12 March 2013

ITM-SMBA 15

PEARL MANUFACTURING CO.

100% COTTON MENS WEAR

OWNERS: NIRAV GIRISH CHARVI VRUSHALI SEJAL INSHA JENIFER

12 March 2013

ITM-SMBA 15

3 2
Mos and its application COST ACCOUNTING INTRODUCTION TO PROJECT
12 March 2013 ITM-SMBA 15

INTRODUCTION TO READYMADE GARMENTS: The demand for readymade garment is increasing at around 18-20% annually in the country. change of fashion in human life. The business is not only in India, there is a big export market.

12 March 2013

ITM-SMBA 15

ABOUT PEARL MANUFACTURING CO.: -

TYPE OF COMPANY PRODUCT NAME

MANUFACTURING PEARL formal shirts

MFG. PLANT LOCATION

YEAR OF ESTABLISHMENT: CAPITAL INVESTED: PRODUCTION CAPACITY: NO. OF WORKERS : -

MUMBAI, MAHARASHTRA
2011 RS. 8, 00,000 2000 UNITS 11 WORKER

12 March 2013

ITM-SMBA 15

RAW MATERIAL REQUIRED: 1) Fusing Patti color cough 2) Gaj Patti Material Inside Shirt 3) Dhaga 4) Button 5) cloth 6) card board 7) Spunch 8) Polyethylene bag 9) Box per piece 10) Label shirt 11) Tag & Patti
12 March 2013 ITM-SMBA 15

OUR MANUFACTURING PROCESS: STYLING

CUTTING

ASSEMBLING THE FRONT AND BACK

12 March 2013

ITM-SMBA 15

CONTINUED.....

ASSEMBLING THE SLEEVES

STITCHING THE HEM

ADDING POCKETS

12 March 2013

ITM-SMBA 15

CONTINUED.....

STITCHING THE SHOULDER SEAMS

ATTACHING THE NECKBAND

FINISHING THE NECKLINE

12 March 2013

ITM-SMBA 15

CONTINUED

LABEL SETTING
PEARL MFG.CO. 100%COTTON SHIRT FOR MEN SIZE:-XL
Design and made in Mumbai, state Maharashtra WASHING INSTRUCTION: Shirt 1st time should be dry cleaned and wash with cold water from then onwards. Do not use bleach powder. www.pearlmanufactur ingco.co.in MADE IN INDIA

FINISHING OPERATIONS

12 March 2013

ITM-SMBA 15

3 2 1
Mos and its application COST ACCOUNTING INTRODUCTION TO PROJECT
12 March 2013 ITM-SMBA 15

CAPITAL INVESTMENT: -

The amount of cash required to start and business or a company or a manufacturing unit to be invested in acquiring an asset and for the payment of other expenses is called CAPITAL. We the PEARL MFG.CO. Having the investment of rs.8, 00,000 Out of which we have kept the cash balance of rs.63,120. All this calculations are being shown below..

12 March 2013

ITM-SMBA 15

CAPITAL INVESTMENT CALCULATION

A) Plant & Machinery 1) 7 silai machine @ 11ooo 2) Caj Machine 1 @ 100000 3) Button machine 1 @ 125000 4) Cloth Cutting Machine 1 @ 3500 5) Iron 2nos.@2000 B) Furniture & Fixture 1) Cutting Table 1 @ 6000 2) Press Table 2 @ 2000 77,000 100,000 125,000 3,500 4,000 309,500

6,000 4,000
1,250 1,050 80 12,380

3) Stools for sitting 10 @ 125 4) Scissors 7nos.@ 150

5) Measure Tap 8nos.@10
12 March 2013 ITM-SMBA 15

C) P&L Exp. 1) Rent (F.C.) 2) Ele.Exp one time investment. 3) Staff Welfare Exp 25days @ 50rs (V.C.) 4) Salary to master 5) Helper Salary 2men @ 4000 6) Machine operator 8) Telephone bill 15,000 8,000 2500 10,000 8,000 4,000 1,500 49,000

12 March 2013

ITM-SMBA 15

D) Variable Cost per piece 1) Fusing Patti color cough 2) Caj Patti Material Inside Shirt 3) Dhaga Per Shirt 4) Button 12nos 5) cloth 2.50mtr 6) card board 7) Spunch 8) Polyethylene bag 9) Other misc 10) Box per piece 11) Label shirt 12) Tag & Patti 13) shirt for press 14) man making shirt 15) Ele.Bill Per Shirt 1.50rs.making 2000 shirt

10.00 2.00 1.50 3.00 100.00 3.50 2.00 1.50 1.00 20.00 2.00 3.00 4.00 28.00 1.50 183.00 *2000 366000 736880 63120 800000

2000 units production in a month Total capital required add:- cash balance TOTAL CAPITAL INVESTED

12 March 2013

ITM-SMBA 15

SALES BUDGET: The most important budget, which all other budgets are contingent upon, is the sales budget.

All budgets such as production budget, selling and distribution budget and others are all affected by sales budget and are depend upon the revenue generated by sales.

Following is the sales budget of our company for the six month duration of
July to December.

12 March 2013

ITM-SMBA 15

sales budget

month :------------> units per unit price total

1 813 220 178860

2 1781 220 391820

3 2167 220 476740

4 2432 220 535040

5 2666 220 586520

6 2100 220 462000

PRODUCTION BUDGET: After preparing sales budget, production budget is prepared. A production budget is stated in physical units. Following is the production budget of our company for the six month duration of July to December.

12 March 2013

ITM-SMBA 15

PRODUCTION BUDGET

months: -----------> July August September October November December opening stock add:production total availability 0 2000 2000 1187 2000 3187 1406 2000 3406 1239 2000 3239 807 2000 2807 141 2000 2141

less: sales
closing stock
12 March 2013

813
1187

1781
1406

2167
1239

2432
807

2666
141

2100
41

ITM-SMBA 15

CASH BUDGET: -

Cash budget contains detailed estimates of cash receipts (cash inflow) and cash payments (cash outflow) for the budget period or some other specific period. we have cash opening balance of rs.63,120. but we face cash crunch In the 1st month itself, so we decided to avail a bank overdraft facility. And interest of bank overdraft amount which will be negligible, will be deducted from the total profit amount. The other cash receipts and payments calculations are being shown below.

12 March 2013

ITM-SMBA 15

CASH BUDGET
PARTICULARS Opening balance (A) add:- receipts debtors July 63120 August 0 September 9,104 October 668,664 November December 1,675,340 2,874,703

196,746 600,919

1,066,560 1,413,676

1,606,363

1,573,682

total receipts (B)

TOTAL ( C=A+B) less:- payments creditors wages Rent electricity exp. 1 time investment telephone bill other expenses total payments (D)

196,746 600,919
259,866 600,919

1,066,560 1,413,676
1,075,664 2,082,340

1,606,363
3,281,703

1,573,682
4,448,385

367815 22000 15000

8000 2500 415315

550815 22000 15000

1500 2500 591815

366000 22000 15000

1500 2500 407000

366000 22000 15000

1500 2500 407000

366000 22000 15000

1500 2500 407000

366000 22000 15000

1500 2500 407000

Closing Balance (E=C-D)

12 March 2013

-155,449
ITM-SMBA 15

9,104

668,664 1,675,340

2,874,703

4,041,385

 MARGINAL COSTING: -

Marginal cost, in cost accounting, means variable production costs, that is,

the costs which tend to vary in direct proportion to the change in the production level.

If an extra unit of output is produced, the costs which could be incurred for producing this extra unit will only be variable costs since fixed cost remain constant.

12 March 2013

ITM-SMBA 15

Month

Unit

Sales @220

Variable Contribu Cost tion @183

148,779 325,923 396,561 445,056 487,878 384,300 30,081 65,897 80,179 89,984 98,642 77,700

Fixed Cost

Profit

1 2 3 4 5 6 TOTAL PROFIT
12 March 2013

813 178,860 1781 391,820 2167 476,740 2432 535,040 2666 586,520 2100 462,000

37,000 37,000 37,000 37,000 37,000 37,000

-6,919 28,897 43,179 52,984 61,642 40,700 220,483

ITM-SMBA 15

MARGINAL COSTING

month 1 Sales less: Variable Cost Contribution less: Fixed Cost Profit/loss 178,860 148,779 30,081 37,000 -6,919

month 2 391,820 325,923 65,897 37,000 28,897

month 3 476,740 396,561 80,179 37,000 43,179

month 4 535,040 445,056 89,984 37,000 52,984

month 5 586,520 487,878 98,642 37,000 61,642

month 6 462,000 384,300 77,700 37,000 40,700

12 March 2013

ITM-SMBA 15

3 2 1
Mos and its application COST ACCOUNTING INTRODUCTION TO PROJECT
12 March 2013 ITM-SMBA 15

PVR: -P/V Ratio is the relationship between the profit & sales. In formula it is expressed as.. P/V Ratio=

contribution Sales * 100

The higher the P/V Ratio better is for company prospects.

P/V RATIO= 30, 081 / 1, 78, 860 * 100

= 16.82%

12 March 2013

ITM-SMBA 15

BEP: - Breakeven point can be defined as the point or sales level at which profit are zero and there is no loss. That is, breakeven point is that point at which total cost are same as total sales revenue.

So BEP profit is zero, contribution (sales-variable cost) is equal to the fixed cost. IF Actual sales > BEP then there is a profit

If Actual sales < BEP then there is a loss.

BEP (in units) =

fixed cost

Contribution per unit

BEP(in units) = 37000 / 37 = 1000 units.

12 March 2013

ITM-SMBA 15

MOS: - this is the difference between sales and breakeven point. If the distance is short, it indicates that a small drop in production or sales will reduce profit considerably.

If the distance is long, it means business can still make profit even after a serious drop in production.

MOS (in units) =

Month 1

profit PVR
Month 3 Month 4 Month 5 Month 6 40,700/16.82 =2420

Month 2

(6,919)/16.82 28, 897/16.82 43, 179/16.82 52, 984/16.82 61,642/16.82 = (411) = 1718 = 2567 =3150 =3665

12 March 2013

ITM-SMBA 15

12 March 2013

ITM-SMBA 15