INTRODUCTION ABOUT THE INTERNSHTP:

Internship (project work) is an integral part of the academic curriculum

of VTU MBA. It is initiatives to bridge the gap between knowledge and its
application through a series of interventions that will enable us to gain insights
and exposure to the industry.
The 12week Internship (project work) has been positioned during
beginning of 4 semester of the MBA program as it serves the twin purposes of
providing, critical busing insights to us as well as priding industry with
graduates of a high caliber who are ready to get ahead in the world from day
one.
TOPIC CHOOSEN FOR THE STUDY:
Cost analysis and cost control
The research study is about finding out the profitability of the company
and also to find out material cost whether company is making proper
accounting decisions. This study is conducted to know the cost utilizatipon
pattern in the organization.
Company is growing day by day as a profit making organization so it
is essential to find out the total cost of current period. So the analysis is made
to find the feasibility of companys cost.
The study also helpful in examining the utilization of cost and
eliminate the wasteful expenditure which is directly in the production and
also, help in proper control over the cost.
STATEMENT OF THE PROBLEM
Cost analysis is essential for every business whether it is a
manufacturing industry or service industry. Adequate cost control helps in pre

determination of cost of production and achieving these cost levels that is

efficiencies and wastages can be analyzed. Thus the present study Is to
understand the cost influence on the sales and profitability of the company in
it pricing method and counter checking the suitability in other methods.

OBJECTIVES OF THE STUDY

To study the costing system followed by the SULFEX

To analyse & estimation of budgeted cost sheet & actual cost sheet
To conduct the Cost Volume Profit (CVP) Analysis,
To study how changes in Total cost affect on profitability of the company.
To suggest cost controlling method that could help the organisation in
reducing the cost.

SCOPE OF THE STUDY

Cost analysis can be used at several levels. At the most basic level, cost
allocation is simply part of good program budgeting and accounting practices,
which allow managers to determine the true cost of providing a given unit of
service. It deals with cost allocation, cost effectiveness and cost benefit.
The companies cost control will influence more on the level of cost
management of to company. So, the study of cost has important role to understand
the efficient system of company.
METHODOLOGY ADOPTED
The methodology involves collection of data from primary and secondary
sources. The relevant the study collected information only through secondary.
Secondary data
Secondary data was collected from Sulfex Mattress Companys official
website, records of the company, annual reports and tile statement of cost sheet of
the company.

REVIEW OF LITERATURE
Alejandro M (Head of internal control, YPF group, 2014)
Cost analysis is the process of accumulation, examination, and
manipulation of cost data for comparisons and projections.

Fitsum Kidane, (2012)

Cost analysis helps managers in making decisions on such areas like pricing,
profit, planning, setting standard cost, capital investment decisions, marketing
decisions: cost management decisions and others. The review shows that, finding
from different literatures stated that cost analysis is crucial in various decisions and
plays an important role in managerial decision making.
Manoj Anand- Indian histitute of Management Lucknow-Noida Campus.
"A Review of Research on the Theory & Practice of Cost Management's".
South Asian Journal of Management, Vol. 11, No. 1, pp. 59-95, JanuaryMarch 2004
The paper surveys the theory and practice of cost management. The initial
developments in activity-based costing, and issues in activity-based costing
implementations such as factors influencing its success degree of interest and
adoption and its relationship with firm value along with case studies are reviewed.
The strategic cost management issues such as customer profitability analysis in a
value-chain analytic and life cycle costing framework are reviewed, To have
detailed information on value-added and non-value added activities followed by the
need to be competitive in the industry in terms of price, quality and performance is
the major motivation for the introduction of the activity-based costing in Corporate
India.
INVESTOPEDIA.com (2013)

It is a process by which business decisions are analyzed. The benefits of a

given situation or business-related action are summed and then the costs associated
with taking that action are subtracted.
LIMITATIONS OF THE STUDY:
The Study is based on the secondary data if any error inherent in the data
that would have affected the results.
Since this study is based an financial information, the company does not
reveal sufficient information required for the data analysis.

INDUSTRY PROFILE
INTRODUCTION
Rubberized coir industry
'Prior to the year "1960 people hardly had- any idea of rubberized coir. In
those days the "world famous car manufacturers Volkswagen of Germany, were
using horse hair as cushion filling material for their car seats. As their production
increased they wanted large amount of raw material. This leads to finding if
alternative product like sisal fiber, jute fiber, and the coir fiber. Coir fiber was
decidedly found to be the best. This was the beginning of rubberized coir industry.
In early 60s two renowned manufacturers Dr. Fehere and Dr. Otto Augliether
(DOA) were competing with each other to supply modem machine to manufacture
rubberized coir products. Their design and material constitution was so excellent
that because we could find some of their plant are still working well over a period of
four decades.
The Indian rubberized coir industry is nearly four decades old. It was in
1964 that Bharth motors of Chennai is the first producer among many other units
came up during sixties.

In the global market the use of rubberized coir had been dominated fey the
automobile industry. The luxurious cars manufacturers like Mercedes, BMW,
Volkswagen, Volvo and Fiat where got most of its supplies all over the world. Even
the Mitsubishi, Honda and Datsun company were a consistent user of rubberized
coir.
Another potential area for coir is for seating in other vehicles like trucks,
buses and railway sub-way coaches. It has potential for replacing polyurethane foam
in inner spring mattresses. The use of rubberized coir as means of stabilizing
seashore line's canal and river bank was reported gradually developing in some of
the western countries like Netherlands, Germany etc. There, exists a very large and
diverse market for bedding and upholstery in Europe and the 'United States wad if
efforts could be made to popularize rubberized coir it would be possible t0 get a
significant share of the market.
In the domestic front, the growth of rubberized coir manufacturing industry
was very slow, particularly as led matters, owing, to lack of awareness and any
organized marketing effort. There was total disapproval of this product in all sectors
when introduced as a healthy hygienic cushioning material. People considered it as
a dirty, fifthy, and low cost and a rough product meant for the low income segment
of the consumer market .The PU foam products in view of its sort feel used to be
considered as a luxury product and had the preference of the upper segment of the
consumer market. The situation gradually changed and the seventies witnessed rapid
growth of the industry with product finding more and more acceptance and outlets
on account of consumer public realizing its unique characteristics functional,
aspects and cost advantages.
After nearly one decade of its introduction, Government of India recognized
Rubberized coir mattress as a healthy and hygienic product, and taken the- efforts
for its popularization through projection of its advantages and end user applications.

Slowly many State Governments recognized rubberized coir as "wealth from

waste". So through issue of circulars Government advocated to use of rubberized
coir mattress in various organizations like hospitals, health clinics etc.
GROWTH DURING LAST DECADES
During early 60s this product got some market recognition. In early 70s, apart
from Dr. Ferher & DOA plants, some entrepreneurs started manufacturing
machinery indigenously. In the next B decades over one, hundred manufacturers
have entered rubberized coir field. As per the statistics, the industry has been
produced 60,000 M.T, till for the year ended March 2001 and the growth is still
expected to go in the years to come.
Today rubberized cob-products are increasingly used in many industries
notably m transport industry like railways and buses, packaging industry
(pharmaceutical s, heavy engineering, and electronics), hospitals, theatres and
auditoriums etc.
The basic raw material for rubberized coir industry is the brown coir and the
natural latex rubber. Over the last decade, the brown coir sector has registered a
tremendous growth. The encouragement given by coir board by forming a separate
brown fiber development committee and through implementation of various
developmental schemes aimed at betterment of production infrastructure skill
development and diversification of production
With the financial assistant, to small units, brown fiber industry has achieved
remarkable growth.
Tamilnadu state crowned the cap with the highest brown fiber production
exceeding 1, 50,000 m. T. out of 2,50,000 MT. all over India. Out of 105 units
assisted during 1998-1999, 80 units from Tamilnadu got the maximum assistance
totaling over rs. 68 lakhs. There is still a good potential for the growth of brown coir
fiber.

COMPANY PROFILE
Sulfex is a commercial mattress company established in the year 1994.
Sulfex is a front line manufacturer with established core competencies, The factory
and marketing office of the company are located- in the parassinikadavu village, 15
km from kannur , an historic town in kerala. The factory is equipped with advanced
machinery and skilled personals to streamline various stages of production.
Sulfex India private limited is founded in the year of 1994, by Mr.M.T.P
Muhammad kuhni, a prominent NRI business personality with diverse interests in
rubberized coir, ply wood and construction in India and trading activities in the
Middle East. Sulfex group is a fastest growing entity, surging ahead with various
business interest filled by underlying passion to pursue excellence on all front,
Sulfex aims to create long lasting value for customers across the world.
Beginning as the manufacturer of exceptional quality rubberized coir
mattress; the Sulfexgroup, has along way today. Together the two state of coir based
manufacturing plants, such as Sulfex fiber products and Mattress products.
Company has grown rapidly.
Geographically it is situated at parassinikadavu and thaliparamba, kannur,
northern part of Kerala state. Account for a mammoth 8000 metric ton production
Gapaaty. Sulfex is the India's second largest and most sophisticated plant having
capacity for rubberized coir mattress as well as allied products like carpet,
underlay's, packing pads, air conditioner filters and companion products like
pillows, cushions and a range of door and bath mats.
The raw materials' are 100% natural coir fiber and rubber latex that are fully
replenishable resource. By Harnessing its technological superiority, product
excellence and care for the environment, the company has created one of the best
scientifically backed rubberized coir matters brand.

Sulfa is a brand that is going places not only in India, but in highly
discerning value conscious global market as well. With a turnover that is 400
million in Indian currencies company stronghold, the state of Kerala, and through a
wide network of 2000 dealers, Sulfex is expanding its market to the whole south
India, Goa, Maharashtra, Madhya Pradesh, Chhattisgarh, Jharkhand, Orissa and
west Bengal. Backed by mammoth production capacity and proactive logistics
capacity, Sulfex is positioning itself as a front line player in these areas.
The company relies on imported machinery and highly skilled manpower.
Continuous quality upkeep and attention to detail ensure that each mattress provides
maximum sleeping comfort and extra long life. These are the two critical
benchmark for every mattress produced by the company.
Many quality conscious clients' approaches in Sulfex mattress like director
general of supplies and disposal, ministry of commerce and industry, government of
India, director if general quality assurance, premium hotels, internationally reputed
pilgrimage centers etc, for instance. The "product excellence" awards that have
come Sulfex's way stand as a glowing testimony to the brand superiority.
VISION
"Aims to create long lasting value of customers across the world"
MISSION
The aim of sulfex company is to produce agro based or eco friendly products
with natural resources. Sulfex Company utilizes the available resources effectively
and efficiently. Their consumption of raw material is minimal and it provides
maximum comfort.

QUALITY POLICY

The company assures if it products by ensuring strict compliance with the

approval standards and documents system use of quality raw materials and
components, as also proper keep of machinery.

PROMOTERS
Great India Particles Pvt Ltd.
Prime Habitats Pvt Ltd.
Khazana Builders Pvt Lt-d
OBJECTIVES
Produce eco friendly products
Minimum rejection or wastage
TO satisfy the customer by providing the right quality goods at the right time
and at right place and also in right price
To produce quality product
Economy in production
SULFEX MOTTO
Our customer is the most important person in premises and our employees
and our workers are our assets.
We are steered by the needs and requirements and strive to exceed their
expectations every time.
We are responsible to the community in which we do business, building their
skills and strength as we our own.
We never compromise the quality and our products.
We research and innovate for ways to improve our skills to serve our
customers better

WORK FLOW MODEL

PREPERATION OF LATEX COMPOUNT

ROPEE DRYING

UNTWISTING

SHEET MAKING

HYDRAULIC PRESSING

10

PRODUCTS PROFILE
Following are the various of products offered by the sulfex Company
I.
II.

Sulfex mattress
Sulfex cushions, Pillows mid

bolsters
III.
sulfex quick dry mats
Sulfex mattress
Sulfex mattress provide scientifically tested back support and soothing
comfort. The main objective of company is to give good quality product for a
reasonable price. The products unique Side blanketing (only mattress to have this
specialty) attribute prevents sagging and help keep dimensional stability intact, in
spite of long use. For the critical tape- edging process, the company retires on
imported machinery and skilled manpower.
Sulfex produces 3 different grade of mattress namely soft grade, medium
grade and firm grade. The mattresses come in varied size, length, width and density.
Size varies from length. Common sizes are 72 inches, 75inch, and 7inch. Width also
varies from 24, 30', 33', 36, 424860, 72.Thickness from 1 inch to 12 inches.
Density of mattress is 80.
According to the order the length and width varies. Among these Sulfex
mattresses are differentiated with its size, quality and rates. They are listed below

Sulfex President

It is a brand new range from Sulfex, quilted in fine polyester blended cotton
for added comfort. It is designed especially for the most luxurious experiences with
11

an extra layer of rubber foam and Exudes elegance and indulgences, every inch,
super thick, with rich rubber topping to sink in softly. It has Strong inner backings
to help your body retain the natural comforts. It is available with a wide variety of
royal shades and designs to pick your right president.

Sulfex Nakshatra

It is the most luxurious product of Sulfex Mattes Company and a new

entrant. The mattress is a high density one manufactured with Bamboo cloth. The
mattress also gives extra comfort and is soft. It is also a luxury looking one most
preferred by hotelier.
Sulfex Fantasy Plus

It offers plush, but firm backings for your fun filled indulgences. Yes it
is ideal comfort that newlyweds yearn for. Finer fabric and & polyester
blended cotton. Ensures superior comfort and It is also choice mattress for the
hoteliers to pamper then- choicest guests. Wide range to satisfy every
customers taste. Available in a stunning range of surface designs and covers.

12

 Suffex Fantasy Star

This Fantasy Star Coir Mattress is available in a variety of patterns, sizes,

shapes and colours. All these items are developed using the finest quality fabric and
contemporary techniques. One can avail this Con- Mattress collection from us in
bulk. Easy to maintain, all these mattresses are available in accurate dimensions to
our clients. The mattress range can be availed from us at very nominal prices.
Sulfex Heritage Plus

This Heritage Plus mattress is designed by using superior quality material in

compliance to the set industry standards. We provide these superior grade mattresses
in various designs and specifications as suited to our clients' requirements.
Sulfex Excelsior

Exquisite elegance takes the shape of mattress. The premium range and fine
quality mill cloth. Everyone will admire the majestic quitting, and die superior

13

quality of sloth and the finest shades and designs. As for its comfort, everyone will
surrender. The, wide range of colors and quilted designs offer you a lot to indulge
in.

Sulfex Tranquil (Rexin Mattress)

It is The perfect hospital mattress designed and made carefully, taking
into account the demanding needs of the hospital wards and operating tables. The
unique combination of coir and latex helps patients to relax in comfort The high
quality rexine covering lends softness and prevents any kind of moisture stepping
down to inside and it is Washable, untreatable, easy to carry and foldable.

Polyurethane Foam Mattress

These Foam Mattresses are made by experts using superior grade raw
material. The light weight of these mattresses makes them easy to handle. Known to
ensure optimum comfort and softness, these products are highly appreciated in the
market these mattresses are widely appreciated by the patrons due to their ability of
improving blood circulation and providing a stress free and refreshing sleep.
Other Products
Ortho Mattress for
Back pain
Folding Mattress for
Hostels
Baby Mattresses
Cushions, pillows and bolsters
A wide range of exquisite pillows, cushions and bolsters are available in
matching color and designs. When the best mattress is chosen,, the company
complements them with best Sulfex pillows, cushion and bolsters.

14

Sulfex quick dry mats

Sulfex introduces range of finely Grafted mats for entrances, kitchens and
bathrooms. The quick dry bathroom mats have excellent moisture absorption
capacity, and dries well in normal roam temperature. It is Easy to clean and long
lasting.
AREAS OF OPERATION
Areas of operation of Sulfex are
Local market and regional markets (within the state of Kerala) even Sulfex
is expanding its market to the whole of W&; India
National market (Goa, Maharashtra, Madhya Pradesh, Chhattisgarh,
Jharkhand, Orissa and west Bengal)
International market south Asia .including Arab countries and Europe)

MAJOR COMPETITORS
The major competitors for Sulfex mattress are

M/S KURL-ON
M/S DUOFLEX
M/S RUBCO
M/S SHERLON
M/S FIBERFOAME

INFRASTRUCTURE FACILITY
Sulfex provides a very good infrastructure facility. Areas of land covered
with production facility, administration and roads..The infrastructure facilities includes,
Drinking water

Employees are supplied with mineral war from

Employees in Sulfex have good canteen facility

drinking
Canteen

serving good
food at reasonable price
15

Cabins

Employees have separate cabins where they can work

without
any disturbance from outside
Machines

Company has well equipped rnachines for

manufacturing the
products
FUTURE GROWTH AND PROSPECTS

Future growth and prospects of Sulfex mattress are:

Produce high quality products.
To be number one manufacturing company in India
Profit maximization.
To take advantage of upcoming international airport near to the factory
Minimum rejection or wastage.
To increase import business
Economy in production.
To enhance value to shareholders and. service to all stake holders

SWOT ANALYSIS
Strengths

The company has able and deducted workforce.

The management enjoy the confidence of the employees
The products have been already accepted in the market
increasing profitability
Good percentage of market share

Weaknesses

Lack of flexibility in taking decisions

Lack of supervision of facilities for career development
High price for products
Low advertisement and publicity

Opportunities
Maximum utilization of workforce efficiency

16

Expanding market
Increasing number of marketing outlets
Higher performance due to increasing capacity
A The reasonably priced products of the company have a competitive edge

in the market
Efficient and well connected transportation system

Threats
The threat from local competitors. Some of the Competitors have been able
to gain ground even in remove rural areas
Unfavourable raw material price, price of chemicals and other resource
AWARDS & ACHIEVEMENTS OF THE COMPANY
ISO 9001:2008,isi&,bis certification for the company
Management System Certified- Company
First Company to have DCQA (Director General of Quality Assurance)

Certification
Best small scale Industries award 1998-99
Kerala Govt. CONSUMER AWARD for quality in the year 2000
National Small scale Industries Award (HSTC)
Best performer award from Canara Bank

ORGANIZATION AT A GLANCE
Company name

Sulfex India Pvt.Ltd|

Business Type

Manufacture/wholesale supplier

Product name

Rubberized coir Mattres

Plant Location

Pallivayal, Kannur

Company Address
Elemhelampara
Pallivayal P.O, Thahparamba
Kannur, Kerala-670
Tel-0497-2780747, 2780748
Fax: 0497-2780848
Email: sulfexindia@gmail.com
Website: www.Sulfexmattress.com
Turnover

USS 10 Million-USS 50 Million

17

Ownership
Constitution

proprietorship

Year of establishment :

1994

Owner

MTP Mohammed Kunhi

Japan, Maldives, Australia and Singapore

Export and sales

Main markets

Total annual volume :

USSI million USS2.5 million

Factory information
No. of R&D Staffs

3 persons

Production capacity

2000 mattress per day

Total employees

210 persons

Working hour (plant) :

24 hours (3 shifts )

Office

8 hour

Board licenses
Coir board.
Rubber board
Pollution control board
Managing director

ORGANIZATIONAL STRUCTURE
General Manager

Production manager

Marketing manager

Finance manager

Area sales

Accounts

Personnel manager

Staff

Plant in charge
Production in charge
Sales officer
Foremen

Cashier

Sales executive
Staff

Electricians

Mechanics Production supervisor

Furnishing supervisor

18

Workers

Workers

Workers

INTRODUCTION TO FINANCE
In a modern day economy "Finance" is considered to be the "Life Lim" of
every business and it is the foundation upon which all me economic activities are
carried put. To think of an economy without money is impossible as it is the most
important element of all the commercial activities earned out in the world, it has
overcome the difficulties of the barter system. It has brought in rapid economic
changes actress the globe by facilitating Specialization and division of labour,
techno logical advancement to meet large scale demands of customers spread over a
Wide area, enhancement of business activities and expansion of financial
institutions and organization.
MEANING OF FINANCE

19

In simple terms it is defined as provision of money at the time required at least

cost. Finance is the art of both rising and spending of money for a benefit or gain.
According to Howard and Upton, "Finance is that administrative area or set
of administration functions in an organization which relate with the arrangement of
cash and credit, so that the Organization may have the means to carry out its
objectives as satisfactorily as possible".
COSTING METHOD AND COST ANALYSTS
Meaning of Cost and
Costing
Cost may be defined as;
1. The amount of expenditure (actual or normal) incurred on or attributable to a
given thing or
2. To ascertain the cost of given thing. Cost represents the resources that have been
or must be sacrificed to attain particular objective. Sacrifice may be direct or
indirect.
DEFINITION OF COST AND COSTING
According to the institute of cost and management accountants (ICMA),
London has defined costing as the ascertainment of costs. Costing includes the
'techniques' and 'process' of ascertaining costs,
STANDBUS has defined costing as "the process of determining the cost of
doing something, i..e. the of manufacturing an article rendering a-services or
performing of function.
From these definitions, it is clear that costing is the technique (i.e. The body
of principles and rules) and process (i.e. The routine procedure) for determining
(ascertaining) the cost of product, service or job.
SCOPE OF COSTING
A. Coasting in its general sense or narrow sense, has a very narrow scope, it
covers more cost findings or cost ascertainment.

20

B. Cost finding or cost ascertainment means findings or ascertaining the cost of a

product, service or Job.
C. For ascertainment of the cost of a product, service or job, the various expenses
incurred are collected, the expenses are analyzed (i.e. classified) therefore the
analyzed expenses are related, to the product, service or job is ascertained.
MEANING OF COST ACCOUNTING
Cost accounting is a tool of management which provides detailed records of
the costs relating to products, operations or functions. Cost accounting refers to the
process of determining and accumulating the cost of some particular product or
activity.
DEFINITION OF COST ACCOUNTING
The Institute of Cost and Management Accounting, London, defines cost
accounting as "the process of accounting for cash from the point at which
expenditure is incurred or committed to the establishment of its ultimate relationship
with cost centre and cost unit. In ifs widest usage it embraces the preparation of
statistical data, the application of cost control method and the ascertainment of the
profitability of activities carried out or planned".
SCOPE OF COST ACCOUNTING
Cost accounting is wide. Cost accounting covers 4 (four) areas- they are

Cost accounting
Ascertainment of profitability
Cost presentation
Cost control

METHODS OF COSTING
There are two methods of costing

21

 Job costing Batch costing. Contract Terminal costing Multiple or

composite costing
Process costing Unit or single output costing; operating (services) costing,
operation costing.
a) Job costing:
Cost is used in those business concerns where production is carried out as
per specific order and customers specifications. Each job (or product) is separate
and distinct from the other jobs or products. This method is popular in enterprises
which are engaged m house building, ship building, machinery production and
repair. Job costing has the following variants
b) Batch costing:
Batch costing is based on the concept of contract of contract costing. This is
used to determine the cost of a group of identical or similar products is the unit and
not the single item within the batch. This method can be usefully applied for the
production of nuts and bolts, medicines, components and other items which are
manufactured in distinct batches.
c) Operation costing:
This costing methods aim at ascertaining the cost of each operation in place
of each process. In this method the assumption is that output is achieved through a
number of different operations.
Besides the above variants of job costing and process costing the different
techniques or types of costing can be found in these two methods of costing and can
b used to determine cost therein.

22

TECHNIQUES (TYPES) OF COSTING

The term techniques' Or 'type' refers to manner of ascertaining costs of a
product, job or activity. The following are generally the technique of costing.
Historical costing:
It is the system of costing under which costs are determined after' they have
been incurred.
Standard costing:
Under standard costing, standard costs are determined, used and then
compared with the actual costs to determine the extent of variances so that remedial
actions can be taken.
Absorption or full costing:
Under this costing method manufacturing costs, fixed and variable are
charged to products, job, processes etc and are included in total cost.
Variable or marginal costing:
Variable costing methods are only variable production cost to products on
job and thus the cost of the products or job consists of only variable production and
not fixed products costs.
Uniform costing:
Uniform is not a technique of costing, but an attempt by several undertaking
and organizations to use similar costing principles and practices.
COSTING SYSTEM
The term costing system refers to an accounting followed:
TO accumulate

costs to ascertain costs of products or jobs to prepare cost

information using some procedure and principles for recording cost data. There are
two methods of costing and they are as follows
1. Job order costing system
2. Process costing system

23

INSTALLATION OF COST ACCOUNTING SYSTEM

A cost accounting system is a system that accumulate costs assigns them to
cost objects, i.e. Products, jobs, cost processes etc. And report cost information. In
addition to this, proper costs accounting system assist management in planning and
controlling of business operations, in this analyzing products profitability and in
accomplishing business objectives through optimum utilization of available
resources. Basically two questions are involved in installing a cost accounting
system:
A. Factors influencing the cost accounting system.
B. Features of cost accounting system.
Factors influencing the cost accounting system:1. Size of the firm:
The complexity and outline of the cost accounting depends on the size of
business enterprise and management requirements- As the size of the firm and
business grows, management requirement for cost data and information increases.
2. Nature and number of the products:
If a single product is manufactured, all costs of direct material, direct
labour and other factory expenses can be directly allocated to that product.
3. Raw materials:
The nature of raw materials and to degree of -waste therein influences the
designing of the cost accounting system in a manufacturing concern.
4. Staff efficiency
The working and formulation of the cost accounting system depends, to a
great extent, on the efficiency of personnel and staff engaged in it.
5. Comparability:

24

A business enterprise follows cost accounting system prevailing in other

business firms within the same industry. This is necessary to facilitate comparison
of its own cost data produced for the industry.
6. External factors:
The adoption of costing system depends mainly on internal factors and
situations within the firm.

Features of cost accounting system:

Cost accounting system may be used by all types of business organization manufacturing and non-manufacturing.
a. Basis for accumulating costs;
A fundamental feature of any system is the method of accumulating
manufacturing costs. Costs may financial accounting..
b. Relationship with financial accounting:
Most cost accounting system is complementary or supplemental in relation
of financial accounting. In this role, cost accounting systems imply physical
inventory counts to determine quantities of materials, work-in-progress and finished
goods.
c. Basis of product costs:
In many cost accounting systems, cost estimates are desirable in addition to
actual or historical costs. Actual costs incurred for a period are used to compute
product costs.
d. Full (absorption) costing or marginal (variable) costing:
Another important question relating to the cost accounting system is
whether all manufacturing costs are to be accumulated and attached to product.
COST CENTERS

25

The institute of cost and management accounting, London defines cost

centers as "a location, person or item of equipment (or a group of these) for which
costs may be ascertained and used for the purpose of cost control.
A cost center is an organizational segment or area of activity considered to
accumulate costs. The following are the types of cost center usually found m a
manufacturing company
Impersonal cost centre:
A cost centre which consists of a item of equipment (or group of these),
Personal cost centre:
A cost centre which consists of a person or a group of persons:.
Operation cost centre:
A cost centre which consists of the machines and or persons carrying out
similar operations.
Process cost centre
A cost centre which consist of a specific process or a continuous sequence of
operation.
COST UNITS
The institute of cost and management accountants, London has defined cost
units as
follows:
A unit of quantity of product, service or time (or a combination of these) in
relation to which cost may be ascertained or expressed.
Classification of costs:The achievement of the objective of cost accounting requires that cost
should be ascertained, classified and grouped. Cost classification may be defined as
the process of grouping costs according to their common characteristics. The
different cost classifications are as follows:-

26

1) Natural classifications of cost

Direct material
Direct labour
Direct expenses
Factory
overhands

Selling and distribution awl administrative overheads

2) Cost behavior (in relation to change in output, activity or volume) Fixed cost
Variable cost Mixed (semi-variable and semi-fixed cost).
Factory overhands
Capital cost
Revenue cost
7) Cost for decision making and planning

Opportunity cost
Sunk cost
Relevant cost
Differential cost
Imputed cost out-out of pocket cost
Fixed, variable and mixed cost
Shut dawn cost

8) Cost for control

Controllable and uncontrollable cost
Standard cost Fixed
variable and mixed cost
9. Other
cost
J
oi
nt
c
o
st
Common cost

27

MARGINAL COSTING
The chartered institute of management accountants, England, defines the
term marginal costing as "marginal costing is the ascertainment of marginal cost
and of the effect on profit of changes in volume or type of output by differentiating
between fixed costs and variable costs.
Characteristics of marginal costing
The essential characteristics and. mechanism of marginal costing technique
may be summed up as follows:

Segregation of costs into fixed and variable elements.

Marginal costs as product costs.
Fixed costs and period costs.
Valuation of inventory of work-in-progress and finished goods is done on the

basis of marginal costs.

Selling price is based, on marginal cost plus the contribution,
Profit is calculated, by deducting marginal cost and fixed cost from sales.
Cost volume (or break even) analysis, is one of the integral part of marginal
costing.
ABSORPTION COSTING
As distinct from marginal costing, absorption costing is a total cost
technique under absorption costing total cost i.e. fixed and variable is charged to
production. Stocks are also valued at cost. Points of distinction between marginal
costing absorption costing are as follows:
1. Treatment of fixed and variable costs:
In marginal costing only variable costs are barged to products. Fixed cost are
treated as period costs and charged to profit and loss account of the period. In
absorption costing all costs are charged to products.
Valuation of stock

28

In marginal costing stock of work in progress and finished goods are valued
as marginal cost only. In observation costing, stocks are total cost which includes
both fixed and variable costs. Thus stock values in marginal cost are lower than in
absorption costing.
2. Management of profitability:
In marginal costing, relative ^profitability of products or department is based
on study of relative contribution made by respective products or departments. The
managerial decisions are thus guided by contribution. In absorption costing, relative
profitability is judge by profit figures that also guiding factor managerial decision.
Elements of cost:
Mere knowledge of total cost cannot satisfy the needs of management for
proper control and managerial decisions, management is to be provided with
necessary data to analyze and classify cast. For this purpose, the total cost is
analyzed by elements of cost are 3 materials it is, materials, labour and other
expenses.
Elements of cost:
a. Materials
Direct
Indirect
b. labour
Direct
Indirect
c. Other expenses
Direct
Indirect
d. Overheads
Production
Administration
Sellings
Distribution

29

Overheads may be defined as the aggregate of the cost of indirect materials,

indirect labour and such other expenses including service as cannot conveniently be
charged directly of specific cost energy. The main groups into which overhead may
be subdivided are

Manufacturing overheads
Administration overheads
Selling and distribution overheads
Variable overhead
Research and development expenses
Fixed overhead
Semi variable cost
Indirect materials
Indirect labour
Allocation and apportionment of overhead of cost centers
Allocation of overhead expenses
Apportionment of overhead expenses

BREAK EVEN ANALYSIS

The break-even chart is a graphic relationship between Cost, volume and
profit. It shows not only the BEP but also the effects of cost and revenue at varying
levels of sales. The break even chart is also called as volume profit graph.
Breakeven point
The breakeven point can be defined as the point or sales level at which profit
are zero and there is no less. That is breakeven point is that point at which the total
cost are equal to total sales revenue. At the breakeven point profit zero contribution
(sales variable cost) is equal to feed cost.
If the actual volume of sales is equal to the break even volume there will be
no profit beyond the breakeven point. All the marginal contribution represents
income.
Break even chart
It is the graphical representation of sales volume and sales. It shows not only
the BEP but also the effects of cost and revenue at varying levels of sales.

30

It is the graphical representation of sales volume and sales. It snows not only
the BEP but also the effects of cost and revenue at varying levels of sales.
USE OF BREAK EVEN CHARTS

To earn a budget profit what should be the volume of sales

TO know what will be the BEP under various situation of changing sales

mix, price and cost

To know what are the most and least profitable products.
To know what is the minimum levels of sales required to avoid the losses.
To understand what is the impact of profit when sales mix is changed.
To know what will be the impact of expansion plan on CVP relationship

OBJECTIVE 1

31

TABLE 4.1: TABLE 1 SHOWING TOTAL PURCHASE OF THE SULFEX

Year
Total Purchase (Rs in crores)
2010-2011
99.72
2011-2012
115.69
2012-2013
135.12
(Source: Reports of SULFEX)

% Changes in Purchase
100.00%
127.54%
148.96%

GRAPH 4.1: GRAPH SHOWING PERSANTAGE CHANGES IN

TOTAL
PURCHASE

% Changes in Purchase
160.00%
140.00%
120.00%

% Changes in
Purchase

100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
2010-2011 2011-2012 2012-2013

ANALYSIS
Total Purchase: The above table interpret that the total purchase by taking base
year as-2010-11 On the basis of this, the total purchase in the year 2011-12 it has
been increased by 24.54%. and also it has been tremendously increased to 48.96%
in the year 2012-2013.
INTERPRETATION
Total Purchase: The Above Graph it Reveals that total purchase has been upward
trend in the purchase of raw material by the company from year to year. And
company also earned maximum profit.

32

TABLE 4.2: TABLE 2 SHOWING PRIME COST OF THE SULFEX

Year

Prime Cost (Rs in

Crores)
2010-2011 127.23
2011-2012 137.11
2012-2013 185.37
(Source: Reports of SULFEX)

% Changes in Prime Cost

100.00%
128.76%
174.08%

GRAPH 4.2: GRAPH SHOWING PERCENTAGE CHANGES IN PKIME

COST

% Changes in Prime Cost

180.00%
160.00%
140.00%
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%

% Changes in Prime
Cost

ANALYSIS
From the above table, it reveals That the Prime cost in the year 2011-2012
was 128.76 % increased compare to base year 2010-2011. But from the year 2010 to
2013 it has been tremendously increasing every year. In the year 2012-2013 it has
been shown as 74.08%, hence the Total Prime Cost have been increased.
INTERPRETATION
The above Graph, it interpret that the prime cost has been increased due to
increase in purchase of "C" grade coal. If "C" grade coal which often produced

33

more waste, it is advisable to the organization to maintain and reduce the total direct
wages. Compared to the previous year the prime cost have increased due to increase
in the cost of raw material and direct wages.
TABLE 4.3: TABLE 3 SHOWING TOTAL FACTORY OVERHEAD
Year

Total Factory Overhead % Changes in Total Factory

2010-2011
2011-2012
2012-2013

(Rs in Crores)
5.43
6.74
10.01

Overhead
100.00%
157.11%
233.33%

GRAPH 4.3: GRAPH SHOWING PERCENTAGE CHANGES IN TOTAL

FACTORY

% Changes in Total Factory Overhead

250.00%
200.00%
150.00%

% Changes in Total
Factory Overhead

100.00%
50.00%
0.00%

ANALYSIS
From the above table it shows that the Total Factory Overhead in the year
201l-20l2 was 57.11% increased compare to base year 2010-2011. But from the
year 2010 to 2013 it has been tremendously increasing every year. In the year 20122013 it has been shown as; 113.33%, hence the Total Factory Overhead have been
increased.
INTERPRETATION

34

The Above Graph reveals that the total factory overhead has been increased
due to increase in purchase, if"C1' grade coal which often produced more waste.
Hence, it is advisable to the organization to maintain and reduce the total works
overheads. Compared to the previous year the factory expenses have increased due
to increase in me cost of raw material and factory stores and spares.
TABLE 4.4: TABLE 4 SHOWING OFFICES AND ADMINISTRATIVE
Year

Office and Administrative % Changes in Office and

Overhead (Rs in crorcs)

2010-2011
2.11
2011-2012
2.50
2012-2013
2.73
(Source: Reports of SULFEX)

Administrative
100.00%
163.39%
178.43%

GRAPH4.4: GRAPH SHOWING PERCENTAGE CHANGES IN TOTAL

COST OF PRODUCTION

% Changes in Office and Administrative

200.00%
150.00%
% Changes in Office
and Administrative

100.00%
50.00%
0.00%

ANALYSIS
From the above table, it shows that the total office administration overheads
63.39% was in the year 2011-2012. It has been increased to 78.43% in the year
2012-2013. Thus the total office and administration overheads have been increased
from year to year.
INTERPRETATION

35

The Above Graph reveals that there is. a variation in office and
administration overheads. It is advisable to the organization to pay the managers on
the basis of value created and added to the organization. There should be sufficient
safety measures to be adopted while handling the machines or while work. The
interest burden of the organization can be reduced by early repayment of loan to
NDDB and to the majority extent use the reserves and surplus in
applying/allocating the funds.
But in year 2012-2013 expenses have decreased than the expected because
in that year they acquired land expansion activities have been done. The amount
decreased in cost of production from the year 2(U 1-2012 to 2012-2013
TABLE 4.5: TABLE 5 SHOWING SELLING AND DISTRIBUTION
OVERHEAD
Year

Selling & Distribution

% Changes in Selling & Distribution

Overhead (Rs in crores)

2010-2011
37.73
2011-2012
60.24
2012-2013
60.40
(Source: Reports of SULFEX)

Overhead
100.00%
219.45%
220.04%

GRAPH 4.5: GRAPH SHOWING PERCENTAGE CHANGE IN COST OF

SALES

% Changes in Selling & Distribution Overhead

250.00%
200.00%
% Changes in Selling
& Distribution
Overhead

150.00%
100.00%
50.00%
0.00%

36

ANALYSIS
From the above table, it is found that there is an increase in selling and
distribution overheads from the year to year. But it had been increased in selling
and distribution overhead from the year 2011-2012 to 2012-2013 is 120.04%. it
reveals that the Amount of Selling and distribution overhead is increasing year
by year because for more production and demand.
INTERPRETATION
The above Graph it interprets that the selling and Distribution overheads
have been increasing from year to year because after a product is established well in
market and when product becomes household name then there may be much
expenses on marketing and distribution likewise MYSORE SANDAL brand is also
a households name m these days as they are serving people from with good quality
product.
TABLE 4.6: TABLE 6 SHOWING NET PROFIT AND TOTAL SALES OF
THE SULFEX
Year

(Rs in crores)

Net Profit
2010-2011
5.11
2011-2012
13.46
2012-2013
21.75
(Source: Reports of SULFEX)

Total Sales
181.06
231.12
286.14

GRAPH 4.6: GRAPH SHOWING CHANGE IN NET PROFIT

37

Net Profit
25
20
Net Profit

15
10
5
0
2010-2011

2011-2012

2012-2013

ANALYSIS
From the above table it found that the net profit was 5.11 crores in the year
2010-2011 but it has tremendously increased 13.46 crores in the year 2011-2012
and the net profit increased 21.75 crores in the year 2012-2013.

INTERPRETATION
The above Graph it infer that the profit is increasing from year to year
because of good sales planning of the company and also due to increased selling
price per unit. Profit is lowest in the year 2010-2011, because of improper planning
and excessive purchase of raw material and other essential manufacturing items.
OBJECTIVE 2
ANALYSIS OF COST SHEET AND PREPARATION OF BUDGETED COST
SHEET
38

2.1- Budgeted cost sheet for the year 20010-11

PARTICULARS
Opening Raw material

AMOUNT
152848682

Add: Purchase

969031446

Add: Carriage inwards

277927
1122158055

Total

AMOUNT

185180599

Less: Closing stock

Direct Material Consumed
Add: Direct Wages
Prime

936977456
294179572
1231157028

Cost

1231157028

Add: Factory Overheads

36768601

Power and fuel

329090

Coal Handing Charges

3401084

Rent & Rates

4728065

Rent

2053278

Insurance

477742

Plant and Machinery Repairs

5077222

Stores and sapers consumed

6924781
59759863

Processing charges
Total
Less: Scarp

59759863

Total

34115426

Add: Opening stock of Work in progress

22921163
70954126

Less: Closing stock of Work in progress

39

Total
70954126
Work
Cost

1817028

Add: Administration Overhead

3067907

Building Repairs

3933504

Printing and Stationery

344235

Postage

509902

Subseription to Generals

3273808

Directors Travelling Expenses

88240

Legal Charges

4999633

Audit fee

21833

Security Charges

1448133

Board Meeting Expenses

1836576
21340799

Vehicle Maintains

1302111154

Directors Fee
330641731

Total
Cost of Production

317132796

21340799
1323451953

Add: Opening Finished Goods

Less: Closing Finished Goods

13508935

Cost of Goods Sold

59031105

1336960888

271862

Add: Selling and Distribution Overhead

102493145

Advertisement

35289203

Bad Debts

14427130

Sales promotions

5041058

Carriage outwards

160958395

C & F Charges

377511898

Octroi Charges
Excise Duty
Total

377511898
Cost of Sales (Total Cost)

40

1714472786

Profit
sales

96208841
1810681627
Table 2.1- STANDARD COSTING FOR THE YEAR END 2010-11
(Source: standard cost sheet and actual cost sheet)
In
Rs

PARTICULAR
Prime cost
Factory cast
Administrative cost
Cost of goods sold
Total cost

BUDGETED COST
1366584301
1445343381
1469031668
1484026586
1903064792

ACTUAL COST
1231157028
13Q2H1L54
1323451953
1336960888
1714472786

VARIATION
135427273
143232227
145579715
147065698
188592006

GRAPH 2.1 STANDARD COSTING FOR THE YEAR 2010-11

(Rs in crores)
25
20
15
10
5
0
2010-2011

2011-2012

2012-2013

ANALYSIS
From the above table it found that the Prime cost was decreased i.e, Rs
135427273, Factory cost was Rs 143232227, administrative cost was Rs
145579715, the cost of goods sold varies from budgeted to actual cost i.e,Rs
147065698.
INTERPRETATION
41

The above graph shows that there is a positive variance in all the cost, its
actual cost does not loss the standard cost the company having efficient control over
the actual cost.

2.2-Budgeted cost sheet for the year 2011-12

PARTICULARS
Opening Raw material

AMOUNT
185180599

Add: Purchase

1226935401

Add: Carriage inwards

221106
1412337106

Total

AMOUNT

242852687

Less: Closing stock

Direct Material Consumed
Add: Direct Wages
Prime

1169484419
301713848
1471198267

Cost

1471198267

Add: Factory Overheads

36072922

Power and fuel

324301

Coal Handing Charges

5376625

Rent & Rates

4816392

Rent

2068223

Insurance

371184

Plant and Machinery Repairs

8714698

Stores and sapers consumed

Processing charges

9851032
67595377

Total

3714987

Less: Scarp

63880390

Total

34115426

Add: Opening stock of Work in progress

22921163
75074653

Less: Closing stock of Work in progress

42

Total

75074653
Work

1546272920

Cost
Add: Administration Overhead

2592327

Building Repairs

2454999

Printing and Stationery

4117125

Postage

233830

Subseription to Generals

1060080

Directors Travelling Expenses

5485694

Legal Charges

88240

Audit fee

4819205

Security Charges

29382

Board Meeting Expenses

2567243

Vehicle Maintains

1868957
25317082

Directors Fee
Total

25317082
Cost of Production

317132796

1571590002

219032392

Add: Opening Finished Goods

Less: Closing Finished Goods

98100404

Cost of Goods Sold

1669690406
42700589

Add: Selling and Distribution Overhead

37760

Advertisement

152276263

Bad Debts

45404667

Sales promotions

16457515

Carriage outwards

5263306

C & F Charges

192794268

Octroi Charges

454934368

Excise Duty
Total

454934368
Cost of Sales (Total Cost)

43

2124624774

Profit

186608023

sales

2311232797
Table 2.1- STANDARD COSTING FOR THE YEAR END 2010-11
In

Rs
PARTICULAR
BUDGETED COST
ACTUAL COST
Prime cost
1588894128
1471198267
Factory cast
1669974754
1546272920
Administrative cost 1697317202
1571590002
Cost of goods sold
1803265638
1669690406
Total cost
2294594756
2124624774
(Source: standard cost sheet and actual cost sheet)

VARIATION
117695861
123701834
125727200
133575232
169969982

GRAPH 2.2 STANDARD COSTING FOR THE YEAR 2011-12

Chart Title
10
9
8
7
6
5
4
3
2
1
0

ANALYSIS
From the above table it shows that the Prime cost was decreased i.e, Rs
117695 861, Factory cost was Rs 123701834 , Administrative cost was Rs
125727200, the cost of goods sold varies from budgeted to actual cost i.e, Rs
133575235.

44

INTERPRETATION
In tills year SULFEX has a positive Variance it does not affect the profit
position of the company. Compare to last year variances of all overhead has been
decreased because of effective control over cost.
2.3 - Budgeted cost sheet for the year 2012-13
PARTICULARS
Opening Raw material

AMOUNT
242852687

Add: Purchase

1410128089

Add: Carriage inwards

159041
1653139817

Total

AMOUNT

179225785

Less: Closing stock

Direct Material Consumed
Add: Direct Wages

1473914032
320912715
1794826747

Prime Cost
Add: Factory Overheads

1794826747
50980071

Power and fuel

186229

Coal Handing Charges

7086525

Rent & Rates

5229541

Rent

2738015

Insurance

2995050

Plant and Machinery Repairs

7523157

Stores and sapers consumed

Processing charges

11753475
88492063

Total

4432823

Less: Scarp

84059240

Total

22921163

Add: Opening stock of Work in progress

27629242
79351161

Less: Closing stock of Work in progress

45

Total

79351161
Work Cost

1874177908

Add: Administration Overhead

1663742

Building Repairs

3095221

Printing and Stationery

3689247

Postage

211995

Subseription to Generals

1301463

Directors Travelling Expenses

7325070

Legal Charges

151545

Audit fee

5524223

Security Charges

60521

Board Meeting Expenses

2218150

Vehicle Maintains

2302483
27543660

Directors Fee
Total

27543660
Cost of Production

219032392

1901721568

213945635

Add: Opening Finished Goods

Less: Closing Finished Goods

5086757

Cost of Goods Sold

1906808325
70664438

Add: Selling and Distribution Overhead

1408744

Advertisement

150236150

Bad Debts

53137628

Sales promotions

18416029

Carriage outwards

5421533

C & F Charges

304933560

Octroi Charges

604218082

Excise Duty
Total

604218082
Cost of Sales (Total Cost)

Profit

2511026407
351106411

46

sales

2862132818

Table 2.3- STANDARD COSTING FOR THE TEAR END 2012-13

PARTICULAR
Prime cost
Factory cost
Administrative cost
Cost of goods sold
Total cost

BUDGETED COST
1974309422
2061595699
2091893725
2097489158
2762129048

ACTUAL COST
1794826747
1874177908
1901721568
1906808325
2511026407

VARIATION
179482675
187417791
190172157
190680833
251102641

GRAPH 2.3 STANDARD COSTING FOR THE YEAR 2012-13

Chart Title
10
9
8
7
6
5
4
3
2
1
0

ANALYSIS
From the above table it found that the Prime cost was decreased i.e, Rs
179482675, Factory cost was Rs 187417791 , Administrative cost was Rs
190172157 , tile cost of goods sold varies from budgeted to actual cost i.e, Rs
1906808333.
INTERPRETATION

47

As per the above analysis the actual is increased compare to previous year
due to lack of control over cost or increased cost of input.

OBJECTIVE-3
COST VOLUME PROFIT ANALYSIS (BREAK EVEN CHART ANALYSIS)
The break-even chart is a graphic relationship between cost, volume and
profit. It shows not only the BEP but also the effects of cost and revenue at varying
levels of sales. The break even chart is also called as volume profit graph.
Table 3.1-COMPUTATION OF PROFIT FROM THE YEAR 2010 TO 2013
(Source: Cost sheet of SULFEX )
PARTICULAR'S
Sales
TOTAL COST
Variable Cost
Contribution
FIXED COST
PROFIT

2010-11
1810681627
1714472786
774654411
1036027216
939818375
96208841

2011-12
2311232797
2124624774
1008130135
1303102662
1116494639
186608063

2012'20l3
2862132818
2511026407
774654411
2087478407
1736371996
351106411

Table 3.2 CALCULATION OF BEP FROM THE YEAR 2010 TO 2013

In Rs
PARTICULARS
2010-2011
2011-2011
BREAK EVEN SALES 1643039117 1983116588
P/V/RATIO
0.572
0.563
MARGIN OF SAFETY 168197275
331452972
(Source; Financial Statements of SULFEX )

2012-2013
2381857590
0.729
481627450

ANALYSIS
The table indicates that Margin Safety of each product for the last 3 years. In
the year 2010-11 was Rs 168197275 again it was increased from Rs 331452972 to
481627450 in the year 2011-12 & 2012-13 Respectively.

48

INTERPRETATION
Margin of Safety is increased year by year it shows as the company's
business is getting strengthened as business grown.
TABLE 3.1 SHOWING NET PROFIT AND TOTAL COST OF THE SULFEX
Year

(Rs in crores)

Net Profit
2010-2011
5.11
2011-2012
13.46
2012-2013
21.75
(Source: Reports of SULFEX)

Total Cost
25.11
21.24
17.14

GRAPH:32 GRAPH SHOWING CHANGE IN NET PROFIT FOR THE

YEAR
30
25
20

(Rs in crores) Net

Profit

15

(Rs in crores) Total

Cost

10
5
0
2010-2011

2011-2012

2012-2013

ANALYSIS
From the above table it shows that the net profit was 5.11 crores in the year
2010-13 2011 but it has tremendously increased 13.46 crores in the year 2011 -2012
and the net profit increased 21.75 crores in the year 2012-2013.
INTERPRETATION

49

From the above table it infers that the profit is highest for the year20122013 because of good control over cost and also due to decreased cost price per unit
Profit is lowest in the year 2010-2011, because of improper planning and excessive
purchase of raw material and other essential manufacturing items.

FINDINGS AND SUGGESTIONS

FINDINGS
The following are some of the findings and suggestion undertaken in SULFEX:

SULPEX has an effective control over the cost and profit.

Cost accounting system in SULFEX performs its function satisfactorily. It
provides information to the management information system department
which in turn reports to the top management. It produces reports without the

loss of tune and value.

The company performance in the year 2013-13 was good hut the cost was

increased more in 2011-13 as compared to previous year.

SULFEX is presently pursuing standard costing technique to analyses to

effectiveness of cost & cost control

SULFEX has in high profit and safety margins in last all 3 previous it shows

the good, financial position due to effective cost controlling system.

SULFEX is also getting good profit with lower risk & better operating cost.
SULFEX produce different types of mattress and subsidiary products. As it
is a manufacturing unit it maintains a separate cost accounting and finance
department. The activities of these departments includes computation of
work cost, raw material cost analysis, preparation of cost sheets, preparation
of budgets, preparation of management information reports.

SUGGESTIONS
The following are some of the recommendation to improve the cost
accounting system in Sulfex

50

 The company should increase their sales to acquire increased level of market
share in the domestic market. This may help in achieving goals: of the
organization
Increase in sales volume is not profitable to me company so, it should aim at
reducing costs and expenses before thinking of increasing the sales volume.
Attempts should be made to reduce production costs with the help of
research and development department
It is suggested to adopt just-in-time approach which not only make stores
activities effective but also eliminate unnecessary activities that involved in
the stores. This will help in control of costs.
Reduce the time gap between 2 cost sheets. At present cost sheet drawings
requires, minimum 3 months, increase the pace by effectively utilizing
computer facilities.
There is primary step for Control of selling and distribution overheads.
Attempt should be made to account for expenses in detail by type of
expenses selling and distribution function can be divided into following
activities and then account ledgers are allotted for which heading
accordingly.

Demand creation
Demand sustaining
Strategic and warehousing
Transportation
Customer financing and collection
Financial and general administration

51

CONCLUSION
From the study undertaken in SULFEX it can be concluded that cost
accounting system is essential in every manufacturing company: Cost accounting
provides information of the nature of cost data to managerial personnel for efficient
performance of their functions.
A such cost accounting is the foundation of the management information system.
It is me means to achieve its defined goals & financial goals.
As there is a huge national competition for Domestic traders, SULFEX should
reduce its cost. By the efficiency of workers and by replacing old machines
companies profit is increasing year by year.
Members use information generated under cost accounting system by
management at different levels; thus different sets of information could be
developed under cost accounting and supplied to different persons responsible for
activities in the organizations. It is used for the purpose of analysis and decision
making.
To conclude cost accounting system provides the service to aid the
managers in achievement of the goals and targets laid by the management grid its

52

effectiveness evaluated from time 10 time. The overall performance of the Cost
accounting department of SULFEX is Satisfactory.

BIBLIOGRAPHY
WEBSITES:
WWW.GOOGLE.COM
REPORTS
Company Annual Reports
Cost Reports.
BOOKS REFERRED:
Management Accounting and control system
Author: Shashi K Gupta
Cost Accounting
Author : M..N Arora (second edition)

53

COST SHEET OF SULFEX

Particulars

Amount as at

Amount as at

Amount as at

31-03-2013

31-03-2012

31-03-2011

54

Opening Raw material

242852687

185180599

152848682

1410128089

1226935401

969031446

159041

221106

277927

1653139817

1412337106

1122158055

179225785

242852687

185180599

1473914032

1169484419

936977456

320912715

301713848

294179572

1794826747

1471198267

1231157028

50980071

36072922

36768601

186229

324301

329090

Rent& Rates

7086525

5376625

3401084

Rent

5229541

4816392

4728065

Insurance

2738015

2068223

2053278

Plant & Machinery Repairs

2995050

371184

477742

Stores & Sapers Consumed

7523157

8714698

5077222

11753475

9851032

6924781

1883318810

1538793644

1290916891

4432823

3714987

1878885987

1535078657

1290916891

22921163

34115426

34115426

27629242

22921163

22921163

1874177908

1546272920

1302111154

Add: purchase
Add: carriage inwards
Total
Less: closing stock
Direct material consumed
Add:Direct wages
Prime Cost
Add: factory overheads
Power and fuel
Coal Handling Charges

Processing charges
Total
Less: Scarp
Total
Add: Opening stock of work in
progress
Less: closing stock of work in
progress
Work cost

55

Add: administration overheads

Building repairs

1663742

2592327

1817028

Printing & Stationery

3095221

2454999

3067907

Postage

3689247

4117125

3933504

211995

233830

344235

Directors Travelling Expenses

1301463

1060080

509902

Legal Charges

7325070

5485694

3273808

151545

88240

88240

5524223

4819205

4999633

60521

29382

21833

Vehicles maintains

2218150

2567243

1448133

Directors fee

2302483

1868957

1836576

1901721568

1571590002

1323451953

Add: opening finished Goods

219032392

317132796

330641731

Less: closing finished Goods

213945635

219032392

317132796

1906808325

1669690406

1336960888

70664438

42700589

59031105

1408744

37760

271862

Sales promotions

150236150

152276263

102493145

Carriage outwards

53137628

45404667

35289203

C& F Charges

18416029

16457515

14427130

Octroi charges

5421533

5263306

5041058

304933560

192794268

160958395

2511026407

2124624774

1714472786

Profit

351106411

186608023

96208841

Sales

2862132818

2311232797

1810681627

Subseription to General

Audit fee
Security charges
Board meeting expenses

Cost of production

Cost of Goods sold

Add: selling and Distribution
overhead
Advertisement
Bad debts

Excise Duty
Cost of Sales (Total Cost)

56