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ESCOLAR STATIONERY

Presented By:

Group C2

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Nature Of Activity

Located in Udupi.

Product oriented.

Produces stationery which can be used for

office purpose or educational purpose.

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Information of the Products

Books

Pens

Pencils

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Scope of Activity

Udupi and nearby areas

Offices

Schools

Retail outlets

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Departmental Division

Stores

Production

R&D

Distribution

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Production/Budgeting

The production procedure is carried out in

three different units which consists of heavy

machinery.

Each unit is allocated for one product .

Budgeting is done every year.

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Production Capacity

On the production capacity of each product is

Pencils

20,00,000

Pens 15,00,000

Notebooks 1,20,00,000

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Floor Layout

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MIXTURE

GRAPHITE

GRANULES

CYLINDRICALBLOCK

DRYING CHAMBER

LEAD INSERTED

INTO THE WODDEN

FRAME

FINAL FINISHING

PAINTING &POLISHING

FOSIL STAMPING

PACKING

PENCIL MAKING PROCESS FLOW DIAGRAM

CLAY

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Cost Allotment

Rent 500000

General Lighting 150000

Wages and Salaries 2000000

Power 1000000

Depreciation of Machinery 200000

Raw Material 25000000

Security 240000

Insurance 5000000

Transportation 2000000

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Basis for Cost Allocation

Raw material

procurement

Production R&D Maintenance Transport Office PackagingStores &

Distribution

Floor

Space(sq.

ft) 1500 45000 750 750 1800 750 1800 3600

Cost of

Machinery 12,00,000 5,00,00,000 4,00,000 90,00,000 1,00,00,000 1,25,000 5,00,000 20,00,000

HP of

Machines 150 5000 10 150 50 0 280 100

No. of

Employees 6 31 15 10 15 7 5 10

Hrs worked 2496 7920 2496 2496 7920 1920 3744 2496

No.of

Machine

Hours 3240 8640 3600 900 0 0 4320 0

Lighting

points(Nos) 15 120 10 8 20 10 10 30

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Cost Pool

Overheads Indirect/Direct Variable/Fixed

Rent Indirect Fixed

General Lighting Indirect Variable

Wages and Salaries Indirect Fixed

Power Indirect Variable

Depreciation of

Machinery Indirect Variable

Taxes Indirect Variable

Raw Material Direct Variable

Transportation Indirect Variable

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Cost Allocation

BasisRaw materialprocurement

Production Maintenance Packaging Storage &Distribution

Transport R&D Administration

RentFloor Space(sq.

ft)13405 402145 6702 16086 32172 16086 6702 6702

DepreciationCost of

Machinery2631 109619 19731 1096 43848 21924 877 274

Insurance Cost ofMachinery

65771 2740477 493286 27405 1096191 548095 21924 6851

SecurityCost of

Machinery3157 131543 23678 1315 52617 26309 1052 329

Power HP of Machines 26132 871080 26132 48780 17422 8711 1742 0

Indirect Wages

& Salaries

No. of

Employees121212 626263 202020 101010 202020 303030 303030 141414

CanteenNo. of

Employees36364 187879 60606 30303 60606 90909 90909 42424

General

Lighting

Lighting

points(Nos)10090 80717 5381 6726 20179 13453 6726 6726

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Cost Apportionment

Particulars

Raw material

procurement Production Maintenance Packaging

Storage &

Transport R&D

Administrati

onDistribution

Transport 40% - - - 60% - - -

R&D - 35% 25% 40% - - - -

Administration 10% 20% 10% 20% 10% 20% 10% -

Particulars

Raw material

procurement Production Maintenance Packaging

Storage &

Distribution Transport R&D

Administra

tion

TOTAL 1651606 56065696 10110713 878556 21813023 11451855 1238667 524153

Apportionment of

R&D 0 433533.3568 309666.6834 495466.6934 0 0 -1238667 0

Subtotal 1651606 56499229 10420380 1374022 21813023 11451855 0 524153Apportionment of

Transport 4580741.848 0 0 0 6871112.77 -11451855 0 0

Subtotal 6232348 56499229 10420380 1374022 28684136 0 0 524153

Apportionment of

Administration 74879.05059 149758.1012 74879.05059 149758.1012 74879.0505 -524153

Total 6307227 56648987 10495259 1523780 28759015 0 0 0

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Cost Absorption

Particulars Raw material

Procurement

(no.of machine

hrs)

Production

(no.of machine

hrs)

Packaging

(no.of machine

hrs)

Maintenance

(no.of machine

hrs)

Pencils 1 5 2 1

Pens 3 4 2 1

Notebooks 2 4 3 2

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Particulars Raw materialProcurement

Production Maintenance Packaging

Total Overhead

cost6307227 56648987 10495259 1523780

No.of Machine

hours 3240 8640 3240 4320

Overhead

absorption rate1946.675 6556.595 3239.277 352.267

Cost incurred

by pencils1946.675 32782.98 6478.554 352.726

Cost incurred

by pens5840.025 26226.38 6478.554 352.726

Cost incurred

by notebooks3893.35 26226.38 9717.831 705.452

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Cost of Products

ProductsDirect

Material

Overhead

costsTotal

Pencils 6000000 41560.93 6041561

Pens 11000000 38897.69 11038898

Notebooks 8000000 40543.01 8040543

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Joint Products

The production of pencils include the

production of lead pencils and colored pencils.

They incur some joint cost.Pencils

Lead Colored

Final

ProductFinal

Product

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Lead Colored

Output 1100000 150000

Sales 1095000 145000

Selling price 3.5 25

Separable costs 1641561 1400000

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Lead Colored

Sales Value 3850000 3750000

NRV value 2208439 2350000

Weightage of joint cost 0.48 0.52

Joint cost 1065840 1134160

Joint cost/unit 0.97 7.56

Total cost 2707401 2534160

Total cost /unit 2.46 16.89

INCOME STATEMENT

Sales 3832500 3625000

Cost of goods sold 2695094 2449688

Gross Profit 1137406 1175312

Gross Profit Margin 29.67% 32.42%

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Process Costing

In production of pencils there are mainly twoprocesses:

1. Lead production

2. Sandwich process In the lead production process has 2000 units of

O.S WIP @ 1050 D.M and 60% CC values 720.Theinput into the process is 5000 units @ 0.5 and theCC is Rs. 6050.A output of 6000 units istransferred after a normal loss of 6% of goodsand the closing WIP is 50% finished.

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Statement of Equivalent Units

Particulars Direct Material Conversion Cost

O.S WIP (2000) -- (0%) 800 (40%)

New goods (4000) 4000 (100%) 4000 (100%)

C.S WIP (1000) 1000 (100%) 500 (50%)

Normal Loss (360) 360 (100%) 360 (100%)

Total E.U 5360 5660

Total cost 2500 6050

cost/EU 0.466418 1.068905

Total cost/unit = 0.466418+1.068905

= 1.535323

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Statement of Cost of EU

Opening StockDM 1050Prev. Process 720

Prst. Process 855.1237

2625.124

New finished

goods

DM 1865.672

CC 4275.618

6141.29

Normal Loss 552.7161

Closing StockDM 466.4179

CC 534.4523

1000.87

Total Cost 10320

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Activity Based Costing

SNo ACTIVITY COST DRIVER

1 Modifying product characteristics No.of Man hrs in R&D

2 Receiving Raw material No.of RM receipts

3 Setup of Machine for 3 products No.of machines

4 Maintenance No.of Man hrs in Maintenance

5 Production jobs No.of Machine hrs in production

6 Administration No.of Man hrs in Administration

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