INTRODUCTION Cost

The word cost is used very often in our day-to-day affairs. American Institute of Certified Public Accountants defined cost as: Cost is the amount, measured in money, of cash expended or other property transferred, capital stock issued, services performed, or liability incurred, in consideration of goods or services received or to be received.

COSTING
Costing refers to the procedure for measuring cost. It is the technique of measurement and accumulation of cost of different activities, products, processes or services. The term costing has been defined by the CIMA as The technique and process of ascertaining cost. In short, costing is the technique consists of a set of rules and principles for ascertaining cost. Costing is referred to as classifying, recording and appropriate allocation of expenditure for the determination of the cost of the products or services.

COST ACCOUNTING
The Institute of Cost and Works Accountants, U.K. defines Cost Accounting as the application of costing and cost accounting principles, methods and techniques to the science, art and practice of cost control and ascertainment of profitability. It includes the presentation of information derived there form for the purpose of managerial decision- making.

The CIMA has defined Cost Accounting as: The process of accounting for cost from the point at which expenditure is incurred or committed to the establishment of its ultimate relationship with cost centre and cost units.

COST ACCOUNTANCY
Cost Accountancy is 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 thereform for the purpose of managerial decision-making.

COST ACCOUNTANT
Cost Accountant is a specialist, who studies and analyses the cost recordings and informs the management of the problems of the business, if any. He is a good guide and offers his best services. He is mainly concerned with preparation of budgets, estimates, setting of standards ect. He also makes a detailed analysis of variances, providing information for cost reduction and cost control and costvolume-relationship.

OBJECTIVES OF COSTING
The main purpose/objective of costing are: 1. To determine cost with a view to fixing selling prices. 2. To ascertain the cost of each product, process or operation as well as total cost. 3. To determine the profitable and unprofitable products with a view to improving the profitability.

4. To provide a reliable basis upon which quotation or tenders may be submitted. 5. To provide invaluable information for the purpose of comparison. 6. To facilitate in detecting and preventing the waste, leakages and inefficiencies. 7. To enable the business to ascertain cost of each specific unit of output and the extent of which each element of expenditure contributes to each cost. 8. To assist management in various policy-making, such as, make or buy, introduction of a new product, utilization of idle capacity, expansion of existing capacity, replacement of plant etc.

INSTALLATION OF COSTING SYSTEM

For introducing a sound costing system one should ensure that: 1. The technical side of the business is carefully studied to design a suitable costing system. 2. The system to be adopted must satisfy the need of the need of the business and unduly elaborate system is avoided. 3. It is helpful in planning the future and controlling the present. 4. The system is simple and easy to operate. 5. Standard printed forms, having numbers, are used for control purpose. 6. The necessary data can be collected regularly and promptly. 7. The results are shown under two sets (viz., cost and financial accounting) are so correlated that reconciliation between the two can be done easily. 8. The cost accountant must receive full cooperation from the technical staffs and have such a power to access easily to all factory records as and when required.

DIFFICULTIES IN INTRODUCING A COSTING SYSTEM

To introduce a sound costing system the cost accountant may have to face certain practical difficulties which are as follows:

1. Due to lack of proper education and cooperation the top-management may treat it as duplication of work. 2. Due to ignorance and suspicion, the existing accounting staff may feel that they would lose their importance. Hence they may resist the introduction of the new system. 3. The selected system of costing may not be suitable for the business. 4. The cost of installation and operating a costing system may, sometimes, be so high that only a large organization can afford them. 5. Due to shortage of trained staff, cost classification, cost analysis, cost control and cost reduction may not be handled efficiently.

TO OVERCOME THE ABOVE MENTIONED DIFFICULTIES, THE FOLLOWING MEASURES SHOULD BE ADOPTED:
1. The related existing staff should be trained properly 2. The proposed costing system should be simple and practical. 3. The employees and the top management should be convinced to the benefits derived from the costing system. 4. The existing staff as well as management should realize the utility and importance of a sound costing system. 5. Finally the installation and operating cost of the system should not supersede its value to the management.

ESSENTIAL OF A GOOD COSTING SYSTEM

The main characteristic are: 1. Simplicity: It must be simple, flexible and adaptable to the changing conditions. And it must be easily understandable to the personnel. The information provided must be in the proper order, in right time and to the right person so as to be utilized fully.

2. Flexibility and Adaptability: The costing system must be flexible to accommodate the changing condition and circumstances. The expansion, contraction or changes must be adopted in the existing system with minimum changes. 3. Economy: The cost system must suit the finance available. The expenditure must be less than the benefits derived from the system adopted. 4. Comparability: The management must be able to make comparison of the facts and figures, figures of that concerns, or other department of the same concern. 5. Suitability of the firms: before accepting the cost system, the nature requirements, size, condition of the business etc., must be carefully considered. The system must be capable to prompt and accurate reporting to different levels of management according to their requirements. 6. Minimum charge of existing one: When introducing a costing system, if may cause minimum disturbance to the existing set up of the business. 7. Uniformity of Forms: Forms of different colours can be used to distinguish them. Forms should contain instructions to fill, to use and for disposal. 8. Less Clerical Work: Printed forms will involve less labour to fill in, as the workers may be a little educated. They must not like to spend much time in filling the forms. 9. Efficient Material Control and Wage System: There must be a proper procedure for recording the time spent on different jobs, by workers for the payment of wages. A systematic method of wage system will help in the control of labour cost. Since the cost of material cost forms a great proportion of total cost, there must be an efficient system of stores control. 10. A Sound Plan: There must be proper and sound plan to collect, to allocate and to apportion overhead expenses on each job or on each product in order to find out the cost accurately. 11. Reconciliations: The system of costing and financial accounting must be facilitated to reconcile in the easiest manner. 12. Overall Efficiency of Cost Accountant: The work of the cost accountant under a good system of costing must be clearly defined as to his duties and responsibilities to the firm are very essential.

NEED FOR COST ACCOUNTING (ADVANTAGES/IMPORTANCE)

The importance of cost accounting is: 1. The cost accounting is very much useful in preparing estimates of new work under various working conditions. 2. A well-established costing system reveals unprofitable situation with their causes. 3. Thus, it will help to control waste of material, labour and overhead cost, thereby reducing the cost of production. 4. All the expenses are classified according to functions, elements and variability. These types of classifications will reveal the controllable and non-controllable portion of overheads. 5. It not only assists to estimate the cost of a product but also helps to determine the reasonable cost of that product through standard costing. 6. Cost data helps to reconcile the periodical results with those shown by financial records. 7. It helps to reveal operating efficiency or inefficiency in order to take right action at the right time. 8. Profit planning and price fixing becomes easier. 9. It helps the management for taking important decisions such as product mix, capacity utilization etc. 10. It helps to prepare financial statements in more details. 11. Market research and value analysis together with cost reduction programme leads to economy. 12. It provides data to government for price fixation, price control, wage level fixation, payment of dividends, tariff protection and settlement of disputes. 13. Cost and responsibility centres may be fixed in order to locate the responsible persons or the centres. 14. Installation of uniform costing enables management to make inter-firm comparisons. 15. It helps in the preparation of financial statements, as cost of inventories can be easily obtained from cost records.

OBJECTIVES OF COST ACCOUNTING

The main objectives or purpose are as follows: 1. 2. 3. 4. 5. 6. Ascertainment of cost. Fixation of selling price. Cost Control. Matching cost with revenue. Special cost studies and investigations. Preparation of Financial Statements, Profit and Loss Account, Balance Sheet.

LIMITATION OF COST ACCOUNTING

The limitations of cost accounting are: 1. Like any other accounting system, it is not an exact science but an art which has developed through theories and practices. 2. Cost accounting is based on some preestimations. 3. No one cost is suitable for all purpose. 4. Because of different assumptions, the cost presented by any two cost accountants will generally vary. 5. A cost accountant does not necessarily provide the true cost of a product, as they incorporate a large number of conventions, assumptions etc. 6. Cost accounting provides information for taking decisions, but it does not give the exact solution to the problem.

METHODS AND TECHNIQUES OF COST ACCOUNTING

The various methods and techniques of cost accounting are used to ascertain cost. They are designed to suit the needs of individual conditions. The most significant techniques of costing are: 1. 2. 3. 4. Historical or Absorption costing. Standard costing. Marginal costing. Uniform costing.

The various major methods generally used are: 1. 2. 3. 4. 5. 6. 7. 8. Job costing. Process costing. Contract costing. Batch costing. Multiple costing. Single output or unit costing. Operation costing. Departmental costing.

THEY ARE:

1. JOB COSTING:
It is defined by ICMA London as, that form of specific order costing which applies where work is undertaken to customers special requirements. It means and applies to an industry which produces a definite article against individual order from customers. Job costing is of a shortage duration than contract costing.

2. PROCESS COSTING:
It applies to industries where production is carried on through different stages (processes) before becoming a finished product. The output of each product becomes the input of next product; i.e., finished product of one process becomes the raw material of the subsequent process. This is

particularly important where by-product arise or wastage occurs at any stage. Finished products are obtained at the end of each process. It is necessary to ascertain the cost of each process and the cost unit of each process. Each process has an account to which all expenditure is charged. The process cost per unit in different processes is added to find the total cost per unit. For example, take the sugar manufacture; the first stage is crushing the cane; the next stage is boiling juice into gur; the next stage is the conversion of gur into unrefined sugar and the final stage is the refining into white sugar that we get in the market.

3. BATCH COSTING:
A batch may represent a number of small orders passed in batches through the factory. The unit of cost is a batch or group of identical products. ICMA defines as that form of specific order costing, which applies where similar articles are manufactured in batches either for sale or for use within the undertaking. In most cases, the costing is similar to job costing.

4. CONTRACT COSTING:
The method of contract costing is applied where the job is big and longer duration. For each individual contract, separate accounts have to be kept. Basically, this type of costing is similar to job costing, but takes longer time. It is also known as Terminal costing. Each contract is given a number for identification. It applies to a concern like constructional works, roads, bridges, buildings etc.

5. MULTIPLE COSTING:
It means combination of two or more of the above methods. This system of costing is adopted in manufacturing concerns where a variety of parts are produced separately and later assembled into a final product. The

total cost consists of the cost of all the parts which go to make a final product. It is also known as composite costing.

6. SINGLE OUTPUT OR UNIT COSTING:

Under this method production is continuous and units are identical. Producing a single article or a few articles, choosing the cost unit depends upon the nature of the product. By preparing a cost sheet, the cost per unit is arrived at by dividing the total cost by the total number of units produced. This method is suitable to industries producing pencils, cigarettes, dairy products, brick works, mines, steel works etc.

7. OPERATION COSTING:
This method is used where there is a mass production and processes are repetitive in nature, and there is a detailed application of processes costing. The procedure of costing is broadly the same as per process costing, except that cost unit is an operation instead of a process. Then each manufacturing process can be distinguished as a separate operation. Operation costing is confined to every minute operation of each process.

8. DEPARTMENTAL COSTING:
It is a method of cost finding adopted to ascertain the cost of operating a department or a cost centre separately. Where the factory is divided into a number of departments, this method is adopted. The total cost of each department is found out and divided by the total units produced in that department and this will give cost per unit. For example, departmental stores, sellers, publishers etc.

9. HISTORICAL COSTING:
Batty says, Historical costing, the ascertaining and recording of actual costs when, or after, they have been incurred, was one of the first stages in the growth of the cost accountants work. It refers to the ascertainment of costs after they have been incurred. It is also known as traditional costing.

10. STANDARD COSTING:

Standard cost is pre-determined cost. The costs are determined in advance of production. Standard performance is set in terms of costs and actual costs are compared with the standard. The difference between the actual cost and the standard one is known as variations, which are recorded and causes thereof are investigated and remedial steps are taken. This system enables control of costs and also measuring the efficiency of operation.

11. UNIFORM COSTING:

It is not a distinctive form of costing, but the cost system is designed by trade associations followed by several undertakings. This system enables interfirm comparisons.

12. MARGINAL COSTING: This system of costing differentiates between fixed costs and variable costs. Under this system, fixed costs are not treated as product costs. The cost is thus the aggregate of direct material, direct wages, direct expenses and variable overhead. This type of costing is useful in tak8ing important decisions- price fixing during competition times, make or buy decisions, product mix etc. It is also known as variable for direct costing.

THE DIAGRAMMATICAL REPRESENTATION OF THE ABOVE METHODS AND TECHNIQUES IS:

COST DATA

TECHNIQUES

METHODS

Historical Costing

Standard Costing

Marginal Costing

Uniform Costing

Budgetary Costing

Job Costing

Process Costing

Farm Costing

Contract Costing

Batch Costing

Multiple Costing

Single Costing

Operation Costing

Service Costing

COST CENTRE
Cost centre may be defined as the smallest part of operation or area of responsibility for which cost are collected. It is a location, person or item of equipment (or group of these) for which cost may be ascertained and used for cost control.

A Cost Centre is defined as an area, machine, or person to whom direct and indirect costs are allocated. A distinctly identifiable department, division, or unit of an organization whose managers are responsible for all its associated costs and for ensuring adherence to its budgets. Also called cost pool or expense centre.

A cost centre is part of an organization that does not produce direct profit and adds to the cost of running a company. Examples of cost centres include research and development departments, marketing departments, help desks and customer service/contact centres. Cost Centre is a code created by a Company for its internal Departments (ex: Sales Dept, Purchasing Dept, Marketing Dept, Finance Dept) to debit expenses according to the User Dept. Cost centre shows the expenses incurred by user dept for the financial period and helps in Checking of Costs. Cost centre may be of four types they are: 1. Personal cost centre: it consist of a person or group of persons upon whom responsibilities are assigned. 2. Impersonal cost centre: it consists of a location or item of equipment or a group of these.

3. Operation cost centre: It consists of machine and/ or persons carrying out similar operations. e.g., machine and people engaged in welding, turning, machinery etc. 4. Process cost centre: It consists of a specific process or a continuous sequence of operation. Thus cost accumulated by each of these categories of department is the production or a service which can be considered as a cost centre.

COST CONTROL
Cost Control is defined as the guidance and regulation by executive action, of cost of operating an undertaking. Cost Control plays at the discretion of the management, who wish to maintain the cost within a specified limit. It is exercised through numerous techniques, some of which are standard costing, Budgetary Control, Inventory Control, Quality Control etc. It aims to improve performance or efficiency to achieve the target. Cost Control can be ensured through or involves: 1. 2. 3. 4. Setting up standards for expenses and production. Finding out differences of actual against standards. Analysing the differences (variance) with reasons. Taking up corrective measure to eliminate variations.

COST UNIT
Cost Unit refers to the unit or quantity of product, service or time units (or combination of these) in relation to which cost may be expressed or ascertained. It is a device used for the purpose of breaking up or separating cost into smaller subdivisions attributable to products or services. For instance we may determine

cost per tonne of coal, per kilo-watt hour of power, rate per machine hour, or per tonne-kilometer of a transport service etc.

COST REDUCTION
Cost reduction is concerned with reducing costs. It is concerned with reduction programme which is a continuous process; it strives to achieve permanent reduction, starts where cost control ends. Cost can be reduced on account of savings in cost. The advantages are: 1. 2. 3. 4. 5. 6. 7. Reasonable price for the customers. Continued employment for the workers. Increase in productivity. Expected return on capital. Prosperity of the industry. Economic use of resources. Increased credit worthiness.

COST AUDIT
Cost is the verification of cost accounts and a check on the adherence to the cost accounting plan.

CONVERSION COST:
It refers to the cost of changing or converting the direct materials into partly or fully finished products or from one stage or production to the next, in conversion cost, the cost of raw materials is left out. As such, conversion cost is the sum of direct wages, direct and overhead expenses of converting the raw materials into finished products.

PRODUCTION COST:
The cost of the sequence of operations which begins with the supplying of materials, labour and service and end with primary packing of the product is known as production cost.

OPPOURTUNITY COST:
By opportunity cost we mean the expected return on benefit forgone in rejecting one course of action for another. When rejecting one course of action, the rejected alternative becomes the opportunity cost for the accepted. For example, if the fixed deposit is drawn and invested in the industry, the opportunity cost, i.e., the interest on fixed deposit is the opportunity cost.

REPLACEMENT COST:
It is the cost of replacing the material or asset in current market. For example, if a material A was originally purchased at Rs. 100 per kilogram and if the same material A is now purchased at Rs. 130 per kilogram, the replacement cost is Rs. 130.

SUNK COST:
A cost which has incurred or sunk in the past and is not relevant to the particular decision-making is the sunk cost or sunk loss. It may be variable or fixed or both. It is only historical cost and such irrelevant for decision-making.

DISTINCTION BETWEEN COST CONTROL AND COST REDUCTION

1. It aims at maintaining the cost in accordance with standard costs. 2. It seeks to attain the lowest possible cost under existing condition. 3. The function is static. 4. Emphasis is on the past and present. 5. It is preventive function. It aims at reducing the cost. It brings profits by challenging standard through research.

The function is dynamic. Emphasis is on the present and future. It is corrective function.

COST SHEET:
All expenses relating to product are extracted from financial accounts and analysed under expanse heads in the form of statement. This tabulated statement is called cost sheet. Bigg defines, The expenditure which has been incurred upon the production for a period is extracted from the financial books and the stores records, and set out in the memorandum or a statement. If this statement is confined to the disclosure of the cost of the units produced during the period, it is termed a cost sheet. Cost sheet is a document which provides for the assembly of the detailed cost of a cost centre or cost unit. Cost sheet is the statement showing details of the total cost of a job, operation or order.

PURPOSE OF COST SHEET:

1. 2. 3. 4. 5. 6. It gives the break up figures of the total cost under different elements. It gives total cost as well as cost per unit. It facilitates comparisons. It helps in preparation of cost estimates (for tenders, quotations). It helps in fixing the selling price. It facilitates cost control by disclosing the inefficiencies, by comparing with the previous years figures.

PRIME COST:
Prime cost of any product comprises of all direct costs, viz., direct material, direct labour and direct expenses, specially attributable to a job. Prime cost is also known flat cost or first cost or direct cost.

WORKS COST:
Works cost represents the total of all items of expenses incurred in the manufacturing of an article, viz., direct material, direct labour, direct expenses and factory expenses. In short, it is described as prime cost plus works on cost. It is also called factory cost or cost of manufacture.

COST OF PRODUCTION:
It means and represents the factory cost plus administration expenses; i.e., prime cost plus administrative expenses=cost of production. It is also known as office cost.

TOTAL COST:
It means the sum of all items of expenditure incurred in producing, manufacturing and selling distribution. It comprises of cost of production plus selling and distribution expenses. Prime cost and work cost and administrative cost+selling and distribution expenses=total cost (final cost).

COST STRUCTURE:
The expenses that a firm must take into account when manufacturing a product or providing a service. Types of cost structures include transaction costs, sunk costs, marginal costs and fixed costs. Cost structures are simply the identification of how costs associated with the production of a good or services are distributed throughout the process. While some think of a cost structure as referring only to the finances utilized in the production process, a true cost structure will also take into consideration the use of all types of resources along the way. This can include costs such as labor and utilities, as well as back end costs like sales and marketing expenses.

When attempting to create a reasonable picture of the cost structure associated with the production of any type of good or service, the first step is to understand each individual step that occurs. This begins with the development of the idea for the product, the acquisition of raw materials, and the creation of production facilities that are used to create the end product. At the same time, a cost structure will address all labor costs associated with each step. This will include not only the expense of wages and salaries, but also ancillary benefits offered to employees, such as vacation, retirement, and health benefits. Essentially, any expense that is incurred to ensure all the necessary components for production are in place will be part of the cost structure.

decals with gold and platinum for hotel industry. Once you send us artwork, we shall respond immediately with sample within 6-7 days. We prefer the artwork in Photoshop, illustrator and jepg with minimum resolution of 300dpi for line tone and 600 dpi for line work. If special fonts are used do send us a copy. MULDER (INDIA) PRIVATE LIMITED

INTRODUCTION
This report deals with the proposal of mulder (India) private limited (mulder) to establish a manufacturing facility for the production of ceramic transfer, Textile transfer and autographic transfers at arohalli industrial area in Bangalore District. The transfers are the medium used to decorate Ceramic, Crockery, Textile and Vehicles. When these transfers who have special paper base stuck to objects and heat treated, the design get embossed on the object. With the rapid urbanization and economic boom, the demand for vehicles is growing at a phenomenal pace. The sophisticated manufacturing technology and the high production standard required by the automobile manufactures have restricted the number of Indian manufacturers in the present market scenario. At present only 3 major players are catering the market requirements in India. In Textile division, Mulder India is only manufacturer in the country printing Textile labels in large scale by automatic cylinder printing machines. Mulder India is major supplier to OEMs such as Page Industries (Jockey), Lux Industries (LUX), Rupa and Company Limited (RUPA) etc. The demand for textile labels are increasing day by day, so that Mulder is planning to increase production capacity in double. Mulder was originally established in 1994 as a joint venture with Mulder Holland BV the pioneers in the field of decal printing. Mulder Holland had 45 percent shareholdings in the JV. In 2000, Mulder Holland wound up its business in Holland and Mulder India become 100% India Company. Mulder has been associated with 3M India Limited a multinational giant in the field of autographic decals since

2003. Part of the requirements of 3M India Limited has been outsourced from Mulder (India) and Mulder was able to match the standards of production. Mulder (India) Private Limited has been established by a group of professionals from the field of engineering and finance. Three members from the group and chartered accountant and two are engineers with management backgrounds. Among the group organizations are; Sansera Engineering Private Limited (Sansera). Singhvi, Dev and Unni, Chartered Accountants (SDU). Ceramic Designs (CD). The project is considered as an extension of the present facilities of Mulder (India) and will be financed through internal accruals of Mulder and the existing arrangements with the Bankers.

PROFILE:
Mulder India was setup in 1994 as a joint venture with Mulder Holland also in collaboration with K H Bailey, UK. To maintain the quality and workmanship that Mulder is known world wide. We have set up a "State of Art" manufacturing facility at Bangalore India. Now Mulder India is Independent entity that conforms to European standards but have benefit of the prices from Asian Countries. The technical collaboration has provided Mulder India with European production methods and commitment to quality and timely deliveries. Our abilities have being tested over number of years by various companies worldwide who have outsourced large amount of their requirement with us. Mulder India is a true testimony of the coming together of technology and commitments, to produce world class quality and reliability at very competitive prices. It is this advantage that has led to more and more customers all over the world sourcing their requirements from Mulder India.

Mulder India a fully automated factory with cylinder screen printing machines. We also have in house art and colour separation department. Our capacity - 10 million sheets per annum. Our sheet size is 60cm x 90cm. All raw materials used are from European manufacturers. Transfer/ decal manufactures for ceramic, Glass, Candle, Enamel, Metal and Textile Industries.

TEXTILE DIVISION:
In 2007, we started a JV with technic graphic, UK to make textile decals. From last 2 years we are on our own. We have completed setup to produce textile decals by screen and litho. We import all raw materials from reputed manufacturers. We can also produce PVC free prints in screen and litho. We at present supply to major customers in India and abroad. Tagless labels. Labels for innerwear. Gillters. Puff. Foil. Flock. Prints for Foot wear.

Application for water slide decals:

Basic tools required to apply decals are water bowl, rubber squeeze and soft cloth Fill the bowl with clean water. Soak each decal section (one at a time) in the water until it starts to uncurl and slightly relaxes. Do not allow decals to soak for long period. Remove water and allow to rest for a few moment and you will notice that the decal will slide around the backing paper when gently rubbed. Make sure the ware is clean, any direct or grease can affect the fired result. Pick up the decal with the backing paper and slide the decal from the paper on the ware. Do not apply upside down. Position the decal in the correct location and hold one edge with a finger and using the squeeze remove all water and air bubbles from under the decal. Wipe carefully with clean cloth or paper towel to remove surface water. Make final check for positioning, air bubbles and water etc. When the decal has been on the ware for a few minutes it cannot be moved. Allow to dry for 4-8 hours before firing. Poor application or lack of attention to detail can result in after firing defects.

SPECIALS AND CONTROLS

Special Printing for Glass, Ceramic Tiles, Steel and Enamul ware. Other than our open stock we also print special and control of your own requirements. We can create designs from our collection or your own choice. We have a fully equipped design center to create patterns to suit individual customer needs and supply proofs within the shortest lead time. We ensure that we are able to maintain high quality and standard for which Mulder is known. We make decals of different temperature to suit customer requirements from 180 Degree to 1200 Degree. A special mention of our lifetime decals for Hotel

ware, these decals can be fired upto 1200 Degree on Ceramic table ware. We are specialized to make inglaze