Costing Assignment on

Cadbury Chocolate
20/11/2010
Submitted by:

Name PRN No.

Amrit Pathak

Dinesh Bhat
10020241062

10020241066
2010
Naveen Kumar 10020241070

Akansha Arora 10020241089

Mohit Jindal 10020241102

Costing Assignment---20/11/2010

Cadbury India is a fully owned subsidy of Kraft Foods Inc. The combination of Kraft Foods and
Cadbury creates a global powerhouse in snacks, confectionery and quick meals.

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.

In India, Cadbury began its operations in 1948 by importing chocolates. After 60 years of
existence, it today has five company-owned manufacturing facilities at Thane, Induri (Pune) and
Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi,
Mumbai, Kolkota and Chennai). The corporate office is in Mumbai.

Financial Accounting

Financial accounts describe the performance of a business over a specific period and the state
of affairs at the end of that period. The specific period is often referred to as the "Trading
Period" and is usually one year long. The period-end date as the "Balance Sheet Date". The
format of the published financial accounts is determined by several different regulatory
elements-

Company law, Accounting standards (GAAP) and Stock Exchange.

Financial accounts concentrate on the business as a whole rather than analyzing the
component parts of the business. For example, sales are aggregated to provide a figure for total
sales rather than publish a detailed analysis of sales by product, market etc

Financial accounting is used primarily by those outside of a company or organization. Financial

reports are usually created for a set period of time, such as a fiscal year or period. Financial
reports are historically factual and have predictive value to those who wish to make financial
decisions or investments in a company. Management Accounting is the branch of Accounting
that deals primarily with confidential financial reports for the exclusive use of top management
within an organization. These reports are prepared utilizing scientific and statistical methods to
arrive at certain monetary values which are then used for decision making. Such reports may
include:

 Sales Forecasting reports

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Costing Assignment---20/11/2010
 Budget analysis and comparative analysis
 Feasibility studies
 Merger and consolidation reports
Financial Accounting, on the other hand, concentrates on the production of financial reports,
including the basic reporting requirements of profitability, liquidity, solvency and stability.
Reports of this nature can be accessed by internal and external users such as the shareholders,
the banks and the creditors.

Management Accounting
Management accounts are used to help management record, plan and control the activities of a
business and to assist in the decision-making process. They can be prepared for any period (for
example, many retailers prepare daily management information on sales, margins and stock
levels).

Managerial accounting is used primarily by those within a company or organization. Reports

can be generated for any period of time such as daily, weekly or monthly. Reports are
considered to be "future looking" and have forecasting value to those within the company.

Cadbury’s manufacturing unit in India

Thane Dist. Solan – 173205,

Cadbury India Ltd. Himachal Pradesh
1, Pokhran Road,
Eastern Express Highway, Gwalior
Thane – 400606, Maharashtra Cadbury India Ltd.
Plot No.25, Malanpur,
Pune Industrial Area, Village Gurikha,
Cadbury India Ltd. Tehsil Gohad, Gwalior – 477116
Induri Factory, Madhya Pradesh
Talegaon Dabhade,
Pune – 410507 Bangalore
Cadbury India Ltd.
Himachal Pradesh Jodi Hanumanapalya,
Cadbury India Ltd. Mahadevapura Post,
Works: Hadbast No.199, Mangalore Road,
Village Sandholi Baddi, Nelamangala – 562123
Tehsil – Nalagarh, Bangalore, Karnataka

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Costing Assignment---20/11/2010

The Product: Cadbury’s Dairy Milk Chocolate

Drying: After fermentation of the fruit, the raw cocoa still contains far too much water; in fact
about 60%. Most of this has to be removed.

Cleaning: The raw cocoa is thoroughly cleaned by passing through sieves, and by brushing.
Finally, the last vestiges of wood, jute fibers, sand and even the finest dust are extracted by
powerful vacuum equipment

Roasting: The subsequent roasting process is primarily designed to develop the aroma. The
entire roasting process, during which the air in the nearly 10 feet high furnaces reaches a
temperature of 130 °C, is carried out automatically.

Crushing and shelling: The roasted beans are now broken into medium sized pieces in the
crushing machine.

Blending: The crushed beans are weighed and blended according to special recipes.

Grinding: The crushed cocoa beans, which are still fairly coarse are now pre-ground by special
milling equipment and then fed on to rollers where they are ground into a fine paste. The heat
generated by the resulting pressure and friction causes the cocoa butter (approximately 50% of
the bean) contained in the beans to melt, producing a thick, liquid mixture.

Cocoa Powder: After the cocoa butter has left the press; cocoa cakes are left which still contain
a 10 to 20% proportion of fat depending on the intensity of compression.

Kneading: In the case of milk chocolate for example, the cocoa paste, cocoa butter, powdered
or condensed milk, sugar and flavouring - maybe vanilla - go into the mixer, where they are
pulverized and kneaded.

Rolling: Depending on the design of the rolling mills, three or five vertically mounted steel
rollers rotate in opposite directions. Under heavy pressure they pulverise the tiny particles of
cocoa and sugar down to a size of approx. 30 microns.

Conching: But still the chocolate paste is not smooths enough to satisfy our palates. But within
two or three days all that will have been put right. For during this period the chocolate paste
will be refined to such an extent in the conches that it will flatter even the most discriminating
palate.

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Costing Assignment---20/11/2010
Performa of the Cost Sheet:
Particulars Cost Per Total Cost
Unit

Raw material 5.16 23,20,000

Sugar = 3,00,000
Cocoa Butter= 3,00,000
Cocoa Solids = 3,20,000
Peanuts = 2,00,000
Milk Solids = 2,00,000
Chocolate Coated Rasins= 4,00,000
Almonds= 3,00,000
Vanilin= 1,00,000
Honey= 50,000
Boston Baked Bean= 1,50,000

1.56 7,00,000
Direct Labour= 7,00,000

0.53 2,42,500
Carriage on Material= 2,42,500

Prime Cost:- 7.25 32,62,500

2.35 10,57,500
Factory expenses:-
Fixed –
Depreciation on Plant and
Machinery= 2,57,500
Rent= 1,50,000
Power and Consumable Stores=
1,50,000
Factory Insurance= 1,50,000
Supervisors Salary= 50,000
Variable –
Electricity Charges= 50,000

Power and Consumable Stores=

1,00,000
Running Expenses of Machine=
1,50,000

Factory Cost:- 9.60 43,20,000

19,80,000

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Costing Assignment---20/11/2010
4.40
Office and Administration Expenses
Office staff salary= 10,00,000
Rent= 80,000
Computer= 1,20,000
Furniture= 3,00,000
Telephone= 10,000
Carriage outward= 20,000
Depreciation on furniture= 50,000
Salaries to administrative staff=
3,70,000
Rent, rates, and taxes= 30,000

Office and Administration Cost:- 14.00 63,00,000

9,00,000
Advertisement (Print and by local
T.V. channels)= 4,00,000
2.00
Petrol= 1,00,000
Delivery vehicles= 2,50,200
Maintenance of delivery vehicles=
49,800
Packing rates= 50,000
Bad Debts written off= 1,00,000
16.00 72,00,000
Total cost

Net Profit (20% on selling price)

4.00 18,00,000

Sales 20.00 90,00,000

References:

1. Websites:
a. www.cadburyindia.com/
b. www.indiastudy.com
c. www.chocolateclassesandmaterial.com
2. Books:
a. Book of Cost and management accounting by Mumbai University,(
Manan Prakashan)

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