ON

MARGINAL COSTING

CADBURY INDIA LIMITED MALANPUR

Submitted to the
SOS In Political Science and Public Administration
JIWAJI UNIVERSITY, GWALIOR (M.P.)

In The Partial Fulfillment on the requirement for the degree of

MASTER OF BUSINESS ADMINISTRATION

SOS Political Science and Public Administration

JIWAJI UNIVERSITY, GWALIOR (MP.)

Under the supervision of

NEHA SAXENA
BY-ARVIND SINGH VIJAY
M.B.A. (FINANCE ADMINISTRATION)3rd SEM.

ARVIND SINGH VIJAY , a of M.B.A (Finance) 3rd

semester from SOS In Political Science and Public
Administration, JIWAJI UNIVERSITY, GWALIOR (M.P.)
hereby declare that I have done on summer training from
16 June 2014 to 31 July 2014 at MONDELEZ INDIA
FOODS LIMITED CADBURY, MALANPUR Dist. BHIND,
titled as MARGINAL COSTING. All the facts and
findings in this report are genuine, authentic and purely
in academic interest only.
I also declare that this project report has not been
submitted to any other university for the award of any
other degree.

A
RVIND SINGH VIJAY
ROLL NO: - 3176737
M.B.A.(F.A.) 3rd SEM.
Batch 20132015
PlaceGwalior

I undertook this training in the partial fulfillment of my M.B.A.

curriculum. I am glad that I got wonderful opportunity to do my
research report at MONDELEZ INDIA FOODS LIMITED
CADBURY, MALANPUR district BHIND.
Finance is one of the key parts and the backbone of any company.
Without finance no organization can survive. My project is also
based on the study of Finance which is just a drop in the ocean.
I sincerely acknowledge my gratitude towards the faculty of SOS
In Political Science and Public Administration who gave me
the thorough understanding of different concepts. I never forgot
the name of my project mentor Neha saxena who helped me in
every walk of my project work.
I am extremely grateful to Sr. VARSHA JAIN (HR Executive) and
Sr. SHIKHA GUPTA (Finance Executive). My project guides
who were not only supportive and co-operative but inspite of their
busy schedule were ready to help me with their valuable guidance
and support which is of high worth.

ARVIND SINGH VIJAY

Roll no-3176737

Batch M.B.A.(F.A.)3 SEM.

It is said that without theory practice is blind and without practice

theory is meaningless. Hence, practical training has been made
an integral part of the Management Education in India.
The training gives an excellent opportunity to a student to apply
and prove his ability, intellect, knowledge, reasoning by giving a
solution to the assigns problem that reflect caliber.
On the other hand, it gives an opportunity to work with highly
experienced people of their field. I got the privilege to serve such
training in MONDELEZ INDIA FOODS LIMITED CADBURY,
(MALANPUR).
This project report represents the MARGINAL COSTING of
MONDELEZ INDIA FOODS LIMITED CADBURY, MALANPUR .

1.CADBURY PROFILE
2.THEORITICAL ASPECTS OF THE TOPIC
3.PRACTICAL ASPECTS OF THE TOPIC
4.RESEARCH METHODOLOGY
5.ANALYSIS AND GRAPHICAL REPRESENTATION OF
DATA
6.FINDINGS
7.CONCLUSION
8.SUGGESTION
9.BIBLIOGRAPHY

Cadbury is a British confectionary company owned by Mondelez

productand is the industry's second-largest globally after Mars,
Incorporated With its headquarters in Uxbridge, London,
England, and the company operates in more than 50 countries
worldwide.
The company was known as Cadbury Schweppes plc from
19692011-2013 until its demerger.
Cadbury India is a fully owned subsidy of Mondelez productInc.
The combination of Mondelez productand Cadbury creates a
global powerhouse in snacks, confectionery and quick meals.
Cadbury is the world's largest confectionery company and its
origins can be traced back in 1824, when John Cadbury opened in
Birmingham selling cocoa and chocolate.
Cadbury and Schweppes merged in 1969 to form Cadbury
Schweppes plc. Milk chocolate for eating was first made by
Cadbury in 1897 by adding milk powder paste to the dark
chocolate recipe of cocoa mass, cocoa butter and sugar.
In 1905, Cadbury's top selling brand, Cadbury Dairy Milk, was
launched. By 1913 Dairy Milk had become Cadbury's best
selling line and in the mid twenties Cadbury's Dairy Milk gained
its status as the brand leader.

Cadbury India Ltd. is a part of Kraft Foods. Cadbury India

operates in five categories Chocolate confectionery,
Beverages, Biscuits, Gum and Candy. In India, Cadbury began
its operations in 1948 by importing chocolates.
Some of the key brands are Cadbury Dairy Milk, Bourn vita, 5
Star, Perk, Bourneville, Celebrations, Gems, Halls, clairs,
Bubbaloo, Tang and Oreo. Our core purpose "make today
delicious" captures the spirit of what we are trying to achieve as
a business.
Cadbury India enjoys a value market share of over 70 percent in
the chocolate category and our brand Cadbury Dairy Milk
(CDM) is considered the "gold standard for chocolates in
India. The pure taste of CDM defines the chocolate taste for the
Indian consumer.
In the Milk Food drinks segment our main product is Bourn vita the leading Malted Food Drink (MFD) in the country. Similarly
in the medicated candy category Halls is the undisputed leader.
We recently entered the biscuits category with the launch of the
Worlds No. 1 biscuit brand Oreo.
With annual revenues of approximately $50 billion, the
combined company is the world's second largest food
company, making delicious products for billions of consumers in
more than 160 countries. We employ approximately 140,000
people and have operations in more than 70 countries.
After 60 years of existence, it today has five company-owned
manufacturing facilities at Thane, Induri (Pune) and Malanpur
(BHIND), Bangalore and Baddi (Himachal Pradesh) and 4
sales offices (New Delhi, Mumbai, Kolkata and Chennai.

Cadburys Manufacturing Facility At Malanpur

On 13th January 1989, the company began its manufacturing operations at
the most modern plant at Malanapur near Bhind in M.P. with the total
investment of approx. 120 crores. The factory is located in 24 acres of land
that is taken up on lease from the M.P. Audhyogik Vikas Nigam. The plant
is fully hygiene and 99% of different sections of the factory are fully A.C. and
well governed.
MALANPUR (BHIND)
The Malanpur unit started its production with clairs, initially this product
bombed in the market. But eventually with great efforts the product took off.
Later on the unit started manufacturing Gems, Perks, Five star and the
newest manufacturing of Cadbury Dairy Milk Shots and Khushi. Now the
unit produces a host of chocolates like:

Fruity Gems
Perk Poppers
Ultra Perk
Five Star
Five Star Crunchy
Five Star Fruit N Nut
Celebrations
Milk Treat
The Malanpur unit is COST BASED UNIT, only to manufacture the
product and sent them to sales and marketing department in
Mumbai.For effective and speedy communication, Malanpur is
connected with C.C. Mail network computers for the Cadbury
employees. In this way they can transmit information to all the

Cadbury employees of MONDELEZ INDIA FOODS LIMITED

CADBURY, MALANPUR. In the country.
COMMUNITY DEVELOPMENT

The unit has also taken up many community development initiatives for the
surrounding area along with Mr. ARVIND SINGH VIJAY a prominent NGO
like the Govt.school at Mahuri ka pura village for the local children.

OUR LOCATIONS IN INDIA

REGISTERED
OFFICE
Cadbury India ltd.
Cadbury House
19, B Desai Road
Mumbai 400 026
Maharashtra
India

MUMBAI

CHENNAI

Cadbury India Ltd.

Reyn. Basera Annexe
Near Cooper Hospital
Vile Parle West
Mumbai 400 056
Maharashtra
India

Cadbury India Ltd.

146- Second Floor
Royapeth High Road
Mylapore
Chennai 600004
Tamil Nadu
India

DELHI

KOLKATA

Cadbury India Ltd

303 - 305
3rd Floor, Vipul Agora
M.G. Road
Gurgaon - 122 002
India

Cadbury India Ltd

9-A Esplanade Row
Kolkata - 700 069
West Bengal
India

THANE

PUNE

Cadbury India Ltd

1 Pokhran Road
Eastern Express Highway
Thane 400 606
Maharashtra
India

Cadbury India Ltd

Induri Factory
Malegaon Dab hade
Pune 410 507
Maharashtra
India

HIMACHAL PRADESH

BHIND(M.P.)

Cadbury India Ltd

Works: Hadbast No 199
Village Sandholi Baddi
tehsil- Nalagarh
Dist. Solan 173205
Himachal Pradesh
India

Cadbury India Ltd

Plot No 25
Malanpur
Industrial Area
Village Gurikha
Tehsil - Gohad
Bhind - 477 116
Madhya Pradesh
India

BANGALORE
Cadbury India Ltd
Jodi Hanumanapalya
Mahadeva pura, PostMangalore Road
Nelamangala 562 123
Bangalore
Karnataka
India

COCHIN
Cadbury India Ltd
Cocoa Operations
Near Thrikkakara
Pipe Line Junction
Thrikkakara P.O
Cochin 682021
Kerala
India

1824- John Cadbury opened a grocers shop at 93 Bull

Street, Birmingham. Among other things, he sold cocoa and
drinking chocolate.
1831- John Cadbury opens factory in crooked lane.
1847- Company Fry & Son Produce the First Chocolate Bar.
1861-John's health rapidly declined and he finally retired,
handing over complete control of the business to his sons
Richard and George.
1875- A Swiss manufacturer added milk to his recipe to make the
first milk chocolate bar.
1879- Bourneville 'The Factory in a Garden' is born.
1897- Cadbury Milk Chocolate is Launch.
1905- Cadbury Dairy Milk is Launched, First Cadbury logo
commissioned.
1908- Bourneville Chocolate is Launched.
1920- Cadbury Dairy Milk goes purple.
1921- Cadbury script logo first appears.
1955- First Cadbury TV advert.
1967-Cadbury introduced the `Five Star and Gems' chocolates
in 1967 and 1968 respectively.
1969- Cadbury Merges With Schweppes.

1984-12,00,000 bonus shares issued. The company launched

its dairy milk chocolate, which has now Become the flagship
brand of the company.

1990- Cadbury World Opens.

2000- The Company has relaunched Perk, its chocolate-coated
wafer; it has four new layers covered in Cadbury Dairy Milk
Chocolate.

2001- Mathew Cadbury will take over as the new managing

Director of the Chocolate confectionery major, Cadbury India
Ltd.

2003- Cadbury India relaunched its flagship brand 'Cadbury

Dairy Milk'.
2004- Amitabh Bachchan new brand ambassador for Cadbury
Dairy Milk.
2007- Cadbury India has rolled out a wafer-based
chocolate called 'Ulta Perk' nationally.2011-2013- Cadbury
and Schweppes Demerge.
2009- On nov. 09, 2009: A first for India, Cadbury Perk with
Glucose energy in a new innovation that is aimed to appeal to
consumers taste buds. Targeted at 14-18 year olds.

2010- Cadbury became part of Mondelez product family on

the 2nd of February.

2012- Chocolate centre of excellence opens in Bourneville.

To align with our core purpose, Cadbury India has defined its Vision as "Life
Full Of Cadbury and Cadbury Full of Life".
Cadbury India will participate in many spaces of consumer life through a
cache of product offerings - be it chocolates or snacks or gum.
We believe that work and fun can co-exist beautifully. Therefore at
Cadbury India, it's all about work hard, play harder! We bring moments
of delight to our consumers everyday and every time.
Therefore, we strongly believe that the people who create these products
should also have fun while doing so.

CORE VALUES
We are performance driven, values led. Throughout changing times, our
constant values have inspired us to be pioneers in business and in
corporate responsibility. They help ensure we are proud of our company
and are critical to our core purpose of creating brands people love.
Our values are:
PERFORMANCE
We are passionate about winning. We compete in a tough but fair way.
We are ambitious, hardworking and make the most of our abilities. We
are prepared to take risks and act with speed.
QUALITY
We put quality and safety at the heart of all of our activities - our
products, our people, our partnerships and our performance.
RESPECT
We genuinely care for our business and our colleagues. We listen,
understand and respond. We are open, friendly and welcoming. We

embrace new ideas and diverse customs and cultures.

INTEGRITY
We always strive to do the right thing. Honesty, openness and being
straightforward characterize the way we do business. We have clear
principles and do what we say we will do.
RESPONSIBILITY
We take accountability for our social, economic and environmental
impact. In this way we aim to make our business, our partners and our
communities better for the future.
Our Business Principles are our code of conduct and also take account
of global and local cultural and legal standards. Our core purpose is
creating brands people love. The core purpose captures the spirit of
what we are trying to achieve as a business.

AWARDS

Cadbury wins the Gold Standard at the 2011

APPIES Awards
Cadbury Dairy Milk's Shubh Aarambh campaign wins
the Gold Standard 2011 APPIES Award.

Cadbury wins a silver trophy at the

University of Asia and Pacific (UA&P) Tambuli
Awards

Cadbury won a Silver trophy in the Best Insights & Strategic

Thinking category and a Bronze trophy in the Best in Creative Ideas and
Execution category for the Cadbury Celebrations Mithaas Diwali
campaign.

Cadbury wins Gold at the Asian Marketing

Effectiveness Awards 2011

Cadbury won the Gold medallion for the Cadbury Dairy

Milks Shubh Aarambh campaign, in the Strategic Thinking and Insights
Category.

Cadbury wins 8 Creative Abby Awards at the Goa

Fest 2011

8 Creative Abby awards between Cadbury Dairy Milk Shubh Aarambh

& Celebrations Diwali campaign. Grand Prix for Cadbury Dairy Milk Shubh Aarambh

Make-A-Wish Corporate Partner Award 2011

Cadbury India received the Make-A-Wish Corporate Partner
Award from Make-A-Wish foundation (US).

Cadbury ranked among Indias Most Respected

Companies 2011

Cadbury India was ranked 3rd in the Most Respected Companies in the FMCG
sector survey conducted by Business World magazine.

Cadbury retains AAA rating awarded by CRISIL

2010

Cadbury India retains its AAA rating, awarded by CRISIL the countrys
leading credit rating agency, for the second year in a row

Cadburys manufacturing wins Silver IMEA Award

2010
Cadburys Bangalore manufacturing facility won a Silver Award at the prestigious ET India
Manufacturing Excellence Award (IMEA)

Cadbury recognized among Best Marketer in India

2009

Cadbury India recognized as the 11th best Marketer in the country by the
Brand Equity Marketers Survey - Economic Times

Asian Marketing Effectiveness Awards 08

Asian Marketing Effectiveness Awards 2011-2013 for Bournvita
Folk/Fusion campaign - GOLD award for the "Best Insights and Strategic Thinking" and
SILVER award for the 'Most Effective Use of Advertising'.

Bournvita won the Emmvie Gold for the Best Media

Innovation-TV.
Cadbury won the Emmvie Gold for the Best Media Innovation - TV, for
brand Bournvita, for the entry Physical symbol of Confidence.

Cadbury Dairy Milk & Bournvita crowned as

Consumer Super brands

Cadbury Dairy Milk & Bournvita have done it again. For the
second time running, Cadbury Dairy Milk & Bournvita have been declared a `Consumer Super
brand' for 2006-7 by Super brands India.

Cadbury- Ranked among India's most respected

companies

Cadbury India has been ranked 5th in the FMCG sector, in a survey on
India's most respected companies by sector conducted by Business World magazine in 2007.

ABBY Award wins for India.

The prestigious ABBY awards, held in March, recognize creative excellence in

the Indian Advertising Industry. The Ulta Perk campaign won four Silver Awards in total and
the Cadbury Dairy Milk Campaign, Miss Palampur, also won a Silver Award.

On 7 September 2009 Mondelez productmade a US$16.2

billion indicative takeover bid for Cadbury. The offer was
rejected, with Cadbury stating that it undervalued the company.
Cadbury now became the part of Mondelez productMake
Today Delicious of USA. On 2 February 2010, Cadbury
became part of Mondelez productforming the WORLDS
BIGGEST candy company has alarmed British unions,
lawmakers and chocolate lovers.
Kraft had needed to reach 75% of the shares in order to be able
to delist Cadbury from the stock market and fully integrate it as
part of Kraft. This was achieved on 5 February 2010.

The costs that vary with a decision should only be included in decision
analysis. For many decisions that involve relatively small variations from
existing practice and/or are for relatively limited periods of time, fixed costs
are not relevant to the decision. This is because either fixed costs tend to be
impossible to alter in the short term or managers are reluctant to alter them
in the short term.
Suppose a business occupies premises to carry out its activities. There is a
downturn in demand for the service which the business provides and it would
be possible to carry on the business from smaller, cheaper premises. Does
this mean that the business will sell its old premises and move on to new
ones overnight? Clearly, it cannot happen. This is partly because it is not
usually possible to find a buyer for the premises at a very short notice and it
may be difficult to move premises quickly where there is, let us say, delicate
equipment to be moved. Apart from external constraints on the speed of
move, the management may feel that the downturn might not be
permanent. Thus, it would be reluctant to take such a dramatic step. It would
mean to deny itself an opportunity of benefit from a possible revival of trade.
The business premises may provide an example of an area of one of the
more inflexible types of cost but most of the fixed costs tend to be broadly
similar in this context. So, what we really see is that more than the fixed
cost, what really influences decision making in the short-run is the variable
cost which is actually synonymous with the marginal cost.
Marginal costing is a technique of costing which analyses and presents
costing information to the management in such a manner that the right
decision is taken on managerial problems.
It is also a technique where only variable cost or direct cost will be charged
to the cost unit produced. Marginal costing shows the effect on profit of
changes in volume or type of output by differentiating between fixed and
variable costs. The analysis is segregated into short and long-run cases.

At each level of production and time period being considered, marginal costs
include all costs which vary with the level of production, and other costs are
considered fixed costs.

Features of Marginal Costing System:

It is a method of recording costs and reporting profits

All operating costs are differentiated into fixed and variable costs

Variable cost charged to product and treated as a product cost whilst

Fixed cost treated as period cost and written off to the profit and loss account

Closing stock is valued on marginal cost

Advantages of Marginal Costing:

It is simple to understand re: variable versus fixed cost concept

A useful short term survival costing technique particularly in very competitive

environment or recessions where orders are accepted as long as it covers the
marginal cost of the business and the excess over the marginal cost
contributes toward fixed costs so that losses are kept to a minimum

Its shows the relationship between cost, price and volume

Under or over absorption do not arise in marginal costing

Stock valuations are not distorted with present years fixed costs

Its provide better information hence is a useful managerial decision making

tool

It concentrates on the controllable aspects of business by separating fixed

and variable costs

The effect of production and sales policies is more clearly seen and
understood

Disadvantages of Marginal Costing:

Marginal cost has its limitation since it makes use of historical data while
decisions by management relates to future events

It ignores fixed costs to products as if they are not important to production

Stock valuation under this type of costing is not accepted by the Inland
Revenue as it ignores the fixed cost element

It fails to recognize that in the long run, fixed costs may become variable

Its oversimplified costs into fixed and variable as if it is so simply to

demarcate them

It is not a good costing technique in the long run for pricing decision as it
ignores fixed cost. In the long run, management must consider the total costs
not only the variable portion

Difficulty to classify properly variable and fixed cost perfectly, hence stock
valuation can be distorted if fixed cost is classify as variable

FORMULA:
1. Marginal Cost Equation:
SV=F+P
Where,
S = Sales
V = Variable

F = Fixed Cost
P = Profit

2. P/V Ratio :
P/V Ratio = Contribution x 100
Sales
Contribution = Sales Variable
3. Break Even Sales:
Break even point =

Total Fixed Cost

Contribution per unit

Break even point = Total Fixed Cost

PV Ratio
4. Margin of Safety:
Margin of safety = Actual Sales Break even Sales
% of Margin of safety = Margin of safety x 100
Actual Sales
Margin of safety = Profit
P/V Ratio

5. Find Profit when Sales are given:

Profit = Contribution Fixed Cost

6. Sales required to earn profit:

Sales required = Desired Contribution
P/V Ratio
which is:
Sales required = Fixed Cost + Desired Profit
PV Ratio

Trading and P/L Account for the year

ending March 2011-2013
Particulars
To opening stock
To purchases
DIRECT
EXPENSES
To warehouse
charges
To consultancy
expenses
To process charges
To transport
charges
To yarn dyeing
charges
To twisting charges
To weaving charges
To warping charges
To gross profit

Amount
(Rs)
18092527
55841336

Particulars
By sales

Amount(Rs)
82,806,180

By closing stock

18,085,527

280,713
63,000
4,234,278
276,420
1,864,938
1,170,763
12,946,768
479,600
5,641,364
100,891,707

INDIRECT
EXPENSES
To audit fees
To advertisement
expenses
To bank int &
charges
To brokerage on
sales
To comp
maintainance
To int on o/d
To depreciation
To electricity exp.
To int on loan
To petrol & diesel
exp.
To professional fees
To salary & bonus
To telephone exp.
To misc.exp.
To int on partners
cap
To insurance
charges
To car exp.
To loan processing
charges

100,891,707

13,500
9,600
22,779
430,990
3,000
223,204
923,851
915,324
1,598,306
237,069
7,500
610,000
44,446
12,000
479,278
30,000
21,810
4,500

By gross profit
By disc.rec.

5,641,364
7,000

CLASSIFICATION OF COST

Fixed
Costs

Amount(R
s.)

Variable Costs

Amount(Rs.)

(Rs)
warehouse
charges

280,713

process charges

4,234,278

consultancy
expenses

63,000

transport charges

to audit fees

13,500

yarn dyeing charges

1,864,938

bank int &

charges

22,779

twisting charges

1,170,763

3,000

weaving charges

12,946,768

int on o/d

223,204

warping charges

479,600

Depreciation

923,851

advertisement
expenses

comp
maintainanc
e

int on loan
professional
fees

1,598,306

7,500

276,420

9,600

brokerage on sales

430,990

electricity exp

915,324

237,069

salary

610,000

petrol & diesel exp

int on
partners cap

479,278

telephone exp

44,446

misc.exp

12,000

car exp.

21,810

insurance
charges
loan
processing
charges

30,000

4,500

Purchase

4,259,631

MARGINAL COSTING
ANALYSIS

55841336

78485342

CASE - During the month of May 2011-2013 n m creations was approached

by Vivid Impex. They offered to Import worth Rs.A . This contract would
give nm creations entry into European markets which was much needed as a
Strategic Expansion Plan.
If nm creations were to accept the order then it would increase their plant
utilisation to 100% from the existing 80%. However Marginal Costing Analysis
helped understand the profitability of the deal better. It is shown as follows:
Existing Sales: Rs. 82,806,180
Import Order worth Rs. A
Percentage increase in F.C on account of Import assignment : x %
Percentage increase in V.C on account of Import assignment : y %
Revised Sales: Rs. 82,806,180 + A
Revised Variable Cost : 78485342 + y %
Revised Contribution : (82,806,180 + A) - (78485342 + y %) = B
Revised Fixed Cost : 4,259,631+ x %
Revised Profit : B (4,259,631 + x %) = C
Existing Profit : Rs.61207
Comparing the revised profit i.e. Profit arising after accepting the Import
assignment (C) with the original profit i.e. Profit prevalent after rejecting
the Import assignment, we can see that Marginal Costing enables us to reach
a conclusion and make a Managerial Decision.
If C > Existing Profit then the manager will accept the import
assignment.
If C < Existing Profit then the manager will reject the import
assignment.

Thus Marginal Costing is practically applicable and beneficial to the

management.

Marginal Costing

Problem (1) Chandrashekhar Enterprises supplies you with the following data

Months

Sales.
Rs.

Profit
Rs.

January
1981

3,00,00
0

8,000

February
1981

3,80,00
0

24,000

You are asked to compute: (1) Break-even point (2) Profit at sale level of Rs.
2,40,000 (3) Sales required to earn a profit of Rs. 2,40,000 and (4) M/s for 2 years.

Problem (2) Sales, turnovers and costs during 2 years are as follows:

Yea
r

Sales.
Rs.

Profit
Rs.

198
0

1,50,00
0

1,30,00
00

198
1

1,70,00
0

1,45,00
0

Find out: (1) P/V ratio; (2) B.E.P.; (3) Sales to earn profit of Rs. 40,000; (4) Profit
made when sales are Rs.2,50,000; (5) M/s at a profit of Rs. 50,000 and (6) Variable
cost for 2 years.

Problem (3) 1) Fixed Cost 2) Break Even Point 3) Profit @ 8,00,000 sales 4) Sales to
earn Rs. 60,000 profit . 5) M/s for 2 years. 6) Variable Cost for 2 years.

Situatio
n1

Situatio
n2

Ye
ar

Sales.
Rs.

Profit
Rs.

1st

2,00,00
0

30,000

2nd

3,00,00
0

70,000

1st

3,00,00
0

(-)
20,000

2nd

5,00,00
0

(+)
20,000

Problem (4) 2 years sales were Rs. 3,00,000 and Rs. 5,00,000 and 2 years profit
were Rs. 30,000 and Rs. 80,000. Find out (1) Fixed cost (2) Break down point (3)
Sales to earn Rs. 60,000 profit (4) 10,00,000 Sales (5) sales to earn 10% profit on
sales (6) variable cost for 2 years (7) Margin of safety for 2 (8) BEP (revised) if s.p. is
by 10%. (9) sales to earn profit after tax 70,000 (if tax rate is 30%).

Problem (5) S. Ltd. furnishes you the following information related to the half year
ended 30th June, 1980:
Rs.
Fixed
expenses
Sales Value
Profit

45,000
1,50,0
00
30,000

During the second half of the year, the company has projected a loss of Rs. 10,000.
Calculate: (1) The break even point and margin of safety for six months ending 30 th
June 1980. (2) Expected sales volume for second half of the year assuming that the

P/V ratio and fixed expenses remain constant in the second half year also. (3) The
break-even point and margin of safety for the whole year 1980.

Problem (6) A company has annual fixed costs of Rs. 1,40,000. In 1975, sales
amounted to Rs. 6,00,000 as compared with Rs. 4.5 lakhs in 1974 and profit in 1975
was Rs. 42,000 higher than that in the year 1974.
1) At what level of sales does the Co. break even ?
2) Determine profit or toss on a forecast sales volume of Rs. 8,00,000.
3) If there is a reduction in selling price by 10% in 1976 and the Co. desires to
earn the same amount of profit in 75, what should be the required sales
volume ?
Problem (7) Calculate: (1) The amount of fixed expenses ; (2) The number of units
to Break-even; and (3) the number of units to earn a profit of Rs. 40,000.
The selling price per unit can be assumed of Rs. 100. The company sold in two
successive periods 7,000 units and 9,000 units and has incurred a loss of Rs. 10,000
and earned Rs.10,000 as profit respectively.

Problem (8) You are given the following Information of a company: Variable cost
per unit Rs.12; Fixed expenses Rs.60,000; Selling price per unit Rs. 18; Total sales
Rs. 2,25,000. Find out :
(a) Break-even point, profit-volume ratio & Margin of safety,
(b) What should be the selling price per unit if the break even point is bought down
to 6,000 units,
(c) At what selling price would the sale Rs. 15,000 units yield the net profits of Rs.
45,000.

Problem (9) The following data are obtained from the records of a factory:

Sales 4,000 units at

25 each

1,00,0
00

Materials consumed

40,000

Variable over heads

10,000

Labour Overheads

20,000

Fixed overheads

18,000

88,000

Net
Profit

12,000

Calculate: (1) The number of units by selling which the company will neither loose
nor gain anything. (2) P/V ratio and margin of safety at present level; (3) The extra
units which should be sold to obtain the present profit if it is proposed to reduce the
selling price by (a) 20% and (b) 25% (4) The selling price to fixed to bring down its
break even points to 500 units under present conditions (5) The sales required to
earn profit of Rs. 60,000 at the present selling price of Rs. 25 per unit.

1. PROBLEM IDENTIFICATION:
This is the first and important step in any research; this is a very significant
step. On the Other hand if the problem is well defined regularly than the research
may be useless for the management of the organization for which the research is
being conducted. As I have opted finance as my specialization field, my decision of
undertaking this research is genuine. One more thing which supports the
researchers decision for design is that the finance is the life for any organization so
it is also in favor of the organization to do each possible effort in the direction of
maintaining a healthy financial position.

2. TYPE OF RESEARCH:
The research work being undertaken by the researcher is purely analytical work
because the research is an attempt to analyze the financial position of the
organization on the basis of the annual reports .

3. SELECTION OF SUBJECT:
Selection of appropriate subject is most important in research process. After a good
discussion with the Finance Officer of CADBURY INDIA LTD. Malanpur factory I
decide MARGINAL COSTING as my research topic. Marginal costing is a
significant part of business decision as it is the crux of the problem of trade off
between risks and return involved.

4. OBJECTIVE OF THE STUDY:

Any research undertaken must have its objectives, the sectors relating to the
problem on particular factor for which the research has been conducted. There are
various objective of the research which is as follows:1-Primary objectivesary.,2objectivesSecond

PRIMARY OBJECTIVES:The primary objectives of the research are to prepare the project report successfully.
So it is necessary to create some objective so that it helps project to get completed
easily and correctly.
To test the theoretical knowledge against the practical aspects of the business.
To provide conceptual understanding of Marginal costing of the organization.
To familiarize with techniques of determination of Marginal costing of the
organization.
To give the feedback to the company for improvement in their strategies.
SECONDARY OBJECTIVES:The secondary objectives of this study are as follows:
To get some experience of working in an organization.
To know the deficiencies in the area of the finance.
5. RESEARCH DESIGN:
Research design is considered as a "blueprint" for research, dealing with at least
four problems: which questions to study, which data are relevant, what
data to collect, and how to analyze the results. Before starting the research
every researcher should choose the best research design. The objective is already
given, to attain it various data is analyzed. Therefore, my Research design is
analytical.

C
OLLECTION OF DATA:-

After planning of research, appropriate methods are adopted for

collection of data. This is the stage where appropriate
information for answering the research question is collected.
The researcher should select the most appropriate methods
of collecting data.
The success of research depends upon the purity of collection of
data. The methodology adopted by me during the project on
MARGINAL COSTING is

A.
B.

The study of the organization.

To analyze the various financial details of Marginal costing.

A.

LIQUIDITY MARGINAL COSTING

There was a gradual ups and downs in the Liquidity

Marginal costingof CIL in the year 2007 it was 1.02 which
is satisfactory. But in year 2011-2013, 2009 and 2010 the
Liquidity Marginal costingis 0.85, 0.61 and 0.61
respectively which represents that the liquidity position of
the firm is not good. As in 2011 this cost becomes 1.12
which is again called as better than the previous year
costs.

TURNOVER MARGINAL COSTING

For CIL in the year 2007, 2011-2013 & 2009 the cost is
4.66, 4.92 & 4.9 which is good but in the year 2010 a huge
breakdown in the cost i.e. 2.4 which is not good for the
firm but in the year 2011there is a slight increment in the
cost which is somehow good against the previous year
costs.

LEVERAGE MARGINAL COSTING -

Higher the Leverage Marginal costingit is good for the

inventory management for the year 2007 the inventory is
good i.e. 7.96, there was gradual increase in the cost in
the year 2011-2013, 2009 & 2010 i.e. 8.77, 8.78 & 11.04
respectively which makes the inventory management
efficient. But in the year 2011 the ratio is 7.86 which are
good as compared to previous years.

PROFITABILITY Marginal Costing

In the year 2007 it is 12.45% which is good but there was

a gradual increase in the following year i.e. 2011-2013 it is
12.83. The highest increase in it is 14.11% in the year
2009. But the fall in it in the year 2010 is 10.62% which is
the least percent in the five year analysis. The gradual
increase again happened in 2011 is 11.45% which is good
for the organization.

1. In this project I calculated some marginal costings; these costs

are very useful to interpret the inventory position of the
company. From that it is clear that Cadbury India Ltd is in
advanced stage.

2. For economic order quantity; purchase order of 114 units of MS

PIPE has been made by Cadbury India Ltd. The company
analyzed out of the three quotations for choosing lower cost of
material.

3. They select the B.D. Raj. & Cos quotation because of its
lower cost of material. This is the 56185.469 with applying 4%
ST & fright.

4. In store material I found these following things from the store

keeping receipt. Here I show about the two type of material:ITEM CODE

CC580100

Re-order

Max.

stock Min.

stock Avg.

level

level

level

level

1290

1700

540

990

2700

3600

900

1500

stock

8
CC580100
9

5. For issuing the material I found the knowledge through FIFO

and LIFO method. How material is received in store and how it
should be issued from the store etc.

6. During my research period I have found MARGINAL COSTING

MANAGEMENT of Cadbury India Ltd is very sound thats
why their economic position is also very strong.

STRENGTHS:
One of the LARGEST FMCG companies in India:
Consolidated turnover of Rs.2500 crore for the year 2011.
Strong financial position in the market with different product.
Overall market share of the various products of CIL is about 70%.
More than 100 years of experience in confectionary.
Wide distribution network.
Brand strength:
Strong brands value.
Flagship brand CADBURY DAIRY MILK is common
everywhere.
Extensive supply chain.
IT initiatives.
R & d- a key strength
Excellent coordination between employees & effective communication
with different manufacturing and sales office
Fully automatic and a hygiene plant.
WEAKNESS:
Low penetration
- Some chocolates are not available in rural areas.
High price
-some product price is very high ex. 5 star for rs.10 etc.
Some parts of the factory i.e. the administrative block of CIL Malanpur
must be enhanced the various department office must be separated in
different rooms.
OPPORTUNITIES:
Untapped market
Perk.
Export opportunities.
Innovation.
Increasing income level of the middle class.
Creating additional consumption pattern.
THREATS:
Existing competition.Nestle, Galxo Smith, Britannia, Kwality Dairy.
New entrants:-Nestle munch, Britannia choco treat and other local
brand chocolates and candy items which serves the purpose of common
man in a low price level

I t w a s a w o n d e r f u l e x p e r i e n c e f o r m e to b e a p a r t o f
C a d b u r y I n d i a L i m i t e d and working on a project for the
company.
It was a tremendously excellent experience that made me
learn various aspects of an organization, areas of concern for an
organization, art of not just surviving but proving its potential and
extra caliber at time to time in the Indian corporate sector.
I hope the organization will be benefi ted from this report
and with the help of the suggestions given, the organization
can improve its working further more and the overall
satisfaction level in the organization might increase up to the excellent
level. The workers of the fi rm are more satisfi ed comparing
to the staff s.
The study on MARGINAL COSTING at CADBURY INDIA
LIMITED is cased out with full analysis and evaluation. T h e
d a t a c o l l e c t e d a r e a n a l y z e d scientifically and the results
obtained are free to nearly 80%.
It is assured that the company may maintain its NO.1 FMCG
COMPANYS position in INDIA.
CADBURY INDIA LIMITED through its highly ethical values
not only climbing the ladder of growth year by year but also
fulfilling its responsibilities towards its employees and society.
Overall I will rate CADBURY INDIA LIMITED in A+
category companies.

1. The in-depth analysis of key marginal costingin this project

helps in measuring the financial strength, liquidity conditions and
operating efficiency of the company.
2. Marginal costing gives no clue about the future. It should be
considered only as a tool for analysis rather than as an end itself.
3. Knowledge and skills are necessary for learning new
strategies at all levels.
4. Cadbury has a superb mechanism of marginal costing.
5. The business environment of CADBURY INDIA LIMITED is
reasonably good.
6. Cadburys track record is always oriented towards profitable
growth and with strong fundamentals.

1. www.cadburyindia.com
2. Book: - Management Accounting Principle and practice
(R.K. Sharma & Shashi. K. Gupta)
3. Book: - Accounting For Managers (S.M. Shukla)
4. Documents and journals available at Cadbury India
Limited, Malanpur.
5. Annual Report of CIL given by MD. Anand Kripalu.
6. www.moneycontrol.com