TABLE OF CONTENTS Page #:

Acknowledgement 2

Executive summary 3

Chapter 01: Introduction

1.1 Introduction to report

4
1.2 Purpose of report
4
1.3 Methodology of study 4

Chapter 2: Cost Accounting

2.1 Definition of cost 5

2.2 The role of cost accounting 5
2.3 Contribution of cost accounting 6
2.3.1 Planning 6
2.3.2 Controlling 6
2.3.3 Evaluation of alternatives 6
2.3.4 Inventory management 7
2.3.5 Pricing of products and projects 7
2.3.6 External Reporting 7
2.3.7 Analysis of financial statements 7
Chapter 3: Mountain Fruits (pvt.) Limited. 8-10

Chapter 4: Departmental arrangements

4.1 Overview of the company 11

4.2 Organizational chart 11
4.3 Management List 12
4.3.1 Staff List 12

4.4 Major Departments 13

4.4.1 Production department 13-14
4.4.2 Accounts Department 14
4.4.3 Marketing Department 15
Chapter 5: Cost Elements

5.1 Elements of cost 16

5.1.1 Direct Material 16-17
5.1.2 Direct Labor 17-18
5.1.3 Overheads 18

Chapter 6: Classification of cost

6.1 Classification 19
6.1.1 Cost in relation to a product 19
6.1.2 Cost in relation to volume of production 20
6.2 Chart of accounts 21-23

Chapter 7: Budgeting

7.1 Definition of Budget 24

7.2 Budget Status 24
7.3 Budget Period 24
7.4 Production budget 24-26

Chapter 8: Financial Analysis

8.1 Financial Statements 27

8.1.1 Balance Sheet 27-28
8.1.2 Profit and Loss Account 29

Chapter 9: SWOT Analysis

9.1 Strengths 30
9.2 Weaknesses 30
9.3 Opportunities 31
9.4 Threats 31

CONCLUSIONS 31

RECOMMENDATIONS AND FINDINGS 31

REFRENCES 31

2
Executive Summary
MFL was a project of Aga Khan Rural Support Program (AKRSP). AKRSP
is a non denominational organization established by the AKF to
improve economic situation in the Gilgit Baltistan, the objective of MFl
is top support small scale fruit producers in the remote valleys of
Karakorum, Hindukush and Western Himalayas through skills training
in production and post harvest techniques, micro credit and market
information to process and market their produce in the national and
international markets. Their main partner is in UK is the “Tropical
Whole foods”

MFL works as a professional channel, establishing quality benchmarks

and ensuring market for a large no of small grower associations
through this network, we produce and market a variety of high quality
specialty products, including dry apricots ,tomatoes apricots kernels,
almond, walnuts and vegetable seeds .

These products are grown in the pristine mountain valleys of Hunza

,Nagar, Gilgit ,Chitral ,Ghizer and Baltistan. The transaction of growing
these fruits goes back thousands of years in these valleys ,in the past
these fruits served as an important food supplement to the highly food
deficit mountain communities living in these remote valleys. Today,
using new farming techniques introduced by AKRSP, farmers are
available to significantly increase their production levels and sale their
surpluses to supplement their income, which is invested in the
education of their children ,particularly girls which is new trend in this
area.

The fruits grow in these valleys are unique in terms of their natural
flavor, taste and serve as a rich source of vitamins, minerals and
dietary fibers. They are also known to provide natural defense against
various diseases. Experts also see a link between the longevity trends
of local population and their dietary habits, particularly the
consumption of apricot.

3
Chapter 1
INTRODUCTION
1.1 Introduction to Report
It is very important for students to get practical insight in any
organization after a long theoretical work in University. We went
Mountain Fruits (pvt.) Limited to see the practices of cost
accounting in the organization.

After visiting and interviewing from the Chief Executive Officer,

employees and manager accounts and administration in
Mountain Fruits (pvt.) Limited. We have written this report with
extreme possible attention.

1.2 Purpose of the Study

It is necessary for the student of Business that they should be familiar
with the practical application of Business studies and should gain
experience. The main purpose of this report is to fulfill the
practical knowledge and experience of cost accounting in
manufacturing concerns. It may be through, to gain a good
amount of confidence and to become aware of the policies and
practices of the organization by working and dealing with the
officers.
We select Mountain Fruits (PVT.) Ltd. to see the practices of cost
accounting in the company and in return we get some knowledge that
how Cost accounting activities will be performed in the company.

1.3 Methodology of Study

The quality information was real objective which we tried to collect. We
had to use different techniques/methodologies to collect the
data.

The sources of data were as follows;

• Interview with Chief Executive Officer
• Interviews with the Manager Accounts and Administration
• Interview with supervisor
• Personal observation through visiting the production department.

4
CHAPTER 2
COST ACCOUNTING

2.1 Definition of Cost

The committee on Cost concepts and standards of American
Accounting Association has given a broad definition of cost, so that it
may cover all of the various types of the costs as are used by
accountants. The committee defines cost as follow:

"Cost is foregoing, measured in monetary terms, incurred or potentially

to be incurred to achieve a specific Cost object or Cost objective".

2.2 The Role of Cost Accounting

Cost accounting furnishes management with the necessary accounting
tools for planning and control of activities. Specially, the collection,
presentation and analysis of cost data helps management accomplish
the following tasks;

1. Creating and executing plans and budgets for operating under

expected competitive and economic conditions.

2. Establishing costing methods and procedures that permit control

and of possible, reductions or improvements of costs.

3. Creating inventory values for costing and pricing purposes and,

at times, controlling physical quantities.

4. Determining company costs and profits for an annual accounting

period or a shorter period.

5. Choosing from among two alternatives which might increase

revenue and decrease cost.

5
2.3 Contribution of cost accounting to management
Cost accounting is now used not only by manufacturing organizations
but by service and trading organizations as well, both in profit and non-
profit sectors of economy. It is used as an aid for planning and
controlling of on going operations, for evaluation of alternatives and
projects, for pricing, for special and non-routine decisions and for
external reporting.

2.3.1 Planning:

Planning is the process of setting objectives and then determining

the steps needed to attain them.

In planning management is interested in future costs. To supply

appropriate information cost accountant makes make analysis of
cost of past operations. These historical costs are adjusted to reflect
changes in products, technology, volume, production efficiency,
input cost etc. In the planning process Budgeting is the area where
contribution of cost accounting is most visible.

2.3.2 Controlling:

Controlling if the process by which management makes sure that

intended and desired results are consistently and continuously
achieved.

The controlling process consists of the following three steps:

i. Establishment of standards.

ii. Comparison of results against standards and

iii. Correction of deviation.

In these activities cost accounting assists management by

developing standards, collecting data of actual results, preparing
performance reports and by analyzing variance.

2.3.3 Evaluation of alternatives:

6
Management is frequently confronted with decisions involving
choice from different alternative course of actions. Cost accounting
provides information as to how future costs and revenues will be
affected under each alternative thus assists management in making
appropriate selection.

2.3.4 Inventory management:

Cost accounting assists in inventory management by keeping

complete record of materials from the time they enter into the
premises till the time they are sold in the form of finished products.

Quantitative models for materials planning and management

developed by cost accounting enable management to keep stocks
to a minimum and, at the same time, guard against being out of
stock.

2.3.5 Pricing of products and projects:

Pricing involves determination of prices of new products,

adjustments in the prices of existing products as well as
determination of bid prices for contracts.

2.3.6 External reporting:

Cost accounting also serves the purpose of external reporting. While

making an upward adjustment in the rates of public utilities e.g.
electricity, gas, petrol, etc. the government must justify the
increase before the opposition in the legislative assemblies and
before the general public.

2.3.7 Analysis of financial statements

Financial statements of a business organization are analyzed by

external users and by management to arrive at quantitative
decisions regarding profitability, financial strengths, trend etc. Cost
accounting assists management in such analysis by providing
detailed information about sources of profit or loss as revealed by
the financial statements.

7
CHAPTER 3
MOUNTAIN FRUITS PRIVATE LIMITED
After three months debate the AKRSP in March 2000 management
finally agreed to pool funding of PKRs 2.00 million to initiate training
project for quality improvement of dried apricots in Gilgit region. A
separate small office was established in Gilgit town with total six staff
members. The project aimed to change the traditional unhygienic sun
drying method to produce an internationally acceptable food product.
Although it seemed impossible under prevailed conditions of resources
in the northern areas but it happened in just few years. The project
was then shifted in to a purposely built (leased for 10 years) factory at
Danyore where the factory has access to spring water to wash over
100 tons of dry apricots in a season.

In November 2004, the Dry Fruit Project was converted in to a formal

dry fruit export business, Mountain Fruits (pvt.) limited with net assets
of 6.5 million after repaying PKRs 3.5 million to the mother
organization, AKRSP. By then the Company was exporting over 65 tons
of dried apricots, apricot kernels, dried apples and nuts on test basis.
Apart from the success of dry fruit business the company employed
seasonal women workers in processing of fruits with special focus on
the socio economic conditions of the workers.

Since the primary objective of the project was to bring economic

change at micro level by increasing the income of poor farmers. The
company started buying dried apricots at the best market price in
2000 that was PKRs 35 per kilogram, the company increased farm gate
price for dried apricots gradually and paid PKRs 87/kg. The company
trained over 2000 farmers in improved apricot drying in year 2006 a
new company was also established in Gilgit and the prices for the
improved quality dried apricots was gone up to PKRs 150 per kilogram
at farm gate. This was revolution in the history of farmer’s income in
dry apricots.

The company not only focused in dry apricots business but also
increased product line by adding walnuts and almonds in 2005-6. The

8
company believes value addition is the only tool to increase income
and market share therefore from the very beginning the concept of
organic production and fair trade certification has been the mandate of
the company.

To increase farm income of small farmers, AKRSP focused to help in

increasing agriculture productivity, introduced cash crops; improve
quality of farm products, value addition and linking surplus production
to high value market. Dry fruits and nuts have been main horticultural
products of farmers. Before opening of the Karakrum Highway the
people of northern area have to sustain on what ever they produce in
their limited lands. There was no source of food supply from out side
and the local population has to supplement dry fruits to their food
stuff. After opening of the KKH the farmers got access to outside
markets to sell dry fruits and import food grains from planes of
Pakistan.

Since the market for fresh fruits was far away and it was not possible
to market perishable fruits e.g. apricots even in nearest markets in
Pakistan therefore farmers have been using un-hygienic sun drying
techniques to preserve fruits and nuts. The production of fresh apricots
in northern areas has been reported 45,000 to 60,000 tons; about 30%
is being wasted before sun drying for various reasons. The
conventional sun dried apricots halves are exposed to open
atmosphere for a week and the product so dried is full of biological and
physical contamination. AKRSP has been working on hygienic drying of
fruits and link the product to domestic market but it could not be much
successful for quality control reasons

In 1999, a staff member of the AKRSP joined North South Seed; a

project of the AKRSP and voluntarily did research in production and
marketing of whole dried (sulfur treated) apricots. After being success
in development of international quality standard product and
recognizing the quality of the product from a UK based company,
Tropical Whole foods a project proposal named “Dry Fruit Projects” was
presented to AKRSP management. In March 2000, the AKRSP
management approved to finance rupees 2.0 million to initiate the
project (a training program to improve sun drying of fruits in the
region).

9
AKRSP enterprise section pooled seed money for the project and the
project was initiated as a training program but the hidden mandate of
the project leader was to establish dry fruit export business.

After two years, in year 2002 the project made break even and it was
physically shifted to a food processing factory having annual capacity
to produce 100 tons of dry fruits.

The Tropical Whole foods, UK were an established business company

they provided technical assistance to the project staff and now the
project is a registered company named as “Mountain Fruits (pvt)
limited”. The company has increased its product line including dried
apples, walnuts halves, dried tomatoes, apricot kernels in addition to
sulfured and non-sulfured apricots. Mountain Fruits (pvt) limited is the
only factory in the northern areas where more than 50 ladies workers
have chance to find seasonal work. About 2000 families are benefiting
selling their products to the company. Following are statistical
information of the company

10
CHAPTER 4
DEPARTMENTAL ARRANGEMENTS
4.1 Overview of the company
The management of the company consists of a Chief Executive Officer and 3
Board of directors besides the managerial staff, supervisors, and working
labors. The working labors in the production department are only
female labors.

4.2 ORGANIGATIONAL CHART

Chief Executive

Officer

Manager Accounts Marketing

Factory Manager Field Manager
and Administration Manager

Assistant Field
Data Entry Officer Supervisor
Manager

11
4.3 Management List

Names Designations

Sher Ghazi Chief Executive Officer

Brett Adam Director

Friend Richard Director

Sakhi Murad Honorary Director/ Manager Accounts &

Administration

4.3.1 Staff List:

S. Admin Section
Name of
No. Employee Designation
1 Sher Ghazi CEO
2 Sakhi Murad Manager Accounts
3 Amir Shah Watchman
4 Salman Khan Electrician

S. Production section
2 Jamila khatoon Asst.QCO
3 Shahina Perveen Processing Incharge
4 Farman Driver
5 Azeem ullah Purchasing officer
6 Iftikhar Ali Asst.PO
7 Rahim ullah Asst. field
8 Bahadur Murad Asst. field

12
4.4 Major departments:

Mountain Fruits
(pvt.) Limited

Production Accounts Marketing

Department Department Department

4.4.1 Production Department

Purchasing of Raw material

Production department deals with the purchasing of raw material (i.e.)
apricots, walnuts, almonds and fresh apples. These are purchased from
different districts of Gilgit-Baltistan likely apricot, almonds and fresh
apples from district Hunza-Nager, walnuts from district Sakardu. These
items are purchased by the field assistants, who go to the farmers and
purchase them. The raw material when received into the company the
dat entry officer records the quantity and the area and the name of
farmer from which the material has been purchased in the field and
then the material is sent to the warehouse from where it is forwarded
for the processing.

Grading of raw material

The grading of the raw material is made according to its quality for
future processing. The processing in charge of the company has the
responsibility of grading the raw material according to its quality and
quantity.

Processing of raw material

13
After the grading of raw material it is sent to for processing in
accordance of the demand for a product in the market. The raw
materials are processed at different stages, e.g. Raw material of
apricots are first washed in water in special type of electric machine
called apricot washer machine then the wet apricot are send to the
electric dryer for few hours and then the apricots are let dry in the
solar drying system which they called the tunnel. After drying of the
apricot its sent for re-grading, where the women labors give their
services of re-grading the apricots into three different categories which
are,

• "A" Grade for the best apricots.

• "B' Grade for the better apricots.

• "C" Grade for the not for export quality apricots.

After this process the apricots are sent for packing and labeling of the
product which different denominations of weights in cartons. After
packing and labeling of the product it is sent to the finished goods
inventory store from where they are consigned towards the consignee.

4.4.2 Accounts Department

The accounts department of Mountain Fruits (pvt.) limited, have the
responsibilities of dealing with the controlling and planning of the
financial resources of the company to achieve the organizational
objectives. The accounts department is being handled by the Manager
Accounts and Administration and the data entry officer.

The planning and controlling of the financial resources means to plan

and control the costs and expenditures of the company to gain
maximum profit.

• Exporting of products

The consignments procedure of products to other countries is

also executed here in the accounts department. The accounts
department prepares sales invoice, Form "E" and other
requirements of exporting products. Here the orders 50%
advance payment is received from the purchasing party of the
product in Europe or other country. After receiving 50% advance
payment of the shipment the goods are consigned through

14
 Karachi Sea Port where the clearing agent of the company clears
all the affairs and requirements, and then the clearing agent
sends the Bill of lading to the consigner and consignee both.
After receiving the consignment their consignee sends the
payment in full settlement in the name of company to the bank
where Mountain Fruits (pvt.) Limited has the account. Due to the
fluctuations in the currency rates of different countries the
company has,

• Capital Gain.

• Capital Loss.

4.4.3 Marketing Department

The marketing department deals with marketing of the products of the
company abroad and locally in Pakistan. It is done through sending
delegations to different countries and different cities. It ensures the
attraction of new customers and retaining of the customers by giving
customer value. Through different marketing tools and strategies the
marketing of different products are marketed in different countries and
cities.

15
CHAPTER 5
COSTING ELEMENTS
5.1 Elements of Cost
The elements of cost are the components which are used to acquire
the finished product after processing in the manufacturing companies.
Mountain Fruits (pvt.) Limited also uses the following elements of cost;

1. Direct Material

2. Direct Labor

3. Overhead

5.1.1 Direct Material

Direct Material is the raw material purchased by the company form
the field in form of,

• Apricots

• Walnuts

• Almonds

• Fresh Apple

Procedure of Material Purchasing:

Procedures for material procurement and use involves forms and

records necessary for general ledger, financial accounting as well as
those necessary costing a job, process, or department, and for
maintain inventories and other statistical summaries.

• Purchases of raw material

The actual purchase of all materials is usually made by the

purchasing department headed by a general purchasing
assistant. The purchasing department receives purchase
requisition for raw material and supplies. The types pf
purchasing form used in the company are as under,

o Purchase Requisition

16
 o Purchase Order

• Receiving of material

The function of the receiving material is performed here is as,

i. Unloading and unpack incoming material

ii. Check quantities received against the shipper's packing list

iii. Identify goods received with descriptions on the purchase

order

iv. Prepare a receiving report

v. Arrange for inspections if necessary

vi. Route accepted materials to the appropriate factory

locations.

• Electronic Data Processing for purchases

In a electronic data processing (EDP) system, the computer data

base is used to record the material purchased and recived into
the factory. The Data Entry Officer makes the entries in the
computerized software about the receipts of raw material from
the field with their quantity and other necessary information in
the data base.

5.1.2 Direct Labor

No work can be performed without employment of staff and
workers. Women who working the production in Mountain fruits
(pvt.) Limited is generally called labor. Labor in cost accounting of
men working in a factory, though they may be working as C.E.O,
managers and workers. The main categories of labor for costing
purpose are as under;

17
 i. Direct labor

The workers employed in the company who directly work on

production of goods for sale are classified as Direct labor.

ii. Indirect labor

Beside direct labor, there are some general workers who also
work in the production such as movement of materials from
one place from another place, supervision etc. Their wages
can't be allocated directly to a product under process. These
personnel are termed as indirect labor.

5.1.3 Over heads

In the earlier two cost elements we described about direct material
and direct labor whose cost are directly identifiable with specific
products. There are, however, many indirect expenses such as
electricity, repair and maintenance etc. which can't be directly
related to a specific product, yet these have to be taken into
consideration to have the cost of production of each finished goods
are realistic. Such indirect costs are termed as overheads.

These indirect expenses or overheads are usually classified as;

• Factory overheads

• Administrative overheads, and

• Selling and distribution overheads.

CHAPTER 6

18
CLASSIFICATIONS OF COST
6.1 Classification
At mountain fruits (pvt.) Limited the classification of cost is being
under the following relationships of cost to achieve the company's
objectives;

1. The product

2. Volume of production

6.1.1 Costs in relation to a product

At Mountain Fruits (pvt.) Limited, total operating cost consists of,

• Manufacturing Costs

• Commercial Costs.

6.1.1.1 Manufacturing Costs

Manufacturing cost is the sum of the elements of costs, which

are direct material, direct labor and overhead. Direct material
and direct labor are combined into another classification called
prime cost. Direct labor and overhead may be combined into
classification called conversion cost, which represents the cost
of converting direct material into finished products.

Manufacturing costs are classified into the following categories;

• Direct Material

• Direct Labor

• Overheads

• Indirect material

• Indirect labor

6.1.1.2 Commercial Expenses

19
 Commercial expense falls into two large classifications;

• Marketing and selling expenses

• Administrative and general expenses

6.1.2 Costs in relation to volume of production:

Some costs vary directly in relation to changes in the volume of
production or output, while others remain constant. The costs which
vary and remain constant in Mountain Fruits (pvt.) Limited are as
under,

• Variable costs:

The following list identified overhead costs of Mountain Fruits (pvt.)

Limited which are usually classified as Variable costs;

• Fuel etc
• Repair & Maintenance Others
• Generator Fuel
• Generator Repair
• Office Supplies
• Utilities
• Entertainment
• Daily Wages
• Rent & Maintenance
• Communication
• Fixed Costs:

The following list identified overhead costs of Mountain Fruits (pvt.)

Limited which are usually classified as fixed costs;

• Salaries of regular staff

• Depreciation

• Insurance

• Rent

20
6.2 Chart of Accounts
Account
ID Account Description
10000 Goodwill
10200 Cash at SBL - PLS 5000-1
10300 Petty Cash
10500 Security Deposit
10600 Cash at ABL - C/A 2878
10650 ABL Saving 01-151-0010-9
10700 Cash at ABL - FC A/c
10900 SBL 11024-01
10950 SBL FC/Ac11024-03
11000 Accounts Receivable
11100 Provision for Doubtful Account
11200 Other Receivables
12000 Prepaid Rent
12100 Advance to Supplier – Hunza
12200 Advance to Supplier – Gilgit
12300 Advance to Supplier – Ghizer
12400 Advance to Supplier – BLN
12600 Advance to Supplier – Punjab
12820 Advance to Supplier – Zulfi
12830 Advance to Supplier - Azeem-Apri
12900 Advance to Supplier – Kamal
16000 Inventory-Apricot
16200 Inventory-Dried Apple
16210 Inventory-Fresh Apple
16500 Inventory -Apri. Kernel Sweet
16800 Inventory - Walnuts (in shell)
16900 Inventory - Walnuts Shelled
17000 Inventory Apricot – Open
17010 Inventory – Almonds
17015 Inventory Almonds Shelled
17020 Inv. Almond Oil
17100 Packaging Material
17200 Chemical
17300 Training Inputs
17400 Packages – Raw material
20100 Computer & Accessories
20200 Equipment & Appliances
20300 Furniture & Fixture
20400 Plant & Machinery
20500 Vehicles

21
22100 Acc. Dep-Computer & Accessories
Acc. Dep-Equipment &
22200 Appliances
22300 Acc. Dep-Furniture & Fixture
22400 Acc. Dep-Plant & Machinery
22500 Acc. Dep-Vehicles
23000 Share Capital
24100 Retained Earnings
25000 Accounts Payable
25050 Other Payable
25300 Income Tax Payable
25700 Expenses Payable
25800 Advance from Customers
25900 Accumulated Amortization
26000 CPF Payable
26100 CPF Installment Payable
26200 CPF Loan Installment Payable
27000 Staff Salaries-Admin
27100 Staff Salaries-Production
27300 Staff Travel - Admin.
27310 Staff Travel - Production
27330 Staff benefits - Admin
27340 Staff benefits - Production
27400 Fuel etc
27500 Repair & Maintenance Others
27700 Generator Fuel
27800 Generator Repair
27900 Office Supplies
29000 Utilities
29100 Entertainment
29300 Daily Wages
29400 Rent & Maintenance
29800 Communication
29900 General Expenses
30000 Bank Charges
30600 Export Charges - Apricot
30620 Export Charges - Dried Apple
30650 Export Charges - Walnut Shelled
30670 Export charges - Almond
30700 Research & Development
30800 Loss on Exchange
31100 Vehicle Operation
31400 Transportation Outward
31800 Training & Support

22
32100 Dep. - Computer & Accessories
32300 Dep. - Equipment & Appliances
32400 Dep. - Furniture & Fixture
32500 Dep. - Plan & Machinery
32600 Dep. - Vehicles
35000 Sales-Apricot-A
35100 Sales-Apricot-B
35200 Sales-Apricot-C
35600 Sales- Dried Apple-A
35700 Sales-Dried Apple-C
35710 Sales Fresh Apple
35900 Sale - Apricot Kernel Sw-A
35950 Sales - Walnuts Shelled-A
35955 Sales Walnut Shelled - (In) B
35960 Sales - Walnuts Shelled- (In)C
35980 Sales Apricot - Open
35990 Sales Walnut In shell
35995 Sales - Almond, Kernel Oil
36000 Other Income
36100 Profit on Deposits
36200 Sales Return
36300 Sales Discount
36400 Gain on Exchange
36500 Nursery Income
37000 Sales - Almond A
37050 Sales Almond Shelled
37100 Sales - Almond Pieces
38300 Direct Labor - Apricot
38321 Direct Labor - Dried Apple
38360 Direct Labor - Walnut Shelled
38380 Direct Labor Almonds
38400 Transportation-In - Apricot
38470 Trans. In - Walnut in shell
38480 Transportation In - Packages &
38500 MT Commission - Apricot
38600 Factory Overheads

CHAPTER 7
BUDGETING

23
7.1 Budget
A budget is a quantitative and financial expression of policies to be
pursed and strategies to be employed during a prescribed future
period of time in order to achieve an objective.

7.2 Budget Status

The budget at Mountain Fruits (pvt.) Limited is centralized. It's
forecasted on the basis of orders received from the customers in the
previous period or by past experience. The budget is in control of Chief
Executive Officer and the Manager Accounts and administration. A
budget for production is forecasted for every financial year of the
company.

7.3 Budget Period

The period of time to be covered by the budget is to be specific- a year
or less. At Mountain Fruits (pvt.) Limited the budget period is for one
accounting period that is 1st July to 30th June.

7.4 Production Budget

Mountain Fruits (Pvt.)
Ltd.
Production Budget
For the year 2009
Direct material
1.1 Purchases
Product Line Purchase Forecast
Units
Kg. Av.Rate Amount
79,3 80. 6,347,
Apricot 41 00 280

Apricot kernels - - -
82,0 65. 5,335,
Walnuts 83 00 395
78,5 80. 6,282,
Almond 33 00 640
15,0 15. 225,
Fresh Apple 00 00 000
Grand Total 254,957 18,190,315

24
 1.2 Transportation
Inwards
79,3 0. 72,
Apricot 41 92 850
1.
Apricot kernels - 83 -
82,0 0. 64,
Walnuts 83 78 030
78,5 0. 61,
Almond 33 78 261
15,0 1. 27,
Fresh Apple 00 83 450
225,59
254,957 1
1.3 Master Trainer
Remuneration
79,3 1. 79,
Apricot 41 00 341
1.
Apricot kernels - 00 -
82,0 2. 164,
Walnuts 83 00 166
78,5 2. 157,
Almond 33 00 066
15,0 2. 15,
Dried Apple 00 00 000
415,57
254,957 3
1.4 Packages
79,3 0. 47,
Apricot 41 60 605
1.
Apricot kernels - 00 -
82,0 1. 82,
Walnuts 83 00 083
78,5 1. 78,
Almond 33 00 533
15,0 1. 15,
Dried Apple 00 00 000
223,22
254,957 1

1.5 Loading & Unloading

25
 79,3 1. 79,
Apricot 41 00 341
1.
Apricot kernels - 00 -
82,0 1. 82,
Walnuts 83 00 083
78,5 1. 78,
Almond 33 00 533
15,0 1. 15,
Dried Apple 00 00 000
254,95
254,957 7

254,9 75. 19,309,

Total 57 74 656

CHAPTER 8

26
FINANCIAL ANALYSIS

8.1 Financial Statements

8.1.1 Balance Sheet

MOUNTAIN FRUITS (PRIVATE)

LIMITED
BALANCE SHEET
AS AT 30TH JUNE 2009
2009 2008
Rupees Rupees
ASSETS

Non Current Assets

747, 708,1
Fixed assets – tangible 604 09

1,882, 1,882,
Intangible asset – Goodwill 514 514

Current assets

804, 8,802,
Stock in trade 032 450
720, 3,053,
Trade debts 176 840
3,479, 1,325,
Advances, deposits, prepayments and other receivables 625 147
10,980, 4,005,
Cash and bank balances 370 251
15,984, 17,186,
203 688

18,614,320 19,777,
.43 311

Authorized Capital
6,697, 6,697,
669,700 (2006: 669,700) ordinary shares of Rs.10 each 000 000

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Issued, Subscribed and paid up Capital
6,500, 6,500,
650,000 (2006: 650,000) ordinary shares of Rs. 10 each 000 000
4,251, 3,298,
Accumulated profits 743 190
10,751, 9,798,
743 190
LIABILITIES

Current liabilities

2,500,
Short term borrowing - 000
735, 810,0
Creditors, accrued and other liabilities 982 44
7,126, 6,669,
Advances from customer - associated company 596 077

18,614,320 19,777,
.43 311

8.1.2 PROFIT AND LOSS ACCOUNT

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PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 2009

2009 2008
Rupees Rupees

Sales
Export sales 13,578,416 20,596,832
Less: Export charges (742,204) (1,282,918)
Sales Discount - -
12,836,212 19,313,914
Local sales 556,397 1,788,806
13,392,609 21,102,720

Cost of sales (11,371,093) (17,835,717)

Gross profit 2,021,516 3,267,003

Administration and selling expenses (1,389,050) (2,374,898)

Financial expenses (13,415) (91,072)

Other operating income 334,502 460,264

Profit/(loss) for the year 953,553 1,261,297

Accumulated profit at beginning of the year 3,298,190 2,036,893

Accumulated profit at end of the year 4,251,743 3,298,190

CHAPTER 9

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SWOT ANALYSIS
9.1 Strengths:
The following are strengths of MFL:

a) MFL has the latest employee training and development approaches.

Therefore it can adapt to all sorts of change and bring immediate
improvement in work practices whenever the need arises.

b) MFL have highly qualified management and exceptionally intelligent

and energetic people. This result in lesser problems in maintaining
high quality and production levels take constructive criticism and focus
on personal and professional development by focusing solely on
achieving their work.

c) MFL believes in making people realize their full potential and

capabilities of household women, thus giving women new opportunities
of income generation.

d) MFL also have great production techniques and machinery

because of their alliance with an international company.
9.2 Weaknesses:
It is very difficult to find any weaknesses in the company; however
some weaknesses can be pointed out.
a) The workers, especially cracking labors are supposed to under sky as
the company do have its own proper building yet. This may affect their
performance level.

b) According to given information the daily waged labors are not

subjected to bonuses or rewards, which may reduce their
working moral.

c) The company is not giving proper attention to marketing

activities.

9.3Opportunities:

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As the company has monopoly in the region in production and export
of dry fruits, it can expand its operations around the region and greatly
increase its profit margins.

9.4 Threats:
Although the company is facing no major threats at present, but they
might loose their market shares if new companies start operating in
region, and MFL fails to keep their pace with changing environment.
CONCLUSIONS
Through our personal observation we concluded:

• MFL is a highly hygienic dry fruit processing Export Company,

meeting international standards o quality and hygiene.

• MFL has raised employment level to great extend especially for

mostly illiterate women of lower income families especially in
danyore area.

• MFL is maintaining high standards of production and processing.

• The company also maintains proper material procurement

procedures maintaining all records.

RECOMMENDATIONS AND FINAL FINDINGS

To further excel in dry fruit production and export the firm should:

• Try to maintain all records and transactions computerized

especially data and activities related to labors.

• Give proper attention to marketing.

• Facilitate workers(cracking labors) with proper shelter

REFRENCES:
Company Journals

Financials Reports

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