Costing Project

CHAPTER I
1 INTRODUCTION
1.1 COMPANY PROFILE
Gupta Paints And Chemical is one of the largest automotive paint company in West Bengal and
it operates in three states namely West Bengal,Orrisa and Jharkhand and has one paint
manufacturing facilities in Kolkata and is setting up a new larger modern plant in Kolkata
The company has come a long way since its small beginnings in 1982. Two brothers who were
willing to mark their foot in the world of paint industry and thus ended up setting up a
partnership firm. Over the course of 27 years, Gupta Paints and Chemical became a leading
market player in the unorganized paints industry in Kolkata and periphery. Driven by its strong
consumer-focus and innovative spirit, the company has been the market leader in paints since
1982. Today it is double the size of any other unorganized paint company in Kolkata. Gupta
Paints And Chemical manufactures a wide range of paints for Decorative and Industrial use.
Vertical integration has seen it diversify into products such as Automotive Paints, synthetic
paints, automotive and synthetic primers, stoving paints and thinners.
Satish Gupta and Ashish Gupta are the two brothers who started the company.Satish Gupta who
after finishing his studies joined his family business and Ashish Gupta who was pursuing charted
accountant course, in the mean time they met vikram sarkar who was earlier working with
Shalimar paints who motivated them to venture out into paint industry. This was how the
company was started and now the company plans to expand its horizon by becoming a national
level player in the paint industry.
VISION: -
► To be a vibrant and growth oriented Automotive paint Company.

► To be of national player in the paint industry.
► To be committed to attain sustained excellence in performance, safety, standards,
Customer care and environment management.
► To be provide a fillip to the development of the region.
SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

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MISSION: -
● To develop core competencies in manufacturing automotive paints products with

A focus on achieving international standards on safety, quality and cost.
● To penetrate the paint market throughout the nation.
● To create a pool of knowledgeable and inspired employees and ensure their Professional and
personal growth.
● To contribute towards the development of the region.
NEXT YEAR PROJECTIONS
 Introducing Water – based Paints.
 Repositioning of existing Brands in Rural Market.
 Broadening of Distribution Network.
 Adding more choices for shades and effects.
 Enhancing Better Quality
 Demand will be generated through the new constructions coming in housing

and industries.

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Paint is used to protect, preserve, decorate, or add functionality to an object or surface by
covering it with a pigmented coating. Examples of protection are the covering of metal to retard
corrosion, and the painting of a house to help protect it from the elements. An example of
decoration is to add festive trim to a room's interior. Paint may be used to add functionality by
modifying light reflection or heat radiation of a surface. Another example of functionality is the
use of color to identify hazards or to identify the function of equipment, such as pipelines or
military ammunition.
As There are many types of artists' paints: for example, oils, watercolor, acrylic, gouache
etc.Paint can be applied to almost any kind of object. It is used, among many other uses, in the
production of art, in industrial coating, as a driving aid (road surface marking), or as a barrier to
prevent corrosion or water damage. Paint is a semi finished product, or intermediate good as the
final product is the painted article itself.
Paint can also be mixed with glaze to create various textures and patterns. This process is
referred to as faux finish and is quite popular with discerning homeowners, architects, interior
designers, and scenic designers.
Cave paintings drawn with red and yellow ochre, hematite, manganese oxide and charcoal may
have been made by early Homo sapiens as long as 40,000 years ago.
Ancient painted walls at Denerdera, Egypt, which were exposed for many ages to the open air,
still possess a perfect brilliancy of color, as vivid as when they were painted about 2,000 years
ago. The Egyptians mixed their colors with some gummy substance, and applied them separated
from each other without any blending or mixture. They appeared to have used six colors: white,
black, blue, red, yellow, and green. They first covered the field entirely with white, upon which
they traced the design in black, leaving out the lights of the ground color. They used minimum
for red, and generally of a dark tinge.
Pliny mentions some painted ceilings in his day in the town of Ardea, which had been executed
at a date prior to the foundation of Rome. He expresses great surprise and admiration at their
freshness, after the lapse of so many centuries.
Paint was made with the yolk of eggs and therefore, the substance would harden and stick onto
the surface applied. Some red paint was made of blood of animal. Pigments were made from
plants and sands.

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INDIAN PAINT INDUSTRY SENARIO

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1.2ABOUT THE PROJECT WORK
The project work has been undertaken for fulfillment of course requirement for
completion of two year Masters of Business Administration program from Sikkim Manipal
Institute of Technology.
I selected Punjab national bank, Bihar sharif Nalanda Bihar to carry out the project work.
I was assigned to do my project on the topic “Working capital assistance by P.N.B at Punjab
National Bank” .The reason behind the selection of this topic is the role of working capital has
gained tremendous importance and is of utmost importance for the development and marketing
of the business. The P.N.B is one of the leading bank of banking industry of India . With the
opening of market and in the era of competitiveness of lot of national and multinational banks are
coming in the field of baknking sector and as such the banks have to ensure the satisfaction of the
customers and also the companies have to make sure of a safe and healthy environment of their
staff along with making a profit. Organizations need to establish their own standards for safe
practice tailored to their business demands and requirements. It should be made sure that the
workforce has the correct level of knowledge and skill to operate safely and that a safe and
healthy working environment is maintained. It is so due to the fact that it is the manpower which
gives an edge to the organization over its counterpart.
Since banks main activity is to collect the money from the customer and lend it to the place
where it is more secured and provides the optimum return. To select such place it is very
necessary for the banks, that before lending the money or proving the loan to the customer, bank
must go for the full information about the firm or to the person whom it is lending the money.
Then only it will succeed in lending the money to the place where they will get the maximum
return.

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A. OBJECTIVE OF THE STUDY:
►The primary objective of the study is to estimate the security of the

investment or loan provided by Punjab National Bank.
► the other primary objective of the study is to estimate the profit made by the company by
Selling its product under the prevailing manufacturing condition.
►Based on the above objective the other objective is to work out the way to
Reduce the cost of the products which are manufactured at Gupta Paints and
Chemicals.
Provide required data for fixing sales price for submitting tenders, quotations etc
B. SCOPE OF THE STUDY:
The study is only confined to Gupta Paints and Chemicals .In the present
competitive business scenario each and every organization are looking for ways to gain
an competitive advantage over their competitors so as to maximize their penetration in
the market. The best possible ways to gain a competitive advantage is by achieving an
optimal and the minimal cost of production which would give the company an edge over
their competitors. The company could sell its products at a cheaper rate compared to its
competitors which would help the company to penetrate the market.
Hence this project tries to work out the cost of production of paints at
Gupta Paints and Chemicals and compare it with its competitors and try to find out the
ways to minimize the cost of production and how the company could penetrate the
market.

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CHAPTER II
METHODOLOGY
2.1 Research Design

For an effectiveness of systematic research a sound plan is needed. The plan is called a
research design. It is planning a strategy of conducting research. It plans to what is to be
observed, how to record observations. Research design is thus a detailed plan of how the goal
of the research will be achieved. So for getting valid results out of the research, the research
has been systematically and technically arranged and implemented.
 In my first stage I thought and decided to study in brief the Theoretical

Overview as what is Working Capital and Working Capital management.
 After knowing in brief about the Working Capital and Working Capital management in
general, I decided to know as how working capital is calculated and how Punjab National
Bank helps the small scale industries in maintain those working capital and what are the
steps taken by bank for the security of the loan.
2.2 METHODOLOGY OF THE STUDY:
(1) The present study is based on secondary data collected from the
Books of accounts and bills and vouchers of Punjab National Bank
Review of last year’s annual Reports.
(2) To a small extent, this study is based on primary data collected

Through personal interview of the employees, dealers and management
personnel.

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2.3 Selection of the Sample
This study being analytical in nature was developed with the help of
secondary data collected from the statistics obtained from the Punjab
National Bank. Many reference books and annual reports were also
resources of data. Primary data was used to confirm the findings of
secondary data. Informal discussions with concerned executives, dealers and
the faculty members were the major sources of the primary data.
2.4 SAMPLING FRAME
A sampling frame may be defined as the listing of the general components of the individual units
that compromise the defined population.
a) People: The people include all the empoyees, manager and people from top
management of P.N.B.
b) Activities: Activities included observation of work in different departments and
having hands on experience at work.
2.5 SAMPLING TECHNIQUE
• The Probability Sampling Method.

• Tabulation Method for analysis.
• Graphical representation of Data

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2.6 Sources of Data
2.6.1 PRIMARY DATA
The project doesn’t involve any Primary data and the objective also didn’t
require any Primary data. Thus the research is based on the secondary data
attached with the report. The only Primary data used was to confirm the
findings of secondary data. Informal discussions with concerned executives,

dealers and the faculty members were the major sources of the primary data.
2.6.2 SECONDEARY DATA

The project involves the working capital assistance provided by Punjab National Bank to the
small scale industries of the local market of Bihar Sharif, so the entire project is based on
Secondary Data collected from the Financial Department of the company. The data collected
are:-
• Financial Statements
• Bill and vouchers.
• Informal discussion with the concerned executives and dealers.
The main advantages of Secondary Data are that the information obtained
relates to Original figures of the Company. It is not influential by anyone
and it is not biased
2.7 Tools of Data Analysis

The tools of data analysis are Graphs and Tables, which are prepared by using simple
mathematical and statistical tools.

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2.8 Findings
 The cost of production is fairly good, but the sales are being hampered by the production
constraint faced by the company.
 The products offered by Gupta Paints are fairly cheaper compared to the the
price offered by its competitors.
 The company is making a profit of 5%, along with this the dealers are also
being allowed a 10% discounts on all products.
 The efficiency of the workers is affected by the informal ambience prevailing in the
factory.
 The other factor found out was that the company has an undeveloped distribution channel
which concentrates only in Kolkata and surroundings, because of which the people are
not aware of the brand, which hinders the sale.
 The company is unable to match the demand with the supply because of production
constrain.
 The company follows the manual method to pack the paints.

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2.9 LIMITATION OF THE STUDY:
Every study conducted may have certain shortcomings and unfortunately ours is also a
similar case. A few errors have crept in despite our best efforts to avoid them but it is
expected that still our study and findings are very much relevant.
• The greatest limitation is the time factor. To study the working capital assistance by
Punjab National Bank, requires a lot of times, it is not possible to cover all the working
capital assistance provided by P.N.B in such a short span of time i.e. 10 weeks (2.5)
months.
• Some of the Information about the company has not been disclosed by the company due
to their policies; hence some of the data are based on assumption.
• Huge Mathematical Calculations is involved in working capital analyasis analysis which

could lead into some calculation errors.
.
• The other limiting factor was the lack of cooperation from the management of the
organization.
• There was not sufficient time to measure the effectiveness of the recommendation.

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CHAPTER III
FINDINGS AND ANALYSIS
CONCEPTUAL DEFINATION
Working Capital: The term working capital refers to the capital required to carry on the
daily activities of the business. It is very vital for any sort of business.
There are two concept of working capital:
1. Gross working capital.
2. Net working capital.
Gross Working Capital: It refers to the firms total investment in current or circulating
assets.
Net Working Capital: The term net working capital has been defined in two different
ways:
1. It is the the excess of current assets over current liabilities. Or we may define it as the
difference between current assets and current liabilities.
2. It is that portion of firm’s current assets which is financed by the long term fundd of the
company.
Thus figouuraticaly we can express net working capital in the following ways:
Net working capital = Current assets – Current liabilities.

.
Need for working capital : since we know that basic objective of every business is to
maximize the wealth of shareholders’. This can be possible only when the revenue of sales is
maximized. However, sales do not convert into cash instantaneously. There is always a time gap
between the sale of goods and receipt of cash. Working capital is required for this period in order
to sustain the sales activity. In case adequate working capital is not available for this period, the
company will not be in a position to sustain the sales since it may not in a position to purchase
raw materials, pay wages and other expenses required for manufacturing the product to be sold.
The time gap between the sales and their actual realization in cash is
technically termed as ‘operating cycle’ of the business.
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--------------------------------------------------------------
Operating cycle of a business can be represented in the chart form as follows:
Account
Receivable
Cash Finished
Goods
Raw Work In
Material Progress
Types of working capital : Working capital can be divided into two category on the
basis of time:
1. Permanent Working Capital.

2. Temporary Working Capital.
Permanent working capital: This refers to that minimum amount oof investment in
all current assets which is required at all times to carry out minimum level of business activities.
Temporary working capital: The amount of such working capital keeps on

fluctuating from time to time on the basis of business activities. In other words, it represents
additionalcurrent assets required at different times during the operating year.

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estima
Estimation of working capital: In order to determine the amount of working capital

needed by a firm, a number of factors viz. production policies, nature of business, length of
manufacturing process, credit policies, rapidity of turnover, seasonal fluctuation are to be
considered by the finance manager. Besides this a finance manager can adopt the following
techniques for assessing the working capital requirements of a firm.
1.Components of working capital approach: In this approach every

component of current assets and current liabilities is being estimated. Since we know that
working capital is the excess of current assets over its current liabilities. If we estimate the every
components of current assets and current liabilities, we can estimate net working capital.
2.Percent of sales approach: This is the most simple and traditional approach of
estimating the working capital requirements. On the basis of past experience between sales and
working capital requirements, a ratio can be determined for estimating the working capital
requirements in the future.
3.Operating cycle approach: According to this approach, the requirement of working

capital depends upon the operating cycle of the business. The operating cycle begins with
acquisition of raw materials and end with collection of receivables. It may broadly classified into
four stages.
(1) Raw material s and stores storage stage.

(2) Work in process stage.
(3) Finished goods inventory stage.
(4) Receivables stage.

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Symbolically, the duration of working capital cycle can put as follows:
O = R+W+F+D-C.
Assessment of working capital requirement by Shiva Sagar Rice

Mill Private LTD
Operating Statement as per the p/l account for the year ending.

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Assessment of working capital requirement by Shiva Sagar Rice
Mill Private LTD
Operating Statement as per the p/l account for the year ending.

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2010 2011 2012 2013 2014 2015
Proj Proj Proj Proj Proj proj
Operating statement
1. Gross sales
Domestic sales 318.23 371.26 424.30 424.30 424.30 424.30

Export sales 00000 00000 00000 00000 00000 00000
Total 318.23 371.26 424.30 424.30 424.30 424.30
Less: excise duty 00000 00000 00000 00000 00000 00000
Net sales 318.23 371.26 424.30 424.30 424.30 424.30
2.Cost of sales
i.Raw materials( incl.

stores and other items
used in process of
manufacture)
Indigenous 277.63 323.90 370.18 370.18 370.18 370.18
Imported 000.00 000.00 000.00 000.00 000.00 000.00
ii. others spares
Imported 000.00 000.00 000.00 000.00 000.00 000.00
Indigenous 000.00 000.00 000.00 000.00 000.00 000.00
iii. power & fuel 6.05 7.06 8.06 8.06 8.06 8.06
iv. direct labour(factory

wages & salary) 4.20 4.41 4.63 4.86 4.86 4.86
v. other manufacturing
expences 2.62 2.93 3.05 3.08 3.08 3.08
vi depreciation 7.92 7.92 7.92 7.92 7.92 7.92
subtotal (item i to iv ) 298.62 346.22 393.84 394.10 394.10 394.10
vii. add : opening stock 000.00 000.00 000.00 000.00 000.00 000.00
in process
298.62
sub-total SIKKIM MANIPAL INSTITUTE 346.22 393.84 394.10 394.10 394.10
OF TECHNOLOGY, MAJITAR, RANGPO -737132
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viii. deduct closing stock
in process 000.00 000.00 000.00 000.00 000.00 000.0017
Cost of production 298.62 346.22 393.84 394.10 394.10 394.10

Shiv Sagar Rice Mill Private Ltd.
As per balance sheet Dated
2010 2011 2012 2013 2014 2015

proj proj proj proj proj proj

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LIABLITIES
CURRENT LIABLITIES
1. Short term borrowings

from banks (including
bills purchased and
discount and the
excess borrowing
placed on repayment
basis)
(i) From applicant bank 15.75 15.75 15.75 15.75 15.75 15.75
(ii) From other banks 0.00 0.00 0.00 0.00 0.00 0.00
Sub-total A: 15.75 15.75 15.75 15.75 15.75 15.75
2. Short term borrowing 00.00 0.00 0.00 0.00 0.00 0.00

from others
3. Sundry
creditors(trade) 00.00 0.00 0.00 0.00 0.00 0.00
4. Sundry
creditors(capital 2.78 3.24 3.70 3.70 3.70 3.70
goods)
5. Advances payments 0.32 0.36 0.42 0.42 0.42 0.42
from customers
6. Provision for taxation 0.00 0.00 0.00 0.00 0.00 0.00
7. Dividend
payable(including tax 0.00 0.00 0.00 0.00 0.00 0.00
thereon)
8. Other statutory
liabilities(due within 0.00 0.00 0.00 0.00 0.00 0.00
one year)
9. Deposits/instt. On
term
loans/DPGS/debenture 0.00 0.00 0.00 0.00 0.00 0.00
s etc.
10. Other current 0.00 0.00 0.00 0.00 0.00 0.00

liabilities and prov.
Sub-total B: 3.10 3.60 4.12 4.12 4.12 4.12

11. Total Current Assets
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18.85 19.35 19.87 19.87 19.87 19.87
TERM LIABLITIES
12. Debentures (not

maturing within one
year) 0.00 0.00 0.00 0.00 0.00 0.00
13. Preference
shares(redeemable
after one year) 0.00 0.00 0.00 0.00 0.00 0.00
14. Term loan from(excl.
installments, payable
within one year) 61.95 56.95 51.95 46.95 41.95 36.95
15. Term
deposits(repayable
after year) 0.00 0.00 0.00 0.00 0.00 0.00
16. Other term
liabilities(unsecured
loan) 3.41 2.73 2.05 1.37 0.68 0.00
17. Total term liabilities
18. Total outside 65.36 59.68 54.00 48.32 42.63 36.95
liabilities (items
11+17) 84.21 79.03 73.87 68.19 62.50 56.82
NET WORTH
19. Ordinary share capital

20. General reserve 30.00 30.00 30.00 30.00 30.00 30.00
21. Revaluation reserve 13.02 23.92 36.66 48.10 59.32 70.46
22. Other reserves 0.00 0.00 0.00 0.00 0.00 0.00
23. Surplus 0.00 0.00 0.00 0.00 0.00 0.00
24. Net worth 0.00 0.00 0.00 0.00 0.00 0.00
25. Total liabilities 43.02 53.95 66.66 78.10 89.32 100.46
127.23 132.98 140.53 146.29 151.82 157.28
Thus from the above calculation we can see that the total liabilities of the business
is 127.23 lacs rupees. The liabilities consists of current liabilities, Term liabilities,
and the net worth of the business that is the owner’s capital. Thus
Total Liabilities = C.L + T.L + N.W. = 18.65 + 65.36 + 43.02 = 127.23.
This can be shown with the help of following chart grph.

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C.L
T.T.L
Net Worth
C.L
T.L
3rdQtr
4thQtr
2010 2011 2012 2013 2014 2015

proj proj proj proj proj proj

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CURRENT ASSETS
26. Cash & bank balances

6.48 6.23 6.77 6.54
27. Investment other than
long term
i. Govt. and other trustee

- - - - -
securities.
- - -
ii. Fixed deposit with bank - -
- - - - -
iii. Others
28. i. Receivables other

than defferd and export
4.24 4.95 5.66 5.66 5.66 5.66
receivables including
bills purchased and
discount by banks.)
ii. Export
receivables(including
0.00 0.00 0.00 0.00 0.00 0.00
bills purchased and
discounted by banks)
29. Installment of deffered

0.00 0.00 0.00 0.00 0.00 0.00
receivables (due within
one year)
19.86 23.17 26.48 26.84 26.48 26.48
30. Inventory
i. Raw material
(including store and
13.88 16.2 18.51 18.51 18.51 18.51
other items used in
the process of
manufacture)
1.00 1.16 1.33 1.33 1.33 1.33
ii. Stock in process
4.98 5.81 6.64 6.64 6.64 6.64
iii. Finished goods
- - - - - -
iv. Other consumables
spares
31.Advances to suppliers
of raw material and
11.00 21.00 32.00 46.00 58.00 72.00
stores/spares
32. Advance payment of

0.00 0.00 0.00 0.00 0.00 0.00
taxes.
33. Other current assets

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i. Advances to staff - - - - - -
ii.Claims recoverable - - - - - -
iii. Others due within - - - - - -
one year.
34. Total current

assets(total of items 26 41.58 55.35 70.91 84.68 98.23 111.70
to 33)

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We have calculated current liabilities and current assets individually. This two
figure can be shown with the help of following bar graph.
120
100
80 2010
2011
60 2012
2013
40 2014
2015
20
0
C.A C.L
We can see from the figure that projected current assets of shiv sagar rice mill ltd is
in increasing trend from year to year , where as its current liabilities remains almost
constant. Since we know that working capital is the firm’s investment in its total
current assets and its net working capital is the excess of current assets over its
current liabilities. Or it is the proportion of firms current assets which is to be
financed by the firm long term funds.

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Thus we can conclude from the figure that most
portion of the shiv sagar rice mills private ltd is supposed to be financed by the
long term fund of the organization.

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2010 2011 2012 2013 2014 2015
proj proj proj proj proj Proj
Fixed Assets
35.Gross Block(land and

building, machinery, 93.10 85.18 77.26 69.34 61.42 53.50
work in progress etc.)
36.Depreciation to date 7.92 7.92 7.92 7.92 7.92 7.92
37. Net block item 85.18 77.26 69.34 61.42 53.50 45.58
Other Noncurrent assets 0.47 0.37 0.28 0.19 0.09 0.00
TOTAL ASSETS 127.23 132.98 140.53 146.29 151.82 157.28

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2010 2011 2012 2013 2014 2015
proj proj proj proj proj Proj
TANGIBLE NET
WORTH 43.02 53.95 66.66 78.10 89.32 100.46
NET WORKING
CAPITAL 22.73 36.00 51.04 64.81 78.36 91.83
CURRENT RATIO 2.21 2.86 3.57 4.26 4.94 5.62
TOL/TNW 1.96 1.46 1.11 0.87 0.70 0.57
TOTAL TERM
LIABLITIES/TNW 1.52 1.11 0.81 0.62 0.46 0.37
NET SALES/TOTAL
TANGIBLE ASSETS 2.50 2.79 3.02 2.90 2.79 2.70
CURRENT
RATIO(WITHOUT T/L
INST.) 2.21 2.86 3.57 4.26 4.94 5.62
PBDIT/INTEREST 1.88 3.13 3.87 4.02 4.34 4.71
PAT/NETSALES 0.57% 3.68% 3.57% 3.19% 3.14% 3.12%
ROCE 16.32% 24.84% 27.26% 25.33% 24.41% 23.56%
(INVT+RECEIVABLE)/ 27 27 27 27 28 28
SALES DAYS

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The elements of cost exhibited in a cost sheet are basically to facilitate the process of cost
analysis for managerial decision making and cost control. The important elements of cost are
discussed below.
Direct material cost
Direct material cost refers to the cost of the material which becomes a major part of the finished
product. This material of the product can be identified, measured and is directly chargeable to the
product.
In our cost sheet the raw material, unloading charge and the input tax has been considered as the
direct material and the detail of which are given below.
The cost of raw material required to manufacture 100kgs of automotive paints.
OPENING STOCK OF AUTOMOTIVE PAINT
The amount of raw material available with the company at the beginning of the month (June)
equals to the amount of raw material required to manufacture 2400 kgs of paints
Therefore the cost of the opening stock =Rs95.76*2400
=Rs229824
The amount of tax applicable on the opening stock =Rs229824*4%
=Rs229824*(4/100)
=Rs9193
Therefore the total value of the opening stock =Rs (229824+9193)
=Rs239017.

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PURCHASE
The total purchase made during the month of June was 22000 kgs of raw material
The total cost of 22000kgs raw material=Rs22000*95.76
=Rs2106720
=Rs2106720*(4/100)
=Rs 84269
CLOSING STOCK
The amount of raw material available with the company at the end of the month (June) equals to
the amount of raw material required to manufacture 1400 kgs of paints
Therefore the cost of the closing stock =Rs95.76*1400

=Rs134064
The amount of tax applicable on the closing stock= Rs134064*(4/100)
=Rs5363
Therefore the total value of the closing stock =Rs (134064+5363)

=Rs139427
TRANSPORTATION EXPENSES
This expense includes the cost involved in carriage inward of raw material .The transportation
cost involved in procuring the raw material is nil because the rate of raw material are delivered
FOR destination, the only charge involved in procuring raw material is the unloading charge
which is paid to the labours who unload the raw material from the truck and this cost comes up to
Rs 460
Direct labour
The workers who work directly with the raw material in converting them to finish goods
represent the direct labour. It is the cost which can be identified with, and allocated to the cost
centers or cost units.
The details of the workers are given below
The table below gives the detail of the employees along with the monthly
Cost involved in maintaining them.

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DISCRIPTION OF NO.S OF WAGE(Rs) AMOUNT(Rs)
WORKER WORKERS
Production Supervisor 1 18000 18000

Shop Floor Workers 17 4600 78200
…………………………
Direct labour 96200
Factory Security Guard 1 3000 3000

Store keeper 1 5500 5500
Cleaner 1 1000 1000
…………………..
Indirect wage 9500
Finance Manager/Accountant 1 15000 15000
Office manger 1 8000 8000
Office Clerk 1 4200 4200
Office staff expense …………………..
27200
Salesmen 5 4400 22000
TOTAL 29 154900
Direct expenses
Any expenditure other than the direct material and the labour, directly incurred on a specific
product is called direct expenses. It can be identified with and allocated to the cost centre or cost
unit. The detail of the direct expense associated with our product is given below.
The table below gives the detail of the packaging container required for packing the
automotive paints and the associated cost.
PARTICULARS QUANTITY (Pcs) RATE (Rs) AMOUNT (Rs)

1 LITRE 14500 217500 210000
500 ML 8000 80000 95000
200ML 8000 60000 58000
100ML 9000 54000 57500
50 ML 7800 25350 26000
TOTAL 436850

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Factory overhead
All cost incurred in the factory that cannot be considered direct material or direct labour or as
direct expense are classified as factory overhead. It includes indirect labour, material and
expense. The details of which are given below
WORKER WELFARE EXPENSE
INSENTIVE 12% of salary in case of maximum production (i.e. 23000kgs) = 96200*(12/100)

= Rs11544
Insurance of workers =Rs 500*No’s of workers

(annually 6000) =Rs 500*29
=Rs 14500
WASTAGE DURING PRODUCTION
The amount of wastage that occurs while manufacturing of paint is assumed to be 2%.
Therefore the cost involved in wastage is = (cost of direct material +cost of direct
labour)*2%
=Rs (2291039+96200)*(2/100)
=Rs47745.
Factory Electricity
The table below gives the detail of the electricity consumed at factory along with the monthly
Cost involved in the consumption
ELECTRICITY CONSUMED RATE AMOUNT

3200KWH 3.65 15247
TOTAL 15247
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Note:-the total cost of electricity includes the meter rent and the taxes. Along with this the rate
mentioned above is the rate charged at the lower slab of consumption. In practical the amount of
electricity consumed falls in two slabs. Here for simplicity the net amount of bill has been
mentioned.
Factory stationary
The total cost involved in factory stationary is given below in the table
PARTICULARS AMOUNT
Purchase requisition pad
Purchase order slip
Bin card 250
Store ledgers
TOTAL 250
Note: - all the stationary and printing requirement are ordered at the beginning of the financial
year, hence out here the yearly expense has been averaged to monthly expense
Maintenance expense
The amount allocated for the maintenance of the machinery, electrical fittings and general works
is Rs2500.
Note:-the maintenance cost dose not remains constant, it may vary according to the need of the
work.the amount mentioned above has been averaged from the yearly fund allocated to the
maintanance work in the previous financial year.
Depreciation
The amount charged against depreciation is at the rate of 1% of the total fixed assets of Rs
900000 in the form of building and machinery which amounts to Rs 9000.
Note:-this amount has been taken from the previous year financial report.
SAFTEY EXPENSE
The amount allocated for the safety of the factory and the employees for in the form of fire
extinguisher and medical first aid is Rs2000.
MACHINARY SPARES AND OILS

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The amount allocated for the spare parts like the belts, rotating blades, bush carbon etc is
Rs1000. And the amount allocated for the machine oil and grease required for smooth running of
machine is Rs 300.
Along with this the expense incurred on cleaning materials which consist of broom
sticks, cleaner rod, cleaning pad and cleaner liquid comes to Rs 250
Note:-the cost of machinery spares and oil dose not remains constant; it may vary according to
the need of the work. The amount mentioned above has been averaged from the yearly fund
allocated to the machinery spares and oil in the previous financial year
Administration overhead
OFFICE STATIONARY
It includes cost of planning and controlling the policies and operation of a business enterprise.
The details of the administrative overhead are given below
Note: - all the stationary and printing requirement are ordered at the beginning of the financial
year, hence out here the yearly expense has been averaged to monthly expense
PARTICULARS AMOUNT
Envelops 100
PARTICULARS
A4 size papers AMOUNT
360
Envelops
Cartiage refilling 100
200
A4 size papers
Visiting cards 360
100
Cartiage refilling
Letter pads 200
100
Visiting cards
Pen, stapler pin,glues,tapes etc 100
40
Letter
TOTAL pads 100
900
Pen, stapler pin,glues,tapes etc 40
TOTAL 900
TELECOMMUNICATION EXPENSES

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33
The telecommunication expenses comprise of the under mentioned services rendered by the
telecom department
• Broadband service
• Fax
• Telephone connection
The total cost incurred for the above mention services is Rs2865.
mentioned above is the rate charged at the lower slab of consumption. In practical the amount of
electricity consumed falls in two slabs. Here for simplicity the net amount of bill has been
mentioned
POSTAL EXPENSES
The postal expense consists of cost involved in posting the transport consignee copy to the
dealers who have made the purchase. This expense comes up to Rs 500.
OTHER EXPENSES
It includes the expense involved in the office like the expense made in drinking water, tea, snacks
and newspaper. This comes up to Rs 3000.
BANK EXPENSES
It includes the amount charged by the bank for issuing demand drafts and DACR and it amounts
to Rs 500.
The table below gives the detail of the electricity consumed at office along with the monthly
Cost involved in the consumption.

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ELECTRICITY CONSUMED RATE AMOUNT
600kwh 2.65 1750
mentioned above is the rate charged at the lower slab of consumption.
TAXES
The total output tax (VAT) charged on the finished product is 12.5%
Therefore the total tax charged on the automotive paint is = (factory cost+office &adm
overhead+ selling and distribution overhead +profit)*12.5%
=Rs (2946525+36715+84500+209622)*(12.5/100)
=Rs415920
Selling and distribution overhead

It covers the cost of making sales .it includes expense of creating new demand and retaining
existing demand. The details of selling overhead are as follows
TRANSPORTATION EXPENSES

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This expense includes the cost involved in carriage outward involved in transporting the finished
goods.
The cost involved in transporting the finished goods is shown in the table below
PARTICULAR QUANTITY RATE (Rs) AMOUNT(Rs)

Paints carriage charge 21400 LITS 1/LITRE 21400
Loading charge 3200 cartoons 0.5/cartoon 1600
TOTAL 23000
ADVERTISING EXPENSES
The total cost involved in advertisement is shown below in the table
PARTICULARS AMOUNT (Rs)

Festoon 800
Cable TV advertisement 700
TOTAL 1500
TRAVELLING EXPENSE
The total cost involved in travelling is given below in the table
PARTICULARS Detail AMOUNT

Metro pass 8*150 1200
monthly allowance to salesmen 5*1200 6000
two wheeler expense 800
TOTAL 8000
TOTAL SALES
The selling price of 1 litre of automotive paint is Rs196

Therefore the amount of total sales is =Rs196*21390
=Rs4192440.
Packaging expense
PARTICULAR QUANTITY RATE(Rs) AMOUNT (Rs)

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CARDBOARD 4000 7.5 30000
CARTOON
TOTAL 30000
SALES PROMOTION
Sales promotion is given to the customers in the form of cash back offer. Under this scheme there
is a sticker in the cap of the synthetic paint in which the prize money amount is wrriten, when a
customer returns the cap he gets the amount written on the cap. The amount written on the cap
varies from Rs zero to Rs 50.in this form an amount of Rs 29914 is distributed.
DEALER MARGIN
Therefore the total discount allowed to the dealers is = (total sales *10%)
=Rs 4192440(10/100)
=Rs 4192440
GUPTA PAINTS AND CHEMICALS

COST SHEET OF AUTOMOTIVE PAINT
For the month June (2009-10)
Production 21390Lits
ELEMENTS AMOUNT(RS) TOTAL COST

COST (RS) PERUNIT(RS)

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COST OF DIRECT MATERIAL
CONSUMED
ADD:
OPENING STOCK 239017
PURCHASES 2106720
INWARD CARRIAGE(UNLOADING) 460
INPUT TAX (VAT 4%) 84269
LESS:
CLOSING STOCK 139427 2291039
DIRECT WAGES
SHOP FLOOR WORKERS 78200
PRODUCTION SUPREVISOR 18000 96200
DIRECT EXPENSES
CONTAINERS 436850 436850
………………
PRIME COST 2824089

…………………………………………
FACTORY OVERHEAD
INDIRECT MATERIAL
OIL AND GREASE 300
MACHNINARY SPARES 1000
INDIRECT WAGES
STORE KEEPER 5500
SECURITY EXPENSES 3000
WORKERS WELFARE EXPENSE

INSURANCE 14500
INSENTIVE 11544
ELEMENT AMOUNT(RS) TOTAL COST

COST(RS) PERUNIT(RS)
FACTORY EXPENSES
WASTE 47745
STATIONARY 200
ELECTRICITY 15247
( EAST SIKKIM)
38
INSURANCE 1000
CLEANING STAFF 1000
CLEANING MATERIAL 250
MAINTENANCE OF FACTORY 2500
SAFTEY EXPENSE 2000
DEPRECIATION OF PLANT & 9000 114786
FACTORY ……………… ……………
FACTORY COST 2938875

……………………………………………
OFFICE AND ADMINISTRATIVE
OVERHEAD:
SALARY:
OFFICE CLERK 4200
MANAGERS 8000
FINANCE MANAGER/ACCOUNTANT 15000
PARTNERS FEES 50000
OFFICE:
OUTPUT TAX (VAT 12.5%) 414964
STATIONARY 900
LIGHTING 1750
TELECOMMUNICATION 2865
POSTAL SERVICES 500
OTHER EXPENSES 3000
BANK EXPENSES 500 501679
………………
COST OF PRODUCTION 3440554
……………………………………………
SELLING AND DISTRIBUTION
OVERHEAD
SALESMEN SALARY 22000

TRAVELLING EXPENSE OF 8000
SALESMEN
ADVERTISING 1500
PACKAGING EXPENSES 30000
CARRIAGE OUTWARD 23000
SALES PROMOTION 38530
DIACOUNT ON SALE 419244 542274
……………
( EAST SIKKIM)
39
COST OF GOOD SOLD 3982818
PROFIT 209622
SALES 4192440.
The cost of production of 21390 litres (23000kgs) of automobile paint is Rs3982818
Therefore the cost of production of 1 litre of automobile paint is = Rs3982818 /21390

=Rs 186.2
And the total sale of 21390 litres (23000kgs) of automobile paint comes up to Rs 4192440.
Therefore the selling price of 1litre of automobile paint is = Rs 4192440/21390

= Rs 196.
Therefore the profit made by the company on the sale of 21390 litres (23000kgs) of automobile
paint is given by = total sales –cost of production.
= Rs 4192440- 3982818
= Rs 209622
And the profit per litre is = total profit/total production
= Rs209622/21390
=Rs9.8
SYNTHETIC ENAMEL
It is an oil-based paints and can have various combinations of solvents as the diluents, including
aliphatics, aromatics, alcohols, and ketones. It is essentially used for the preservation of all types
of architectural structures, including factories, from ordinary attacks of weather. Uncoated wood
and metal are particularly susceptible to deterioration, especially in cities where soot and sulfur
dioxide accelerate such action. Aside from their purely protective action, paints, varnishes, and
lacquers increase the attractiveness of manufactured goods, as well as the aesthetic appeal of
( EAST SIKKIM)
40
a community of homes and their interiors.It is a fast-drying paint containing pigment suspended
in an oil base. Theses paints can be diluted with thinner, and become water-resistant when dry.
Depending on how much the paint is diluted or modified with acrylic gels, mediums, or pastes,
the finished automotive painting can resemble a watercolor or an oil painting, or have its own
unique characteristics not attainable with other media.
PRODUCTION PROCESS FOR SYNTHETIC ENAMEL PAINTS
The synthetic enamel paints are manufactured in the multiple of 100 kgs and the whole process
can be divided into five steps that are
Charging, Dispersing, Stabilization Discharging and washing, Make up
The amount of raw material required in each step of the manufacturing process is given below.
Charging and dispersing
In this step the following raw material are mixed in an attritor for 3 hours and are then dispersed
upto 7+ level on the henchman gauge.
05 kgs of Phillip Carbon
10 kgs of RDCO
08kgs of MTO
0.5 kg of zinc octate
Stabilization
In this step the raw material mixed in the above step is stabilized with the help of
10kgs of RDCO
05 kgs of MTO, and then it is run for 30 mins in attritor.
Discharging and washing

In this step 03 kgs of MTO is added to the stabilized mixture in order to disperse the paint so
formed.
Make up
In this step the above mixture is mixed and stirred in a stirrer followed by the addition of the
under mentioned chemicals
45 kgs of RDCO
5 kgs of Long Oil Alkyd
5 kgs of Malic
1 kgs of Calcium Octate
0.5 kgs of Cobalt Octate
0.5 kgs of Lead Octate
0.1 kgs of MEK Oxide
1.2 kgs of MTO
100kgs

( EAST SIKKIM)
41
The total quantity of raw material used is 100kgs and the weight per liter of the paint obtained
by the above process is 1.01 which gives a yield of 99 liters per 100kgs of raw materials used.
The direct material consists of the Raw materials required, inward carriage and the input tax to
manufacture 100 kgs of synthetic enamel.
The details of the raw material along with it cost is given below in the table
PARTICULARS QUANTITY(Kgs) RATE(per Kgs) AMOUNT(Rs)
RDCO 65 72 4680
MTO 17.2 56 963
Zinc Octate 0.5 120 60
Soya Lecithin 0.2 40 8
Long Oil Alkyd 5 80 400
Malic 5 78 390
Calcium Octate 1 120 120
Cobalt Octate 0.5 330 165
Lead Octate 0.5 120 60
MEK Oxide 0.1 220 22
Phillips Carbon 5 220 1100
TOTAL 100 7968
TRANSPORTATION EXPENSE
The transportation expense is same as that of automotive paint
OPENING STOCK OF SYNTHETIC PAINT
Equals to the amount of raw material required to manufacture 1200 kgs of paints
=Rs95616

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42
=Rs95616*(4/100)
=Rs3825
=Rs99441
PURCHASE
=Rs1872480
=Rs1872480*(4/100)
=Rs 74899
CLOSING STOCK
the amount of raw material required to manufacture 1700 kgs of paints
=Rs135456

=Rs5418

=Rs140874
Direct labour –the cost of direct labour is same as that in case of automotive paint
Direct expense
The details of the containers required to pack synthetic enamels are given below in table

500 ML 3940 10 38000
( EAST SIKKIM)
43
1 litre 8000 15 126000
4 litre 1450 27.5 36400
20 litre 350 125.5 42840
TOTAL 243200
FACTORY OVERHEAD
The amount of wastage that occurs while manufacturing of paint is 2%.

labour)*2%
=Rs (1906406+96200)*(2/100)
=Rs40052
The other cost associated with the factory overhead remains the same as that of automotive
paint
Office and Administrative overhead-

The cost associated with this overhead remains the same as in case of automotive paint.
The only cost that vary is that in case of output tax (VAT12.5%)
=Rs (2350939 +86715+84500+170775)*(12.5/100)
=Rs 336616
SALES PROMOTION
is a sticker in the cap of the synthetic paint in which the prize money amount is wrriten, when a

( EAST SIKKIM)
44
DEALER MARGIN
Therefore the total discount allowed to the dealers is = (total sales *10%)
=Rs 3415500*10%
=Rs 3415500*(10/100)
=Rs385955

COST SHEET OF SYNTHETIC PAINT
Production 22770 Lits

( EAST SIKKIM)
45
CONSUMED
ADD:
OPENING STOCK 99441
PURCHASES 1872480
LESS:
DIRECT WAGES 78200

PRODUCTION SUPREVISOR 96200
DIRECT EXPENSES
………………
PRIME COST 2245806
……………………………………………
FACTORY OVERHEAD
INDIRECT MATERIAL
OIL AND GREASE 300

INDIRECT WAGES
STORE KEEPER 5500
INSURANCE 14500
INSENTIVE 11544

FACTORY EXPENSES
WASTE 40052
STATIONARY 200
( EAST SIKKIM)
46
ELECTRICITY 15247
INSURANCE 1000
CLEANING STAFF 1000
SAFTEY EXPENSE 2000
FACTORY ……………… ………………

……………………………………………

OVERHEAD:
SALARY:
OFFICE CLERK 4200
MANAGERS 8000
PARTNERS FEES 50000
OFFICE:
STATIONARY 900
LIGHTING 1750
POSTAL SERVICES 500
OTHER EXPENSES 3000 423576
BANK EXPENSES 500 ………………
2776475
COST OF PRODUCTION
…………………………………………
OVERHEAD
SALESMEN SALARY
SALESMEN 8000
ADVERTISING 1500
( EAST SIKKIM)
47
……………
PROFIT 170775
SALES 3415500
T he cost of production of 22770 litres (23000kgs) of synthetic paint is Rs 3244725
Therefore T he cost of production of 1 litre of automobile paint is = Rs 3244725/22770

= Rs142.5
And the total sale of 22770 litres (23000kgs) of automobile paint comes up to Rs. 3415500

= Rs 150
= Rs3415500-3244725
= Rs 170775
= Rs170775/22770
=Rs 7.5
STOVING PAINT
It is a nitrocellulose based paint which is mainly used to protect the metals from deterioration
and rusting along with the protective function it also add to the aesthetic appeal of the product.It
is a fast-drying paint containing pigment suspended in an NC base. Stoving paints can be diluted
with thinner, and become water-resistant when dry. Depending on how much the paint is diluted
or modified with acrylic gels, mediums, or pastes, the finished automotive painting can resemble
a watercolor or an oil painting, or have its own unique characteristics not attainable with other
( EAST SIKKIM)
48
media. These paints are basically industrial paint and are used in fan, tube Patti and other
industries.
PRODUCTION PROCESS FOR STOVING PAINTS
The stoving paints are manufactured in the multiple of 100 kgs and the whole process can be
divided into five steps that are Charging, Dispersing, Stabilization, and Discharging and washing,
Make up
In this step the following raw material are mixed in a ball mill for 48hours and are then dispersed
upto 7+ level on the henchman gauge.
15kgs of rutyl titanium
08 kgs of coconut oil alkyd
06kgs of Xylene
Stabilization
04kgs of coconut oil alkyd
02kgs of xylene.
02kgs of N-Butanol and the above mixture is mixed in the ball mill for 30 minutes.
In this step the under mentioned raw materials are added to the stabilized mixture
04 kgs of Xylene
Make up
44 kgs of coconut alkyd
13.5 kgs of MF resin
1 kgs of Di-Acetone Alcohol
0.5 kgs of N-Butanol
100kgs

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49
The details of the raw material along with it cost is given below in the table
Rutyl titanium 15 150 2250

Coconut oil alkyd 66 88 5808
N -Butanol 0.5 80 40
Di- acetone alcohol 1 105 105
Xylene. 12 65 780
MF resin 13.5 130 1755
TOTAL 100 10738
OPENING STOCK OF STOVING PAINT
=Rs64428
=Rs64428*(4/100)
=Rs2577
=Rs67005
PURCHASE
=Rs2577120

( EAST SIKKIM)
50
=Rs2577120*(4/100)
=Rs 103085
CLOSING STOCK
The amount of raw material required to manufacture 1600 kgs of paints
=Rs171808
=Rs6872
=Rs178680
Direct labour –
The cost of direct labour is same as that in case of automotive paint.
Direct expenses - the cost of direct expense includes the cost of container, the details of which
is given below
PARTICULAR QUANTITY RATE AMOUNT

1 Lits 13300 15 199500
500ml 9000 10 90000
200ml 9500 7.5 71250
100ml 10000 5.75 57500
50ml 5800 3.25 18850
TOTAL 437100
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51
FACTORY OVERHEAD

labour)*2%
=Rs (2568990+96200)*(2/100)
=Rs53304
The other cost associated with the factory overhead remains the same as that of automotive paint

=Rs (3230035+86715+84500+170775)*(12.5/100)
=Rs453935
SALES PROMOTION
is a sticker in the cap of the stoving paint in which the prize money amount is wrriten, when a
DEALER MARGIN
Therefore the total discount allowed to the dealers is = = (total sales *10%
=Rs 4604600*10%

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52
=Rs 4604600*(10/100)
=Rs 460460

COST SHEET of STOVING PAINT


( EAST SIKKIM)
53
CONSUMED
ADD:
OPENING STOCK 67005
PURCHASES 2577120
INWARD CARRIAGE(UNLOADING) 460 2568990
LESS:
CLOSING STOCK 178680
DIRECT WAGES
PRODUCTION SUPREVISOR 18000 96200
DIRECT EXPENSES
………………
PRIME COST 3102290
…………………………………………
FACTORY OVERHEAD
INDIRECT MATERIAL
300
OIL AND GREASE 1000
MACHNINARY SPARES
INDIRECT WAGES
5500
STORE KEEPER 3000
SECURITY EXPENSES
WORKERS WELFARE EXPENSE 14500

INSURANCE 11544
INSENTIVE

FACTORY EXPENSES
WASTE 53304
STATIONARY 200
ELECTRICITY 15247
( EAST SIKKIM)
54
INSURANCE 1000
CLEANING STAFF 1000
SAFTEY EXPENSE 2000
FACTORY …………… ……………

…………………………………….

OVERHEAD:
SALARY:
OFFICE CLERK 4200
MANAGERS 8000
PARTNERS FEES 50000
OFFICE:
STATIONARY 900
LIGHTING 1750
POSTAL SERVICES 500
OTHER EXPENSES 3000
………………
……………………………………………

OVERHEAD
SALESMEN
ADVERTISING 1500
……………..
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PROFIT 230230
SALES 4604600.
T he cost of production of 20930 litres (23000kgs) of automobile paint is Rs 4374370
Therefore T he cost of production of 1 litre of automobile paint is = Rs4374370 /20930
=Rs 209
The total sale of 21390 litres (23000kgs) of automobile paint comes up to Rs 4604600.
= Rs 220.
= Rs 4604600-4374370
= Rs230230
= Rs230230/20930
=Rs 11
AUTOMOTIVE PRIMER
It is a nitrocellulose based primer which is mainly used to protect the metals from deterioration
and rusting along with the protective function it also add to the aesthetic appeal of the product.It
is a fast-drying paint containing pigment suspended in an NC base. Automotive primer is used
before the application of automotive paint, its main function is to help the paints to run smoothly
and evenly on the metal surface and also help to enhance the gloss of the paint. It can be diluted
with thinner, and become water-resistant when dry.
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56
PRODUCTION PROCESS FOR AUTOMOTIVE PRIMER
The automotive primers are manufactured in the multiple of 100 kgs and the whole process can
be divided into five steps that are Charging, Dispersing, Stabilization, and Discharging and
washing, Make up
In this step the following raw material are mixed in a pot mill for 72 hours and are then dispersed
upto 4.5+ level on the henchman gauge.
20 kgs of Red Oxide Powder.
08 kgs of Clay Powder.
08 kgs of Soap Stone
08 kgs of whiting
0.5 kgs of Aluminum Sterter
12 kgs of RLO
15 kgs of MTO
Stabilization
02 kgs of coconut oil alkyd
04kgs of xylene.
In this step the under mentioned raw materials are added to the stabilized mixture
02 kgs of benzene
03 kgs of ½ sec cotton
02 kgs of 5/6 sec cotton
07 kgs of ethyl acetate
03 kgs of butyl acetate
01 kgs of diacetone alcohol
01 kgs of n- butanol
0.5 kgs of Zinc Octate
Make up
02 kgs of coconut alkyd
01 kgs of benzene
100kgs
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57
In our cost sheet the raw material, unloading charge and the input tax has been considered as the
direct material and the detail of which are given below.
The details of the Raw material required to manufacture 100 kgs of Automotive Primer is given
below
Red Oxide Powder 20 7 140

Clay powder 8 6 48
Soap Stone 8 10 80
Whiting 8 7 56
Aluminum Sterter 0.5 70 35
RLO 12 76 912
MTO 15 56 840
coconut oil alkyd 4 88 352
benzene 3 50 260
zinc octate 0.5 120 800
cotton 5 160 455
ethyl acetate 7 65 294
butyl acetate 3 98 105
diacetone alcohol 1 105 80
n- butanol 1 80 150
Xylene. 4 65 60
TOTAL 100 4667
OPENING STOCK OF AUTOMOTIVE PRIMER

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58
=Rs84006
=Rs84006*(4/100)
=Rs3360
=Rs87366.
PURCHASE
=Rs1017406
=Rs1017406*(4/100)
=Rs 40696
CLOSING STOCK
=Rs28002
=Rs1120
=Rs29122
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59
DIRECT LABOUR-
The cost involved in direct labour is same as in case of automotive paint
DIRECT EXPENSE
The cost associated with direct expense includes the cost of container, the detail of which is
given below
PARTICULAR QUANTITY RATE AMOUNT

1 Lits 10000 15 150000
500ml 10400 10 104000
200ml 9500 7.5 71250
100ml 11000 5.75 66000
50ml 8600 3.25 27950
TOTAL 419200
Factory overhead

labour)*2%
=Rs (1116806+96200)*(2/100)
=Rs24260


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60
=Rs (1748807+86715+84500+170775)*(12.5/100)
=Rs256304
SALES PROMOTION
is a sticker in the cap of the primer in which the prize money amount is wrriten, when a customer
returns the cap he gets the amount written on the cap. The amount written on the cap varies from
Rs zero to Rs 50.in this form an amount of Rs 69106 is distributed.
DEALER MARGIN
The total discount allowed to the dealers is 10% of the total sales = (total sales *10%)
=Rs 2608200*(10/100)
=Rs 260820

COST SHEET AUTOMOTIVE PRIMER
For the June (2009-10)


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61
CONSUMED
ADD:
OPENING STOCK 87366
PURCHASES 1017406
LESS:
DIRECT WAGES
PRODUCTION SUPREVISOR 18000
96200
DIRECT EXPENSES 419200

CONTAINERS 419200 ………………
..
PRIME COST 1632206
………………………………………
FACTORY OVERHEAD
INDIRECT MATERIAL
OIL AND GREASE 300

INDIRECT WAGES
STORE KEEPER 5500


INSURANCE 14500
INSENTIVE 11544

FACTORY EXPENSES
WASTE 24260
STATIONARY 200
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62
ELECTRICITY 15247
INSURANCE 1000
CLEANING STAFF 1000
SAFTEY EXPENSE 2000
FACTORY ……………… ………………

…………………………………………
OVERHEAD:
SALARY:
OFFICE CLERK 4200

MANAGERS 8000
PARTNERS FEES 50000
OFFICE:
STATIONARY 900
LIGHTING 1750
POSTAL SERVICES 500
OTHER EXPENSES 3000
………………
……………………………
OVERHEAD
SALESMEN
ADVERTISING 1500
…………
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PROFIT 130410
SALES 2608200.
T he cost of production of 18630 litres (23000kgs) of automobile primer is Rs2477790
Therefore T he cost of production of 1 litre of automobile paint is = Rs2477790/18630

=Rs 133
And the total sale of 18630 litres (23000kgs) of automobile primer comes up to Rs 2608200
Therefore the selling price of 1litre of automobile paint is = Rs2608200/18630
= Rs 140
= Rs 2608200-2477790
= Rs 130410
= Rs 130410/18630
=Rs 7
SYNTHETIC PRIMER
It is an oil-based paints and can have various combinations of solvents as the diluents, including
aliphatics, aromatics, alcohols, and ketones. It is essentially used for the preservation of all types
of architectural structures, including factories, from ordinary attacks of weather. Uncoated wood
and metal are particularly susceptible to deterioration, especially in cities where soot and sulfur
dioxide accelerate such action. Aside from their purely protective action, paints, varnishes, and
lacquers increase the attractiveness of manufactured goods, as well as the aesthetic appeal of
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A community of homes and their interiors.It is a fast-drying paint containing pigment suspended
in an oil base. Theses paints can be diluted with thinner, and become water-resistant when dry.
Depending on how much the paint is diluted or modified with acrylic gels, mediums, or pastes,
the finished automotive painting can resemble a watercolor or an oil painting, or have its own
unique characteristics not attainable with other media.
It is basically applied before the application of synthetic enamel, its main function is to help the
synthetic enamel to run smoothly and evenly and also enhance the gloss of the paint.
PRODUCTION PROCESS FOR SYNTHETIC PRIMER
The synthetic enamel paints are manufactured in the multiple of 100 kgs and the whole process
can be divided into five steps that are Charging ,Dispersing, Stabilization, Discharging and
washing, Make up The amount of raw material required in each step of the manufacturing
process is given below.
In this step the following raw material are mixed in an attritor for 72 hours and are then dispersed
upto 4.5+ level on the henchman gauge.
20 kgs of Red Oxide Powder.
08 kgs of Clay Powder.
08 kgs of Soap Stone
08 kgs of whiting
0.5 kgs of Aluminum Sterter
12 kgs of RLO
15 kgs of MTO
Stabilization
16 kgs of RLO
0.7 kgs of Cobalt octate
01 kgs of Lead Octate
01 kgs of Lead Octate
0.5 kgs of Manganese Octate
0.8 kgs of Zinc Octate and then it is run for 30 mins in attritor.
In this step 4.8 kgs of MTO is added to the stabilized mixture in order to disperse the paint so
formed.
Make up
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04 kgs of MTO
100kgs
by the above process is 1.35 which gives a yield of 74
Liters per 100kgs of raw materials used.
Raw material required to manufacture 100 kgs of Synthetic Primer
Red Oxide Powder 20 7 140

Clay powder 8 6 48
Soap Stone 8 10 80
Whiting 8 7 56
Aluminum Sterter 0.5 70 35
RLO 28 76 2128
MTO 23.8 56 1333
Cobalt octate 0.7 330 231
Lead octate 1 120 120
Calcium octate 1 120 120
Manganese octate 0.5 140 70
Zinc octate 0.8 120 96
TOTAL 100 4457
OPENING STOCK OF SYNTHETIC PRIMER
=Rs31199

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=Rs31199*(4/100)
=Rs1248
=Rs32447
PURCHASE
=Rs1114250
=Rs11142501*(4/100)
=Rs 44570
CLOSING STOCK
=Rs120339
=Rs4814
=Rs125153

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DIRECT LABOUR-
The cost associated with direct labour is same as that in case of automotive paint
DIRECT EXPENSE
The details of the containers required to pack synthetic enamels are given below in table
PARTICULAR QUNATITY RATE AMOUNT

500 ML 8000 10 8000
1 Lits 2600 15 39000
4Lits 1655 27.5 45513
20Lits 600 125.5 75300
TOTAL 167813
Factory overhead

labour)*2%
=Rs (1066574+96200)*(2/100)
=Rs23255

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=Rs (1494310+86715+84500+170775)*(12.5/100)
=Rs105938
SALES PROMOTION
is a sticker in the cap of the thinner bottle in which the prize money amount is wrriten, when a
varies from Rs 1to Rs 50.in this form an amount of Rs 7843 is distributed.
DEALER MARGIN
Therefore the total discount allowed to the dealers is = (total sales –profit-cost of production-
selling &administrative overhead)
=Rs (2118760. - 105938 -1802458-84500)

=Rs 125864

COST SHEET OF SYNTHETIC PRIMER


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CONSUMED
ADD:
OPENING STOCK 32447
PURCHASES 1114250
LESS:
DIRECT WAGES 78200

SHOP FLOOR WORKERS 18000 96200
PRODUCTION SUPREVISOR
DIRECT EXPENSES
………………
PRIME COST 1330587

…………………………………………
FACTORY OVERHEAD
INDIRECT MATERIAL
OIL AND GREASE 300
INDIRECT WAGES
STORE KEEPER 5500


INSURANCE 14500
INSENTIVE 11544

FACTORY EXPENSES
WASTE 23255
STATIONARY 200
ELECTRICITY 15247
INSURANCE 1000
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CLEANING STAFF 1000
SAFTEY EXPENSE 2000
FACTORY …………… ………………

……………………………………………

OVERHEAD:
SALARY:
OFFICE CLERK 4200

MANAGERS 8000
PARTNERS FEES 50000
OFFICE:
STATIONARY 900
LIGHTING 1750
POSTAL SERVICES 500
OTHER EXPENSES 3000
………………
……………………………………………
OVERHEAD
SALESMEN
ADVERTISING 1500
………………
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PROFIT 105938
SALES 2118760
T he cost of production of 21620 litres (23000kgs) of synthetic paint is Rs 2012822
Therefore T he cost of production of 1 litre of automobile paint is = Rs 2012822/21620
= Rs93.1
And the total sale of 21620 litres (23000kgs) of automobile paint comes up to Rs. 2118760
Therefore the selling price of 1litre of automobile paint is = Rs2118760/21620
= Rs 98.
= Rs2118760-2012822
= Rs 105938
= Rs105938/21620
=Rs 4.9
NC THINNER
They are mainly used to dilute the paints according to the need. They help the paint to run
smoothly and evenly and also enhance the glow of the paint
PRODUCTION PROCESS FOR NC THINNER

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All the raw materials namely Benzene, Diacetone Acetate, Butyl Acetate, N-butanol and Ethyl
Acetate are added in the small ball mill and are mixed for 4 hours in the same after they have
been thoroughly mixed them are discharged in the stirrer and are then packaged.
Raw material required to manufacture 100 kgs of NC Thinner
Benzene 75 50 3750
Diacetone Acetate 10 105 1050
Butyl Acetate 7.5 98 735
N-butanol 2.5 80 200
Ethyl Acetate 5 65 325
TOTAL 100 6060
OPENING STOCK OF NC THINNER
=Rs78780
=Rs78780*(4/100)
=Rs3151
=Rs81931
PURCHASE

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=Rs1515000
=Rs1515000*(4/100)
=Rs 60600
CLOSING STOCK
=Rs199980
=Rs7999
=Rs207979
Direct labour –
The cost of direct labour is same as that in case of automotive paint
DIRECT EXPENSE
THE DETAILS OF THE CONTAINER REQUIRED TO PACK THINNER

1 litre pvc bottle 15000 3 45000
0.5 litre pvc bottle 16000 2 32000

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TOTAL 77000
Factory overhead
labour)*2%
=Rs (1450012+96200)*(2/100)
=Rs30924
The other cost associated with the factory overhead remains the same as that of automotive
Paint

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=Rs (1719177+86715+84500+126500)*(12.5/100)
=Rs252112
SALES PROMOTION
is a sticker in the cap of the thinner bottle in which the prize money amount is wrriten, when a
varies from Rs 1to Rs 50.in this form an amount of Rs 16996 is distributed.
DEALER MARGIN
Therefore the total discount allowed to the dealers is 10 % of the sales price = (total sales *10%)
=Rs 2530000*(10/100)
=Rs 253000

COST SHEET OF NC THINEER
For the June (2009-10)
Production 23000Lits


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CONSUMED
ADD: 100838
OPENING STOCK 1575600
PURCHASES 460
INPUT TAX (VAT 4%)
LESS: 289910 1450012
CLOSING STOCK
DIRECT WAGES 78200

SHOP FLOOR WORKERS 18000 96200
PRODUCTION SUPREVISOR
DIRECT EXPENSES 77000 77000

CONTAINERS ………………
1623212
PRIME COST
…………………………………………
FACTORY OVERHEAD
INDIRECT MATERIAL 300

OIL AND GREASE 1000
MACHNINARY SPARES
INDIRECT WAGES
5500
STORE KEEPER 3000
SECURITY EXPENSES
WORKERS WELFARE EXPENSE 14500

INSURANCE 11544
INSENTIVE

FACTORY EXPENSES
WASTE 30924
STATIONARY 200
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ELECTRICITY 15247
INSURANCE 1000
CLEANING STAFF 1000
SAFTEY EXPENSE 2000
FACTORY ……………… ………………

……………………………………
OVERHEAD:
SALARY:
OFFICE CLERK 4200

MANAGERS 8000
PARTNERS FEES 50000
OFFICE:
STATIONARY 900
LIGHTING 1750
POSTAL SERVICES 500
OTHER EXPENSES 3000
……………
……………………………………………
OVERHEAD

SALESMEN
ADVERTISING 1500
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………………
PROFIT 126500
SALES 2530000
T he cost of production of 23000 litres (23000kgs) of synthetic paint is Rs2403500
Therefore T he cost of production of 1 litre of automobile paint is = Rs2403500/23000
= Rs104.5
And the total sale of 23000 litres (23000kgs) of primer comes up to Rs. 2530000
= Rs 110
= Rs2530000-2403500
= Rs 126500.
= Rs 126500/23000
=Rs 5.5
FINDINGS
This project work mainly concentrates to ascertain the cost and profitability of each individual
product manufactured by the company the details of the cost and the profit is given below in the
table.
ATTRIBUTES SALES PRICE COST PRICE PROFIT
AUTOMOTIVE PAINT 196 186.2 9.8

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AUTOMOTIVE PRIMER 140 133 7
SYNTHETIC ENAMEL 150 142.5 7.5
SYNTHETIC PRIMER 98 93.1 4.9
STOVING PAINT 220 209 11
THINNER 110 104.5 5.5
Comparative study of sales price of automotive paint
COMPETITORS
The company mainly concentrates on the automotive paint and primer business, hence has to
compete with other players in the same field. The main competitors of the company are
kamdehnu paints, Asian paints, provolac paints, Berger paints, gautam paints and some others.

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Market share in automotive paint in and around Kolkata
SALE OF PRODUCTS
ATTRIBUTES QUANTITY(Lits)
AUTOMOTIVE PAINT
11000
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AUTOMOTIVE PRIMER
3000
SYNTHETIC ENAMEL
3000
SYNTHETIC PRIMER
1500
STOVING PAINT
2000
THINNER
2500
CHAPTER-IV
Conclusion & Recommendation

CONCLUSION

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Man is an emotional being, whose ‘thirst’ for satisfaction can never be fully quenched. The
Company Gupta paints are renowned company which has been trying to establish itself as No.1
in the automotive paint market in and around Kolkata for their Quality and Services.
However, despite the fact that after providing the best Quality and Service, the company has not
been able to increase or even maintain it’s Market Share in Automotive paint industry in the
Eastern Region? There are various factors that are affecting the sales of the company in this zone
and they are as follows:
1) The cost of production is fairly good, but the sales are being hampered by the production
constraint faced by the company.
2) The company is unable to match the demand with the supply because of production
constrain.
3) The products offered by Gupta Paints are fairly cheaper compared to the price offered by
its competitors.
4) The company is making a profit of 5%; along with this the dealers are also being allowed
a 10%+ discounts on all products.
5) The efficiency of the workers is affected by the informal ambience prevailing in the
factory.
6) The other factor found out was that the company has an undeveloped distribution channel
which concentrates only in Kolkata and surroundings, because of which the people are
not aware of the brand, which hinders the sale.
Recommendation:-
Gupta Paints and Chemical has a market share of over 16% in the auto motive paint sector and the
same is true in case of other category of paints in the market of Kolkata

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But as they say, there is always some room for improvement. Following
are some of the recommendations based on the observations under study for Gupta
Paints And Chemical which will enable them in better Utilization of their Resources-
Assets and Manpower , thus reducing different Costs at different categories . This
will indirectly increase the Profits of the Company, and thus better Services can
be provided by the Company for higher Sales and Market Share.
a. The company should try to increase the production ,by replacing the old ball
mills, with new age technologically advanced pot mills and arritors which would
lead in reduction in the time required for the production of paint from 48 hours to
12 hours.
b. The company should install a belt conveyor for packaging instead of following a
manual process of pacakaging.This change would lead in reduction in the labour
cost and time but along with this will give uniformity to the product in the form
of weight and tidiness.
c. The company should switch to PVC containers for packing the paints instead of
using tin container; this would lead to slight reduction in the cost of containers.
d. The company should adopt a policy of division of labour which would add to the
efficiency of the labour as well the company.
e. The company should install colorant machine at all its dealer counter as soon as
possible. By doing this the company now has to produce only the bases while the
choice of the color can be made at the dealer counter. This change would lead to
reduction in the cost of holding inventory.
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84
f. The company should focus on its corporate customers like railways along with
this it should try to build more corporate customer base.
g. The company should try to build a direct relationship with the manufacturers of
raw material, instead of depending on dealers.
h. The company should also focus on the decorative paint market which is under
tapped till now by the company.
i. Better utilization of different resources will lead to the marginal Reduction in

various cost .Reduced cost will lead to greater Profit Margin for the company, with
the extra margin the company can provide better service to its customers than the
competitors. By doing this the company will not only be able to retain its existing
customers but will also be able to attract new customers.

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85

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CHAPTER I

1.1 COMPANY PROFILE

► To be a vibrant and growth oriented Automotive paint Company.

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

● To develop core competencies in manufacturing automotive paints products with

NEXT YEAR PROJECTIONS

 Introducing Water – based Paints.

 Repositioning of existing Brands in Rural Market.

 Broadening of Distribution Network.

 Adding more choices for shades and effects.

 Enhancing Better Quality

 Demand will be generated through the new constructions coming in housing

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

►The primary objective of the study is to estimate the security of the

Selling its product under the prevailing manufacturing condition.

B. SCOPE OF THE STUDY:

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

2.1 Research Design

 In my first stage I thought and decided to study in brief the Theoretical

2.2 METHODOLOGY OF THE STUDY:

(2) To a small extent, this study is based on primary data collected

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

2.4 SAMPLING FRAME

2.5 SAMPLING TECHNIQUE

• The Probability Sampling Method.

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

findings of secondary data. Informal discussions with concerned executives,

2.6.2 SECONDEARY DATA

• Bill and vouchers.

• Informal discussion with the concerned executives and dealers.

2.7 Tools of Data Analysis

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

price offered by its competitors.

being allowed a 10% discounts on all products.

 The company follows the manual method to pack the paints.

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

• Huge Mathematical Calculations is involved in working capital analyasis analysis which

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

Net working capital = Current assets – Current liabilities.

1. Permanent Working Capital.

Temporary working capital: The amount of such working capital keeps on

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

Estimation of working capital: In order to determine the amount of working capital

1.Components of working capital approach: In this approach every

3.Operating cycle approach: According to this approach, the requirement of working

(1) Raw material s and stores storage stage.

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

Assessment of working capital requirement by Shiva Sagar Rice

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132

Domestic sales 318.23 371.26 424.30 424.30 424.30 424.30

i.Raw materials( incl.

Indigenous 277.63 323.90 370.18 370.18 370.18 370.18

Imported 000.00 000.00 000.00 000.00 000.00 000.00

ii. others spares

Imported 000.00 000.00 000.00 000.00 000.00 000.00

Indigenous 000.00 000.00 000.00 000.00 000.00 000.00

iv. direct labour(factory

vi depreciation 7.92 7.92 7.92 7.92 7.92 7.92

subtotal (item i to iv ) 298.62 346.22 393.84 394.10 394.10 394.10

Cost of production 298.62 346.22 393.84 394.10 394.10 394.10