ status in the SLP audit. The company follows the
policies of the basic Coca-Cola Company, Atlanta and also by the Indian head
quarters, Gurgoan
3.8 COMPETITOR’S INFORMATION

The one and only global competitors for COCO-COLA is PEPSICO
V/s
Coke vs. Pepsi

Rule Maker holding Coca-Cola may be the dominant consumer product growth
company. Pepsi is the main competitors for coca-cola and has proven more
capable of growing its business than has Pepsi.
The number-two soda maker PepsiCo has lived in Coca-Cola's shadow. Perhaps
it's the perceived golden touch in Warren Buffet‘s 8% stake in The Coca-Cola
Company
Perhaps it's the stories of common folk who became millionaires today by holding
just one share of Coca- Cola stock acquired in 1919 at the company's initial public
offering. Perhaps it's simply because for years Coca-Cola executed a smarter
business strategy by selling just the high-margin cola syrup, in contrast to PepsiCo

who floundered in the low-margin and capital-intensive restaurant business.

During 2000, the coca-cola company turned in a remarkably financial result.
Coca- Cola generated $20.5 billion in sales; sales. It has earned $2.2 billion in net
profits; Coca-Cola generated free cash flow of $2.9 billion;
Valuation:
So on one side we have Coca-Cola composed of the world's leading beverage
business, and on the other side we have PepsiCo with a strong number-two global
beverage business and the world's leading salty-snack business as well.
Again, these companies have almost identical profit margins, yet look at the
Valuation disparity: Coca-Cola has a market cap almost twice as high as Pepsi's.
Similarly, Coca- Cola sells at a price-to-free cash flow ratio of almost twice
Pepsi's.
3.9 OTHER COMPETITORS:
 Cadbury Schweppes
 Nestle
3.10 PRODUCT PROFILE
PRODUCT PROFILE

The product differentiation is very low for colas, but still people thought of Coca-
Cola as the better cola. The inference to be drawn was that Coca-cola did taste
better than Pepsi now Coca- Cola Company is broadly recognized as great
company to do business. As with a great place in which toward fend driving force
in making Coca-cola one of the best long-term investment. Willy-nilly has today
becomes an international anthem with young and old, rich and poor, clamouring
for a sip, it not gallous of it.
Soft drinks are the thirst quenchers that are consumed more during the hot
summers for refreshing them. These are used also as refreshers. Thought it is
consumed as a cool drink, it also acts as recreational and refreshing drink. Now in
the changing scenario of this modern world, it is consumed throughout the year.
And specially, the consumption is more in case of teenagers and students
commonly.
The soft drinks are of two types.
1. Carbonated soft drinks
2. Non-carbonated soft drink.
The soft drinks are available in many flavours. Those flavours are Cola, Orange,
Lime,
and Watermelon, green-apple, mango and cherry. Along with these flavours many
fruit flavoured drinks like guava and pineapple are also available. Among these

fruit flavoured drinks Mango, Cherry, Guava and Pineapple are Non Carbonated
Soft drinks.
Though the soft drinks are mainly consumed as the refreshers, now in the
changing world, these soft drinks are also used along with the alcoholic beverages
to add more taste to them. This has increased the consumption of the Soft drinks.
Thus the soft drinks have a huge market share and market potential.
3.11 PROFILE OF DIFFERENT BRANDS OF COCA-COLA

COCA-COLA
The world’s favourite drink, The world’s most valuable brand.

Coca-cola has a truly remarkable heritage. From a humble beginning in 1886 , it is
now the flagship brand of the largest manufacturer , marketer and distributor of
non alcoholic beverages in the world .
Coca-cola had signed on various celebrities including movie stars such as
karishmakapoor , cricketers such as srinath , sauravganguly , southern celebrities
like vijay in the past and today , its brand ambassadors are Amir khan and hrithik
roshan

3.12 ORGANISATION STRUCTURE


3.13 AREA OF OPERATION

It is a branch of COCO-COLA LIMITED. COCO-COLA`S area of operation
is global, as it has branch in INDIA it has branch (manufacturing unit)
throughout the world.
Market & Business
 Mega Plant
 Area of 51 Acres
 Investment of Rs.124 Crores

3.14 INFRASTRUCTURAL FACILITIES:

One of the reasons for Coco cola‘s success is its specially developed and well
equipped infrastructure for manufacturing process & Quality assurance
procedures as well at all plants throughout the globe.
Coco cola‘s manufacturing process includes treatment of bottles through
Sophisticated technology which is equipped with camera‘s which could

detect the minute microscopic germs in the bottles. Coco cola has separate
machinery for treatment of water which is used as an ingredient in the
beverages of Coco cola. Coco cola in addition to the above has in- house
sophisticated R & D department.
The various Infrastructural facilities present are:-
 Raw water storage facilities like borewell ( KIADB )
 Administration block
 Training Halls
 Canteen facilities
 Water treatment plants
 Cold storage rooms
 Crown stores
 Sugar godown
 Quality Assurance Laboratories
 Cooling towers
 Refrigerator rooms
 Air compressors
 Boilers
 Ready syrup rooms
 Multi Server fill rooms

 Single Server fill rooms
 Maaza fill room
 Pulp store
 Caustic tank
 Cartoon store
 CO2 bulk storage
 Packaging area for RGB , PET etc
 Warehouses
 Empties yard
 Sludge drying bed

CHAPTER -4
DATA ANALYSIS AND INTERPRETATION
4.1 MANUFACTURING PROCESS
Coca-Cola Beverages uses continuous flow for manufacturing its products and
uses the product-focused strategy. It has set standards of its products that are
produced in high volume with low variety.
Once the Coca-Cola Company converts the ingredients into the syrup. The
product concentrates are shipped to bottling plants across the globe. At the
bottling plant, the process starts from manufacturing of bottle and preparation of
final syrup. The treated and cooled water is mixed with the final syrup and, for
sparkling drinks, with the carbon dioxide that gives the product its characteristic
effervescence. The company bulk buys raisins inventory of up to 2years in
advance.
The manufacture of bottles starts from the perform tubes. The perform tubes are
made of plastic and thrown into the equipment that blows these tubes into bottles
in milliseconds. The bottling process, whether in glass or PET (plastic), is very
similar except for the change in material from which perform is made and blowing
equipment. These bottles are then filled by the drink and then forwarded to next
line to be sealed by the closure. After being sealed, the bottles are labelled and
then dated by a laser machine. The bottles are then ready for inspection.
Surprisingly, even the quality check is automated: the machine rejects any bottle
filled below or above the required level. Lastly, the bottles are put together in
form of their cases: six bottles in a case of 1.5L bottles and 12 bottles in a case of
0.5L bottles. The cases are clinked individually with a plastic sheet and then
wrapped together to be sent to the warehouse. There are many plants of the Coca
Cola Company in All over world. coke is prepared by adding fizz to the syrup and
then they were bottled, labelled and packed.

 Ingredients are delivered to the factory.

 Small pieces of plastic known as ‘resin’ are converted into the preform of
a Bottle.
 The Preform is blown into the size of bottle needed.
 Bottle is filled with the beverage.
 Bottle is sealed with the closure.
 Label is pasted.
 Laser inspects for over or under filling of cola in bottle.
 Bottle is encoded.
 Bottles are grouped together in form of cases.
 Plastic sheet is wrapped around the cases.
 A bundle of cases is packed together.
 Cases are moved to warehouse.
 Distributors collect order from warehouse.

4.2 PRICING STRATEGY ANALYSIS OF COCA COLA
➢Price should be set according to the product demand of public.
➢Price should be that which gives the company maximum revenue.
➢Price should not be too low or too high than the price competitor is charging
From Their customers otherwise nobody will buy product.
➢Price must be keeping the view of the company target market .
4.3 PRICES OF DIFFERENT BOTTLES:
Prices of the bottle are fixed as below by studying the Manufacturing Process of
the product-
Size of Coca Cola Price of Coca Cola (RS.)
TYPES OF COCA COLA BOTTELS RATES
Regular bottles 13
Non-returnable or disposable bottle 30
1.5 litre bottle 70
2.25 litre bottle 90
Coca Cola can 40

4.4 PROMOTIONAL PRICING POLICY
Coca Cola has offered promotional prices very frequently. Especially on some
occasion Coca Cola reduces its rates.
4.5 MARKET PENETRATION PRICING POLICY
In an economy like that of India, consumers tend to switch towards a low priced
product. Coca Cola’s objective is to target every consumer of the country so Coca
Cola has to set its prices at such a level which no one can offer to its consumers.
That is why Coca Cola charge the same prices as are being charged by its
competitors. Otherwise, consumers may go for Pepsi Cola in case of availability
of Coca Cola at relatively high price
4.6 INVENTORY MANAGEMENT
HCCBPL is one of those organizations that cannot Compromise on the essence of

their item. They do have a proper inventory system in the facility but they make
sure when the bottle is produced it is being dispatched to the respective retail
outlets or to the distributors. 2 years back Inventory management was different as
they were buying Raw material in bulk but they are now shifting their production
to Just in Time. Just in time, production makes inventory cost less and demands
significantly less space for inventory storage. They had reduced the number of
warehouses. The work is coordinated in such a manner that operations are not
affected. Coca cola only keeps reserve inventory of 2-3 day. Moreover, if they feel
like that their plant is unable to meet to the demand of the product in market; they
can call for the finished goods from plants located in other cities and fulfil the
demand.

4.1 :TABLE SHOWING THE INVENTORY TO WORKING CAPITAL

RATIO
Inventory to working capital ratio= inventory /working capital*100
Amount in€ (million)
year 2016-17 2017-18 2018-19
Inventory 431.5 416.8 463.2
Working capital 4596.8 4733.8 4835.7
Inventory ratio 9.38 8.80 9.57
ANALYSIS:
From the above data it is analysed that the inventory on working capital ratio in
the year 2016 is 9.38 and it has decreased in the year 2017 and increased in the
2018 8.26 & 9.46 respectively.

7000
6000
5000
Current assets
4000
3000 Net worth
2000
Current assets to net
1000 worth ratio
0
2016-17
2017-18
2018-19
4.1 :GRAPH SHOWING THE INVENTORY TO WORKING RATIO
INTERPRETATION:
From the above analysis it is inferred that the inventory on working capital ratio
had been increased over the period, though it is decreased in the 2017. It shows
highly efficiency in meeting the short term obligation of the business concern.

4.2 : TABLE SHOWING THE CURRENT ASSETS TO NET WORTH

RATIO
Current assets to net worth ratio=current assets/ net worth
Year 2016-17 2017-18 2018-19
Current assets 2016.3 2285.6 6937
Net worth 2870.1 3012 3116.4
Current assets to 0.7025 0.7588 2.225

net worth ratio
ANALYSIS:
From the above data it is analysed that the current assets to net worth ratio in the
year 2016 is 0.7025 and it has increased in the year 2017 and increased in the
2018 0.7588 & 2.225 respectively.

7000
6000
5000 Current assets
4000
Net worth
3000
Current assets to net
2000 worth ratio
1000
0
2016-17 2017-18 2018-19
4.2 :GRAPH SHOWING CURRENT ASSETS TO NET WORTH RATIO.
INTERPRETATION:
From the above analysis it is inferred that the current assets to networh ratio has
been increasing over the period. The current assets of the company shows the
effeciency of increase in the value of networth of comapany.

4.3: TABLE SHOWING THE FIXED ASSET RATIO
Fixed assets ratio=fixed assets / capital employed
Year 2016-17 2017-18 2018-19
Fixed assets 2406.6 2322 2391.6
Capital employed 4596.8 4733.8 4835.7
Fixed assets ratio 0.523 0.490 0.494
ANALYSIS:
From the above data it is analysed that the fixed assets turnover ratio in the year
2016 is 0.523 and it has been decreased in 2017 and 2018 is 0.490& 0.494
respectively.

5000
4500
4000
3500
3000 Fixed assets
2500 Capital employed
2000
Fixed assets ratio
1500
1000
500
0
2016-17 2017-18 2018-19
4.3: GRAPH SHOWING THE FIXED ASSETS RATIO
INTERPRETATION:
From the above analysis it is inferred that the fixed assets ratio has been decreased
over the period. It shows that highly inefficiency in utilization of fixed assets to
improve capital employed of the company.

4.4:TABLE SHOWING THE INVENTORY TURNOVER RATIO
Inventory turnover ratio= cost of goods sold / average stock
Year 2016-17 2017-18 2018-19
Cost of goods 3920.2 4083 6657.1

sold
Average stock 433.65 424.15 440
Inventory 9.04 9.62 15.12

turnover ratio
ANALYSIS:
From the above data it is analysed that the inventory turnover ratio in the year
2016 is 9.04 and it had been increased in the year 2017 and 18 respectively
9.62&15.12.

7000
6000
5000
Cost of goods sold
4000
Average stock
3000
Inventory turnover
2000 ratio
1000
0
2016-17 2017-18 2018-19
4.4: GRAPH SHOWING THE INVENTORY TURNOVER RATIO.
INTERPRETATION:
From the above analysis it is inferred that the inventory turnover ratio has been
increasing over the period. The inventory turnover ratio shows the effeciency of
increase in the value of sales.

4.5 : TABLE SHOWING THE OPERATING RATIO
Operating ratio=operating cost/ net sales*100
YEAR 2016-17 2017-18 2018-19
Operating cost 1792.5 1849.2 1875.9
Net sales 6219 6522 6657.1
Operating ratio 28.822 28.35 28.17
ANALYSIS:
From the above data it is analysed that the operating ratio in the year 2016 is
28.822, it has been decreased in the year 2017&18 respectively 28.35&28.17

7000
6000
5000
4000 Operating cost
3000 Net sales

Operating ratio
2000
1000
0
2016-17 2017-18 2018-19
4.5 :GRAPH SHOWING THE OPERATING RATIO.
INTERPRETATION:
From the above analysis it is inferred that the operating ratio is moderate for the
time period and is slowly decreasing. It shows sales volume by proper utilization
of operating expenses of a business concern.

4.6 : TABLE SHOWING THE OPERATING EXPENSES RATIO
Operating expenses ratio=operating expenses/ net sales* 100
YEAR 2016-17 2017-18 2018-19
Operating 1792.5 1849.2 1875.9

expenses
Net sales 6219 6522 6657.1
Operating 28.822 28.35 28.17

expenses
ratio
ANALYSIS:
.From the above data it is analysed that the operating ratio in the year 2016 is
28.822, it has been decreased in the year 2017&18 respectively 28.35&28.17

7000
6000
5000
4000 Series1
3000 Series2
2000 Series3
Series4
1000
0
year
2016-17
2017-18
2018-19
4.6 :GRAPH SHOWING THE OPERATING EXPENSES RATIO
INTERPRETATION:
From the above analysis it is inferred that the operating expenses has fluctuated
year by year. The company’s operating expenses ratio is inefficient and effectively
slowly decreasing the sales volume as well as the productivity of the business
concern

4.7 TABLE SHOWING THE OPERATING PROFIT RATIO
Operating profit ratio =operating profit/sales*100
YEAR 2016-17 2017-18 2018-19
Operating 506.3 589.8 639.4

profit
Sales 6219 6522 6657
Operating 8.14 9.04 9.60

profit ratio
ANALYSIS:
From the above data it is analysed that the operating profit in the year 2016 is
8.14. and it has been substantially increased the over the period in the year
2017&18 respectively 9.04&9.60

7000
6000
5000
4000
3000
2000
1000
0
year 2016-17 2017-18 2018-19
4.7 :GRAPH SHOWING THE OPERATING PROFIT RATIO
INTERPRETATION:
From the above analysis it is inferred that the operating profit has increased year
by year. The company’s operating profit ratio is efficient and effectively
increasing the sales volume as well as the productivity of the business concern

YEAR 2016-17 2017-18 2018-19
Cost of goods sold 3920.2 4083 6657.
Average stock 433.65 424.15 440
Stock turnover ratio 9.039 9.62 15.12
4.8 : TABLE SHOWING THE STOCK TURNOVER RATIO
Stock turnover ratio=cost of goods sold /average stock
ANALYSIS:
From the above data it is analysed that the stock turnover ratio in the year 2016 is
9.039 and it had been increased in the year 2017 and 18 respectively 9.62&15.12 .

7000
6000
5000
4000 Cost of goods sold

Average stock
3000
Inventory turnover ratio
2000
1000
0
2016-17 2017-18 2018-19
4.8 : GRAPH SHOWING THE STOCK TURNOVER RATIO
INTERPRETATION:
From the above analysis it is inferred that the inventory turnover ratio has been
increasing over the period. The inventory turnover ratio shows the effeciency of
increase in the value of sales.

CHAPTER -5
FINDINGS, CONCLUSION AND
SUGGESTIONS
5.1 FINDINGS:
 From the study it is found that the company is using operating costing to
improve the efficiency in meeting the operational activities of business
concerns.
 From the study it is found that the measures adopted by the company in
operating costing is through cost reduction techniques and time to time
changing the policies of operating costing.
 The company uses the cost reduction technique, value analysis without
compromising the quality and the value of the product.
 From the study it is found that the inventory turnover towards working
capital is highly efficient to meet the short term obligation of the business
entity.
 From the study it is finding that the total current asset of the company is
not so productive towards the shareholder fund and long term liability
benefit concern.
 The company’s fixed assets turnover ratio has declined continuously
towards the capital employed.
 From the study find that the company operating expenses has increased
over the time period. It is the sign which directly influence the profitability
and sales concern.

5.1 CONCLUSION:
HCCBPL is one of the major Hose manufacturing unit in the state as well as in
many countries. It is planning a major role with regards to distribution of
beverages to various states as well as various countries.
It has been along and rewarding journey for Coca-Cola company ever since its
establishment in 1888. Today Coca-Cola has great pride of experience in this
field. It has gathered the expertise, developed skills, competency and advancement
of technology in the manufacturing sector
The company has not compromised on quality, infrastructure, and plant layout on
concern towards society. Coca-Cola employees are dedicated to their company
and give their best to the effectiveness and efficiency in operations.

5.3 SUGGESTIONS:
 The company should advance technology and techniques to achieve the

efficiency in operational activities of a business concern.
 The company should improve the measures to Du-Pont analysis and

statistical strategies to improve the operating costing system to achieve the
organizational goal.
 The company has to measure the inventory turnover and build the
strategies for opting profitability avenues in short term period.
 The company should mobilize the current asset for improvement and
providing the profitability towards the shareholders fund.
 The company has to undergo with the new measures and the yard stick for
more utilization of fixed asset of productive, increasing in sales volume
and overall wealth maximization contribution.
 The company should adopt ABC technique and different cost centre
techniques to ascertain the expenditure. Hence, therefore the company can
implement the cost reduction techniques to improve the productivity,
efficiency and effectiveness in the regulation of operational activities in a
business concern.
 The company should go for the departmental value analysis and rectify the
drawbacks or errors or problems of costing expenses.

BIBLIOGRAPHY:
SL NO NAME OF THE NAME OF THE PUBLISHER EDITION YEAR

BOOK AUTHOR
1 BUSINESS DONALD R TATA 9TH 2006

RESEARCH COOPER MCGRAW-
METHODS HILL
2 COST H.S.MAHABAL HPH 1ST 2006

ACCOUNTING ESHWAR
3 COST RAVI M TAXMANN 4TH 2012

ACCOUNTING KISHORE
4 METHODS
AND M.N. ARORA HPH 2ND
TECHNIQUES 2008
OF COST
ACCOUNTING
5 ADVANCED V.K.SAXENA SULTHAN 7TH 2006

COST AND CHAND &
MANAGEMEN C.D.VASHISTA SONS
T
ACCOUNTING
Websites:
https://www.google.com/search?q=coca+cola&rlz=1C1CHBF_enIN842IN842&oq=COC&a
qs=chrome.2.69i57j69i61j0l4.2872j0j7&sourceid=chrome&ie=UTF-8

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A PROJECT REPORT ON

“ A STUDY ON OPERATING COSTING WITH

Reg. No. 17BTCOM009

Under the guidance of

Asst Prof. A. V PROMOD

#27 Nagappa Street, Seshadripuram

I hereby declare that “A STUDY ON OPERATING COSTING WITH REFERENCES TO

Date : Name : Chethan Kumar k

This is to certify that the project titled “A STUDY ON OPERATING COSTING

Signature of Principal Signature of Director

Dr. Anuradha Roy Dr. Bhargavi V.R.

This is to certify that Mr. Chethan kumar k . bearing university

register number 17BTCOM009 has completed this project titled “A

Place: Bengaluru SIGNATURE OF GUIDE

I express my deepest sense of gratitude to Asst Prof. A. V Promod . faculty

Place: Bangalore Name: Chethan Kumar k

Table No. Description Page

4 Data analysis and interpretation 35 – 54

5 Summary of findings, suggestions and conclusion 55 - 57

Table No. Description Page No.

4.1 Showing the inventory to working capital 39

4.2 Showing the current assets to net worth ratio 41

4.3 Showing the fixed asset ratio 43

4.4 Showing the inventory turnover ratio 45

4.5 Showing the operational ratio 47

4.6 Showing the operational expenses ratio 49

4.7 Showing the operational profit ratio 51

4.8 Showing the stock turnover ratio 53

1.1 INTRODUCTION TO COSTING

Cost accounting is the process of determining and accumulating the cost of

Costing system identifies, collects, measures, classifies and reports information

Traditional cost accounting is focussed on determining the cost of goods and

There is a direct relationship among information needs of management, cost

SESHADRIPURAM COLLEGE Page 1

Costing system also deals with analysis of expenses, measurement of production

1.2 ELEMENTS OF COSTING

Marginal cost also plays a significant role in case of costing, because it

Costing system principles, methods, and techniques helps in ascertainment of

SESHADRIPURAM COLLEGE Page 2

Costing is the system of computing cost of production or of running a

Costing is the techniques and process of ascertainment of cost.

Thus, costing simply means cost finding by any process or technique. It

SESHADRIPURAM COLLEGE Page 3

 The cost of manufacturing a product e.g. motor car, furniture, chemical.

1.4 COST ACCOUNTING:

A method of accounting in which all costs incurred in carrying out an activity

In contrast to financial accounting (which considers money as the measure of

It is a formal system of accounting for costs in the books of accounts by means

According to CIMA of UK “Cost accounting is the process of accounting for

1.5 COST ACCOUNTANCY

The practice of recording all the costs incurred by a business, especially so as to

SESHADRIPURAM COLLEGE Page 4

Cost accountancy includes the principles, conventions, techniques and systems

It is defined by CIMA of UK as “the application of costing and cost accounting

‘COST ACCOUNATNCY AS A SCIENCE’

‘COST ACCOUNTANCY AS AN ART’

Cost is the amount of expenditure (actual or notional) incurred on or attributable

SESHADRIPURAM COLLEGE Page 5

SESHADRIPURAM COLLEGE Page 6