The first organization attempt in providing safe milk to customers was made by military dairy forms. With objectives of supplying milk to the British troops in India. The next attempt with the organized dairying was in Bombay city by the British government, to improve the city milk supply. In fact Mr.R.A. Pepperell, the secretary of the milk marketing board of England, in a press meeting in 1944, stated that the sewage of London this necessitated the Government intervention in the year 1945, which led establishment of the Bombay milk scheme and a private firm owned by Mr. Polson, located at Anand 400 Kms North Of Bombay, to supply milk to the scheme. To opening up the attractive market of Bombay, to the milk producers of Kaira District, provided the stimulus to increase their production shortly after India became independent, the Government of Bombay realized that the prevailing system of milk contractors, traded and the private Polson dairy were the farmers of Kaira district. Co-operative milk union (Popularly known as AMUL) started with a modest collection of 250 liters of milk per day in 1948, with village milk producer’s society. AMUL has grown to a size where it today handles some 8, 50,000 liters and more of milk a day in the peak season. The Kaira’s co-operative society has got the membership of some 36, 00,000 farmers, and pays nearly Rs.100 crores to its farmer members for the milk supplied by them. The co-operative society owns a dairy, which processes dairy products in competition with private industry under the brand name “AMUL” The leading national brand name in dairy products surprising through it may seem, it was the Kaira’s cooperative which disproved the myth spread by the multinational that baby food and condensed milk could not be made in India and therefore had to be imported, taking this as a challenge and making both products successfully from buffalo milk. In the above structure the role of the Government is to supervise, to guide, to encourage, disciplining the co-operative societies when the need arises. The Anand pattern combines the power of the people with professional management in a vertical integrated structure, which establishes a direct link between the producers and customers. This co-operative structured in Kaira was in other districts of Gujarat and all the district unions so framed were federated in to the Gujarat co-operative milk marketing federation. The entire structure is owned and operated by farmer elected members, who in turn employ professionals to manage the day today functions of the co-operatives. The structure enables a blend of modern technology with traditional diary framing without causing any financial burden on the state exchequer. Today, the Gujarat Co-operative milk marketing federation has a total membership of over 22 lakhs farmers, with a turnover of about Rs.270 crores a year. When the Prime minister, Sir.Lal Bahadur shastri visited Kaira District in1964, he compared the AMUL co-operative with the other government milk Schemes set up all over the country and decided that the (AMUL) “Anand Pattern” should be replicated nationally. Thus, the national Diary Development Board (NDDB) was set up in 1965 with a mandate to adopt “Anand” Pattern throughout India. It was however


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found that every state (except Gujarat) had a Diary development corporation managing over 100 government milk schemes located in town and cities, all of the which were running under loss. There was resistance to the creation of farmer owned organization and the states were not willing to commit funds for dairy development for the creation of “Anand”. Mean while, in the latter half of the 60’s; surplus conserved milk solids were piling up in most of the European Countries. The NDDB saw this opportunity and used it to go generated funds to finance replication of “Anand”. The programmed of NDDB formulated to meet this objective was called Operation Flood and the Government of Indian approved the Programmed in 1969. Thus, Operation Flood was launched in1970 with funds generated from the sale of gifted milk powder and butter oil from the world flood programmed to replicate “Anand” pattern in the country. The Programmed has continued to grow, with funds generated from gifted dairy commodities received from the European Economic Community and funds provided by World Bank. The progress of Operation Flood is illustrated in exhibit (1 to 8). The Anand pattern has now been implicated in milk sheds covering 242 districts. Nearly 150 lakhs milk producers are members of these co-operatives and received sum of over Rs.850 crores as payment for the sale of milk to their co-operative during 1986-87. Most of these products are small and marginal farmers or landless laborers, 21% have no land, another 66% are small marginal farmers having less than four hectares of land, and over 70% of the families have only two milk animals or less. The establishment of a co-operative structure as a ready and regularly buyers of milk has generally improved prices to farmers. For example, the average price paid by the Delhi Mother Dairy to the state co-operative federations has increased from Rs.230 to Rs 4015 per Kg. of mixed milk (6.05%fat, 9.90% SNF) between the year 1980 and 1986 (as it has not been possible for the government to permit an increase in the sale price of milk) With the expansion of Operation Flood and increase coverage by the co-operatives, the private trade is now required to compete with the co-operative and has therefore been prevent from unduly exploiting the milk producer. The collective interest of the state co-operative structure has been established by the farmers and is an alternative to the exploitative trading marketing system. It has been established that the Anand pattern can be replicated outside Gujarat and survive in from competition. The co-operative have also established their credibility in the production and marketing of a range of milk products under their respective brand names in different packaging to suit the consumers. Realized the benefits of the Anand pattern, the Government has asked NDDB to extend the co-operative system to restructure production and marketing systems of many other primary products as oil seeds, fruit, vegetables, fisheries distribution etc.


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The basic unit in the Anand pattern is the village milk product co-operatives, a voluntary association of milk collection. All the village milk cooperatives in a district are the members of their district cooperative milk union. Every producer’s, milk is tested and paid for, on the basis of the quality of the milk. Usually the morning milk is paid for in the evening and the evening milk is paid for the next morning. The village societies also market nutritionally balanced compound clarified produced by the cattle feed plant owned and operated by the district level unions. The union also operates the network of veterinary services to provide routine and emergency services for animal health care. The village societies elect the board of directors of centralized facilities of the union. This is the responsible for the board of the day to day activities. A manager Director, who report to the elected chairman and the Board of Directors, professionally manages each union. The dairy owned by a union, usually has milk-drying plant to convert the seasonal surplus into milk powder and other conserved products. With the help of the drying plant, the union is able to ensure that milk products get 80% to90% of the lean season price even in the flues season. This has enabled the farmers to get 20% to 40% higher prices than what would have got if they were not a part of the co-operative systems. The middlemen have usually been paying only 50% to 60% of the lean season price in the flush season. Bulk of the out-of-pocket expenditure on the milk production is the purchase of cattle feed concentrates like oil cake, cottonseeds etc., owned and operated by the co-operative is able to provide naturally balanced cattle feed at price 20% to 30% over the price of the traditional feeds. The milk collection from the village is usually sent to the co-operative dairy through trucks hired by the co-operative dairy, tries to market the bulk of its liquid milk and converts the surplus milk into products. Professional managers employed by the co-operative ensure, that they get the best return for their produce.


In June 1974, an integrated project was launched in Karnataka to restructured and reconcile the dairy industry on the co-operative principles and laid foundation for new World Bank aided dairy development projects in 1975. Initially the project covered 8 southern districts of Karnataka dairy Development Corporation was set up to implement the project. The multi level activities were set up with Dairy coT.JOHN INSTITUTE OF TECHNOLOGY Page 3

COST VOLUME PROFIT ANALYSIS operative societies at gross root levels, milk union at the middle level as an apex body vested with the dairy development activities continued under operation Flood-II, the activities were extended to cover the entire state except coastal Taluks of Uttar Karnataka district. The process of dairy development continued in the second phase from 1984, KMF come in to existence. In May 1984, as a successor to KDDC after the closure of operation Flood-II dairy development activities continued under Flood-II with 700 professionals. While the IDC is Government of India Company, the NDDB is a registered society. NDDB, apart from providing services for the implementation of operation Flood also provides the applied research and development support to the projects. In Karnataka on June 4th, 1975 four Milk Unions were started in Bangalore, Mysore, Tumkur and Hassan, Karnataka Dairy Development Corporation (KDDC) got re-named as Karnataka Milk Federation and the Mysore Corporative Milk Producers Societies Union Ltd in to “Mysore-Chamarajanagar District Coop Milk Producers Societies Union Ltd “ MARKET SHARE OF NANDINI MILK: The market share of Nandini milk is shown as follows: 1. Nandini Milk- 75% (MYMUL Market Share in Mysore Dist. Is 53%) 2. Private milk- 25% Though it was registered on 30th March 1977, it was handed over to the Union in 1987 Dairy development in Mysore District: The Mysore dairy, which was taken up by Mysore milk union on 1st June 1987, has an installed capacity of 60 TLPS. This was extended to 100 TLPS. It was future extended up to 100 TLPD during operation flood, Second in Hansur with 30TLPD and recently in Kollegal was established with 30 TLPD capacities.

KMF/MYMUL Ltd., as structured on co-operative principle consists of three Levels namely, 1. Village level- Diary Co-operative Society. 2. District level- Milk Union of Districts. 3. State level – The Federation of Milk union. The structure of MYMUL is functional in nature. The managing committee takes all the decisions, which consists of managing director and functional Department heads.


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To provide mobile veterinary and emergency services for animals of rural areas. introducing cash economy and opportunity for regular income. The complex network of Co-Operative Organization should build a bridge between millions of consumers and milk producers.51.Narasipura Road. 3. 8. To build village level Institutions in Co-operative sector to manage the dairy activities. 7. 9. Location: Mysore Dairy is located within the city limit of Mysore at Siddhartha Layout on T. 5. providing whole some milk at lowest possible price to Urban Consumers. 2.JOHN INSTITUTE OF TECHNOLOGY Page 5 . preventing migration to urban area. a few km from heart of the city. we find that the structure is in line with various heads of the functional department reporting to the chairman and managing director. To ensure Milk Production for self-employment at village level. 1. at the same time . Of the other side to achieve a Socio Economic Revolution within the state. Government of Karnataka has taken golden step to make the farmers involved in dairy development activities and increased their income level and standard of living. Providing assured and remunerative market for the entire Milk Producers.42 Lakhs. the building is worth Rs. 6. Providing self-employment for rural folk and making them stable by providing financial assistance. T. Achieving Economies of scale to ensure maximum return to the Milk producers.25 acres of land. Providing regular market for milk producers throughout the year. Objectives: Karnataka Milk Federation is a co –operative apex in the body in the state of the Karnataka for the representing Dairy Farmers Organization and also implementing Diary development activities the following objectives.COST VOLUME PROFIT ANALYSIS When we look at the organization chart. Inspiring rural people for Milk production as an added occupation along with agriculture. Providing hygienic Milk to urban consumers. The philosophy of Dairy Development is to eliminate middle men and organize institutions to be owned managed by the Milk Producers themselves. 4. The Mysore dairy has been built in the area of 10.

Cross breeding facility through artificial insemination service. in that two seats are reserved (For SC.10 share and Re. where board of directors constitute of a chairman and one MD of the union. the activities on development were taken to in the year 1975. Milk Producers Co-Operative Societies: (MPCS) These MPCS are in every village consisting of 50 and above members with the Rs. one KMF representative. was established on 23-11-1976.1 advance. UNDER the World Bank aided Karnataka dairy development projects. The Mysore co-op milk producers societies union ltd. District Level Milk Union: (DMU) The federation is named as “Karnataka Milk Federation”. Emergency visits to treat the animals on a nominal fee to be collected from producers. First aid facilities the society level. Once in three years union election is held to select a chairman. Among members 8 Directors are elected. having the jurisdiction extended to the entire Mysore district and five taluks of Mandy district. In Mysore District 803 societies are registered and properly functioning. The union undertook the work of organization of milk cooperatives in AMUL. Page 6 T. BACKGROUND AND INCEPTION OF THE COMPANY.JOHN INSTITUTE OF TECHNOLOGY . 1. Technical guidance and supply of root slips or seeds for fodder cultivation the member of the co-op societies.COST VOLUME PROFIT ANALYSIS COMPANY PROFILE. The president of the DMU is elected and he is the supreme authority. to each of them. Out of these 8 directors one is elected to be a president. one NDDB representative. A. Or ST) candidates and another for a lady candidate. 2. pattern’ with main objective of socio-economic reformation of the rural areas through dairying as main subsidiary occupation. one representative from registrar of co-operative society and one from the department of Animal husbandry Main functions of the union:      To provide remunerative market for the milk produced by the rural farmers.

C. Peda also providing. “To create unity of workers for providing a better service to consumers of milk.  QUALITY POLICY: MYMUL is committed to producers welfare through customers delight my adopting continuous improvement and hygienic milk and milk products. The unions process the milk & market in urban area through by various agents. NATURE OF THE BUSINESS CARRIED: The nature of Mysore milk union is that procuring the milk from society and that milk is bring through tankers for various centers. This is the nature & business carried of the MYMUL. ghee. Supply of balance 3 cattle feed to the farmers of the co-op societies at subsidiary rates. T.COST VOLUME PROFIT ANALYSIS    Effective supervision of extension services through field execution on the union. along with curd. VISION. & also by giving training to farmers 7 also induction program. AND QUALITY POLICY:  VISION: The vision of the MYMUL has to provide good quality milk to the consumers at reasonable price. fodders etc. Intensive co-op program’s to the women members of the dairy co-op societies through development program. Those. The union providing service to milk producers technical inputs like veterinary services seeds.  MISSION: MYMUL is committed to provide maximum possible price for milk supplied by its members & provide necessary inputs to enhance milk production while ensuring economics viability of the union & it’s also committed to provide quality milk operative dairy industry in the country.JOHN INSTITUTE OF TECHNOLOGY Page 7 . The union providing various products to market like toned milk.. MISSION. to help in social and economic development of the country and get reliability in world class market”. B. which are near & convenient to various societies.

standardized milk. In turn these societies directly collect milk from villages and supply the same to the dairy.JOHN INSTITUTE OF TECHNOLOGY Page 8 . Mysore pak. Production is the process by which raw materials and inputs are converted in to finished goods. The product dairy purchases milk from co-operative milk societies. And march. curds. NANDINI TONED MILK: Karnataka’s most favorite milk Nandini toned milk.5%SNF. which usually starts from other.COST VOLUME PROFIT ANALYSIS VALUES:        HONESTY DISCIPLINE QUALITY COST CONTROL CO-OPERATION TEAM SPIRIT MUTUAL RESPECT  SERVICE MOTIVE A. The lean season of the dairy starts usually in the month of March.. PRODUCT PROFILE: MYMUL milk union manufactures the following products. April. Lassi. The dairy is having FLUSH SEASON.. Toned milk. And ends in February . PRODUCT/ SERVICE PROFILE: Production is considered to be crucial in any industrial organization. Masala majjige. ghee. double toned milk. Peda.1% fat and 8. NANDINI FULL CREAM MILK: T. Available in 500 ML and 1 liter packs. homogeneous standard milk. full creamed milk. flavouredmilk. containing 3. and ends in September.

COST VOLUME PROFIT ANALYSIS Full milk contains 6. it gives more cup of tea or coffee and is easily digestible. ideal for preparing homemade sweets and savories. BADAM BURFI: This is delicious treat for the family made from pure milk. Nandini Mysore pak is made from high quality Bengal gram. hygienically manufactured and packed in a special pack to remain goodness of pure ghee. Available in 200 Grams and 50 Grams sachet. Available in 50 Grams for pack containing 10 pieces each. Nandini homogenized toned milk is pure milk. Nandini ghee and cane sugar. it is thick and delicious. NANDINI STANDARDISED MILK: This milk containing 4. store at room temperature approximately 7 days. T.6 % fat and 8. It is delicious way to relish a sweet movement.5% SNF available in 500 ml pack. NANDINI PEDA: This is made from delicious treat for the family. 500. SWEET LASSI: Sterilized flavored milk nutritious and healthy milk and on all season wholesome drink available in different flavor.JOHN INSTITUTE OF TECHNOLOGY Page 9 . Made from pure milk.6 % fat and 9% SNF available in 500 ml. Giving you all goodness of homemade curds. Available in 500 ml packs. MYSORE PAK: Fresh and tasty. Available in 200. delicious flavor. Store at room temperature. NANDINI GHEE: This is made from pure butter. Available in 500 ml packs. Available in 250 and 500 Grams. NANDINI CURD: Nandini curd made from pure milk. Rich creamer and tasted milk. and 100 mls sachets and 15 kgs tins. NANDINI DOUBLE TONED MILK: Nandini double toned milk contains 1. which is homogenized and pasteurized consistent rights thought.1 fat and 9 SNF.

And in tanker with temperature of 5 C to 6 C from the three chilling centers located at Hunsur. These bulk milk coolers have been installed to maintain the quality of raw milk and also to reduce the intake of energy intensives raw materials. COMPETITOR INFORMATION: The major competitors of the MYMUL are as follows:        Jersey Dodla Arogya Fresh Milk Loose vendors Gomatha Thirumala Page 10 T.COST VOLUME PROFIT ANALYSIS B. tankers from chilling centers and tankers from bulk milk coolers is as follows:  In cans from village dairy co-operatives 54500 Kg’s  In tankers from chilling centers 112500 Kg’s  In tankers from bulk milk coolers 51000Kg’s C. As on date the per day quantity of milk received through cans directly from dairy co-operatives. OWNERSHIP PATTERN: MYMUL is a co-operative institution. AREA OF OPERATION: Mysore.JOHN INSTITUTE OF TECHNOLOGY . Farmers are entitles to receive the dividends from the co-operative union. The dairy receives milk in cans with temperature of 27C to 30c from village co-operatives located in the district of Mysore and Chamarajanagar district. Kollegal and Chamarajanagar towns.Chamarajanagar district co-operative milk producers union limited registered under the Karnataka co-operative act has been commissioned in the year 1980. Pattern of Co-operative sector in Milk Industry:  Primary Union  District Union  State federation D. Farmers are the real owners as well as the shareholders of the co-operative union. Also the dairy receives milk with temperature of 5 C to 6 C in tankers from 27 Bulk Milk Coolers.

COST VOLUME PROFIT ANALYSIS  Swastika Dodla:            Plant at Nellore.JOHN INSTITUTE OF TECHNOLOGY Page 11 . Loose Milk Sale:       Market share is next to Nandini. Packing is attractive with multicolour pricing on sachets. Loose milk from crude and local cattle reamers. Major consumers are low.income group segments. Quality perception – thick and long shelf life. road ride teashops and sweet neat stalls.retailers or anyone willing to sell. T. Sales from 50ml and above. Consumer perceives that milk is good for making curds. Channel members are playing critical role on boosting the sales. Commission ranges from 80-95 paise. Sale in union jurisdiction 18TLPD (30TLPD in city). Returns will be accepted. Available of raw material at cheaper rate. Majority of the milk is heavily adulterated and no uniform quality. Sale in union jurisdiction 140 TLPD. Payment – cash and carry or which collecting empty on return trip.  Flexible payment system. Flexible distribution .

Milk tanker MILK PROCESSING: Raw milk reception dock Cream separators Milk pastures Stored tanks Electronic milk tester and milk scan. INFRASTRUCTURE FACILITIES: Infrastructure facilities in MYMUL are in this way. They have procurement group contract vehicles. TRANSPORTATION. EG.COST VOLUME PROFIT ANALYSIS E. Dairy co-operative society Bulk milk products.JOHN INSTITUTE OF TECHNOLOGY Page 12 . MILK PROCUREMENT: Milk collection from farmers. Masala majjige packing machine Flavored milk packing machine Ghee packing machine T. PACKING: Milk packing machine Curd packing machine Lassi.

JOHN INSTITUTE OF TECHNOLOGY Page 13 .COST VOLUME PROFIT ANALYSIS ENGINEERING: Reformation equipments Boiler equipment Effluent treatment plants Electronic generation MARKETING: Distribution network Agents Parlors Depots Franchise DISTRIBUTION TRANSPORT: Trucks Auto Mobile Van T.

COST VOLUME PROFIT ANALYSIS A. Work Flow model: Manufacturing. packaging & storing of paste sized Milk: Receiving Milk from Farmers Grading Sampling Weighting Testing Pre-Heating (35® C) Filtering / Clarification Cooling (5°C or below) Standardization Bottling /Packing Storage (5° C or below) T.JOHN INSTITUTE OF TECHNOLOGY Page 14 .

installation of new equipment. conducting various comparative like children drawing Competition. Future growth & prospectus: 1. Achievements and Awards: MYMUL has not got many awards from the state and the central government:    ISO certificate 9001-2008 2nd prize from national energy conservation board 2003-2005 1st prize from state energy conservation board  1st prize in grand maintain during Rajasthasava. then arranging dairy visits for school. training on various production enhancement activities. T. 2. college children consumers and farmers. 3. clean milk production. Dairy plant: Expansion of processing capacity.COST VOLUME PROFIT ANALYSIS B. Milk procurement enhance activities like introduction of new societies formation of BMCs (bulk milk coolers) providing. A. Marketing: Allotting more agencies opening new parlors and depot. good animal husbandry.JOHN INSTITUTE OF TECHNOLOGY Page 15 . making processing and packing facilities at chilling centers.

COST VOLUME PROFIT ANALYSIS McKensy’s 7S Frame work: The respected consulted from Mekinsey and company developed the 7’s framework for management analysis. staff. and style. system. theory and practice seem to support each other in the study of management. The outstanding feature of the 7s medal is the mckinsey consults in their studies of many companies have tasted it extensively.JOHN INSTITUTE OF TECHNOLOGY Page 16 . structure. skill. The 7’s are strategy. Thus. shared value T.

Preventing migration to urban areas. 2. and training the personnel for best utilization of skills.COST VOLUME PROFIT ANALYSIS 1. It is the determination of purpose and the basic long objective of an enterprise and the adoption of course of action and allocation of resource necessary to achieve these aims. OBJECTIVES OF MYMUL: Is to provide pure and fresh milk and to provide marketing facilities to the rural milk producers at reasonable price. The main aim is to supply fresh pure quality of milk with reasonable price. To build village level institution in co-operative sector. The MYMUL strategy is to make available balanced cattle food at reasonable price to improve the productivity of milk. STRATEGY: Strategy is a systematic action and allocations of achieve company aims. Providing assured and remunerative marked for all the milk produced by the farmer member. 4. Providing hygienic milk to urban customers. T. The grouping of activities and people into departments. The organization structure in MYMUL well planned the function and organizations are brought to the notice of the employee. STRUCTURE: Organization structure and authority and responsibility relationship are including in the structure.JOHN INSTITUTE OF TECHNOLOGY Page 17 . 3. 1. Organization struct6ure in MYMUL can be viewed as established pattern of relationship among the components of organization. It is also trying to improve its position in the mind of customers by following up and attending any complaints in more compensated way and union is trying to give their best. The authority and responsibility are properly assigned and therefore the rest is carried on smoothly. 2.

T. MGR PROCURE MENT DY.PLANT DY. INPUT In MYMUL an organization chart is used which is graphical portrayed of various position in the organization and of the formal authority relationship among them.COST VOLUME PROFIT ANALYSIS Organization diagram. BOARD DIRECTOR OF PRESIDENT MANAGING DIRECTOR ADMIN OFFICERS FINANCEOFFICERS MANAGER DAIRY MARKETING HEAD MANAGER PROCUREMENT MIS OFFICER DISTRIBUTI . It provides to understand what is his position in the structure is. PROCUREMENT DEPUTY MGR. The chart in MYMUL shows the position.QUALITY DY.JOHN INSTITUTE OF TECHNOLOGY Page 18 .MGR.ON WING DY.MGR.MGR.

Duties and responsibilities of P &I: T. Marketing department. Asst. 3.JOHN INSTITUTE OF TECHNOLOGY Page 19 . Administrative department. Purchasing department. 2. Procurement department. Manager Assist officer Assist Manager. 4. Storage department. Finance department.officer. 5. Extension officer. 6. Different department of this organization: Procurement and input department: Department structure Manager p& 1 Deputy Manager (AGA) Deputy Manager (procurement) Deputy Manager (Feed fodders Assistant Manager Asst.COST VOLUME PROFIT ANALYSIS MYMUL HAVE THE VARIOUS DEPARTMENTS: 1.

4. Extension officers will be visiting once in month to DCs and supervise the accounts and they will guide the MC. 3. scheme. 4. 6. The main function and responsibility of primary level dairy co-operative are…to purchase the milk offered by the members twice a day (morning and evening) 2. Providing input activities to milk producers through DCs at right time. 5. 2. milk production inputs etc. The manager of p& I is charge of their activities assisted by extension officer’s veterinary officers. The technical in input programmed of the union mainly covers the following activities. 1. It should help the producers for making cattle insurance. Artificial insemination Feeds and fodder development Extensive services. 2. Animal health care.. Members for development of DCs. Proper utilization of funds under govt. 3. 6. As the first step of this programmer starts with surrey of the villages by extension officers. The milk is procured from the village in contract vehicles. Sale of cattle to the members. Top arrange for the dispatch of the union in time. 5. which goes to the society at schedule time and gives empty cans for next collection and trunk sheets or details of previous collection and gets filled milk cans. 4. training.JOHN INSTITUTE OF TECHNOLOGY Page 20 . artificial insemination and agriculture officers. T. 1. Transport vehicle arrangements are the responsibility.COST VOLUME PROFIT ANALYSIS 1. To make regular payment for the milk received on the basis of fat % arrived on testing. Mediator facility to provide information and services to the members extended by the union such as fodder demonstration programme. DCs supervision. 3. In the union payment for the producers is given by the society once in week. Proper transportation of milk from DCs to dairy.

COST VOLUME PROFIT ANALYSIS MARKETING DEPARTMENTS: The structure of marketing department of MYMUL is as follows. The union of selling 117915 LPD to the consumers of Mysore. there is no value for that manufactured product. Therefore future of any organization involved in production of product lies in its marketing dept. Under the control of deputy manager milk is being sold through distribution routes by appointing agents of other institution or at milk parlors. Managing director General Manager Marketing manager Marketing superintendent Marketing assistant Marketing can be considered as the heart of any production.JOHN INSTITUTE OF TECHNOLOGY Page 21 . Without marketing of manufactured products. it is very necessary to achieve the organization objective . T. There is marketing section headed by marketing officers. because it acts as a link between consumers and producers.

Finance mainly focuses on wealth maximization.COST VOLUME PROFIT ANALYSIS As per the indents given by the agents of other institution of parlors milk will be dispatched at scheduled time to the market in morning and evening sessions. T. breaking of rackets etc. and make arrangement for replacement after through verification.JOHN INSTITUTE OF TECHNOLOGY Page 22 . & Hansur have been given to the private traders to run under annual contracts as per terms and conditions of union. ACCOUNTS DEPARTMENT: FINANCE is the lifeblood of any organization. Further. The milk parlors located at Mysore. It mainly focuses minimizing the cost and maximizing the profit. the Marketing section also attends to the complaints made by public regarding spoilage.

This department is headed by Dy. It helps the control of accounts officers It helps the management to consider liability of project to generate adequate surplus not only to cover the department. ASST. ACCOUNTS OFFICER.(FINANCE) ACCOUNTS SUPDT. STRUCTURE. Account Assistant Acct assit Acc assit Acct assit This is the key functional area of the union. T. Accounts departments also perform various disbursements of wages and salaries. MANAGING DIRECTOR MANAGER (FINANCE) DEPUTY MANAGER (finance). The maintenance of investment records a supplying of all types of accounting and financial information to the management.JOHN INSTITUTE OF TECHNOLOGY Page 23 .COST VOLUME PROFIT ANALYSIS FINANCE DEPT. Manager (Finance /Accounts) it maintains subsidiary and trading accounts. The book of accounts maintained by the accounts department in the office are purchase register books. MANAGER. Surviving to obtain a satisfactory internal rate of return in the finance management. All the aspects of accounting and monitoring of work of this division are carried out under the control of accounts officers.

with the guidelines of the president. And also include purchase of dairy co-operative societies materials. stationeries and supplies etc. ADMINISTRATIVE DEPARTMENTS PERSONNEL/ADMINISTRATIVE DEPARTMENT. MYMUL also procure the manual workers through contract basis on their piecework system. T. He is administering this dept. plant and machinery. The personnel manager manages the overall functions of the dept. MANAGING DIRECTOR GENERAL MANAGER /DEPUTY MANAGER PERSONNEL ADMINISTRATOR. The following are the functional areas of personnel management/administration in MYMUL. the head of the purchase department select the best source of supply.JOHN INSTITUTE OF TECHNOLOGY Page 24 . place orders. negotiates the terms of purchase. managing director and general manager/deputy manager. Personnel and administrative department of MYMUL is well equipped with qualified and experienced personnel manager.COST VOLUME PROFIT ANALYSIS PURCHASE AND STORES DEPARTMENTS: The main function of the purchase department is to conclude the purchase of material and stores. follows up orders. receives supply to materials together with invoices from suppliers and check them against the purchase orders and certifies the invoices for payments and performs such other tasks as are related to its function.

is mainly concerned with the recruitment. The assistant managers who sees day –to-day affairs of the dept. SYSTEM. Staffing and employment. Employee records. Organizational planning and development. 5. to various employees working in the organization. Compensation. T. wage and salary administration. manufacturing processes. Motivation and incentives 6. budgeting and control processes. he is accountable for the affairs of the administrative dept. Training and development. 3.JOHN INSTITUTE OF TECHNOLOGY Page 25 . heads the administrative dept.COST VOLUME PROFIT ANALYSIS 1. promotion providing salaries. System refers to procedure and processes such as information system. 2. 3. 4. provident fund etc.

Mysore pak.JOHN INSTITUTE OF TECHNOLOGY .     Reception Processing section P/F machine Cream tank Page 26 T. ghee. Peda. butter. curd. flavored milk by use of following equipments.COST VOLUME PROFIT ANALYSIS FLOW CHART OF HANDLING MILK. lassie. Raw milk reception Standardization Chilling Storage of raw milk Cream Separation Homogenization Pasteurization Cold storage Packing Selling of milk Dispatch Apart from production and selling of milk MYMUL also producers’ products such as cream. Masala majjige.

The union has good skilled human resource. SKILL. 4.COST VOLUME PROFIT ANALYSIS       Boiler DG room and sub station Air compressor room Refrigeration Product section Workshop equipment. 5. T. At present there are 250 workers working in MYMUL. STAFF: The people in the organization are very dedicated and towards the improvement of the organization. which is reflected by the quality assurance test taken by the union during procurement of milk and also by the variety products produced by the union. The MYMUL possesses variety in the procurement of milk and production of milk and milk products. STYLE: Style refers to the way the management behaves and collectively spends time to achieve organizational goal. The maximization number of staff approved is 302 workers for the union. Tech (dairy technology) and B. The skill levels of the workers are work oriented and they are specialized in their respective fieldwork. The company has skilled manpower. The staff in MYMUL has good relationship with each other. which is reflected by the non-stoppage of any work in MYMUL. 6.JOHN INSTITUTE OF TECHNOLOGY Page 27 . The company is capable of processing milk fresh and pure will before the time schedule and other expectations of the customers. the criteria would be B. Staff refers to people in the enterprise and their socialization in to organizational culture. The staff is well qualified and suited for their respective jobs. Examples: For recruiting and selecting the manpower required by the production dept.E. for maintenance of boilers who have capabilities to handle the functioning of work smoothly. which is very improvement in the achievement of organization. They are satisfied with their work. Skills refer to the distinctive capabilities of an enterprise. The company is satisfying the customers through its qualities milk and milk products.

FUTURE PLANNING OF MYMUL: Planning refers to deciding in advance what to do. So. The employees work hard to see that good quality products are produces in the union. Planning focuses on the future direction. management of MYMUL has provided some intimated figures for attaining goals and objectives in future. There are fundamental ideas around which business is built. Planning enables the organization to time its business with the environment and establish a profitable relationship with the environment. MYMUL also have future planning for marketing divisions as well as for marketing of products. The company believes that the business success is combined effort of the employees and management. Company also takes the valuable guidance and suggestions from the employees and customers. the shared value is an element. T. management of MYMUL has provided some intimated figures for attaining goals and objectives in future. By this the company can know what the requirements of customers are. It bridges gap from where we are to where we want to go. Dairy is moving towards attaining future plans. when to do and who is to do it. which ensures the success of implementing the strategy. Planning is simply a rational approach to accomplish an objective. how to do.JOHN INSTITUTE OF TECHNOLOGY Page 28 .COST VOLUME PROFIT ANALYSIS In MYMUL also have future planning for marketing divisions as well as for marketing of products? Dairy is moving towards attaining future plans. values and sense of purpose. planning provides unifying decisions making framework and facilities integration of efforts. In MYMUL every employee is dedicated to the achievement of the organizational goals. SHARED VALUES: Shared value or super ordinate goals refers to a set of value and aspiration that goes beyond the conventional formal statement objective. basis objectives tell the directions of growth. 7.

815 milk producer’s co-operative societies. 2. Two lakhs farmer members. 3.JOHN INSTITUTE OF TECHNOLOGY Page 29 . 4. Well managed. Transportation vehicles. Milk producers elect their own administrative body. 7. 5.COST VOLUME PROFIT ANALYSIS 5. 8. Easy communication channel. SWOT ANALYSIS OF THE COMPANY  STRENGTHS: 1. 6. Good name in the market. ISO 9001-2000 Certificate. T.

2. Political interference 2. Wide spread operating areas. T.JOHN INSTITUTE OF TECHNOLOGY Page 30 . Increased local loose milk sales. 3. Different verities of milk for different categories of people. Good board.  OPPORTUNITIES: 1. Workers inefficiency.COST VOLUME PROFIT ANALYSIS  WEAKNESSES: 1. 3. Tapping loose milk sales. Wide brand competition 2.  THREATS: 1.

699 242.761 18.64.382.411 16.133.829 2.417 1.059.141 5.846.906.030 Mar 10 (in rs) 2.549 283.632 17.529.4 crores to 34 crores in the year 2010- Source: annual report of Mysore Milk Union 2010-11 Interpretation: A sale has increased from 226 cores to 313crores in the year 2010-11.730.780.348.821.858 30.269.886 18.941 5.184 2.600.953.638 25.13.627.627.51.09. Net profit has been decreased from 5. Gross profit increased from 29.571 29. T.974.738.30.JOHN INSTITUTE OF TECHNOLOGY Page 31 .51 crores in the year 2010-11.998.506.277 164.61 crores to 5.430 3.182.346 82.211 26.705.971 80.324 34.43.844.COST VOLUME PROFIT ANALYSIS ANALYSIS OF FINANCIAL STATEMENT OF MYSORE CHAMARAJANAGAR DIST CO-OP MILK UNION Profit and loss account of Mysore Milk Union Mar 11 (in rs) TRADING ACCOUNT Sales Account Cost of Sales Opening Stock ADD: Purchases Account LESS: Closing Stock Direct Expenses GROSS PROFIT INCOME STATEMENT Indirect Incomes Indirect Expenses PROFIT BEFORE TAX LESS: Income Tax NET PROFIT 23.190.982 130.615.

Current assets are increased from 26.COST VOLUME PROFIT ANALYSIS Balance sheet of MYMUL Particulars Sources of funds: Capital accounts Loans / liabilities Current liabilities Profit and loss account Total Application of fund: Fixed assets Investments Current assets Total 260587644 126371278 493604624 880563546 250159222 19619212 269301339 539079773 Amount (in rs) Mar11 385646834 152028450 226274343 116613919 880563546 Amount (in rs) Mar10 285606827 70278651 96235854 86958441 539079773 Interpretation:    Capital account is increased from 28. Investment is increased from 1 crores to 12 crores in the year 2010-11.5 crores in the year 2010-11.JOHN INSTITUTE OF TECHNOLOGY Page 32 .9 crores to 49.5 crores to 38.3 crores in the year 2010-11. T.

JOHN INSTITUTE OF TECHNOLOGY Page 33 . so researcher has set afoot into the citadel of milk processing industry.COST VOLUME PROFIT ANALYSIS LEARNING EXPERIENCE: Just as an unknown frontier is looked upon with much anxiety. that is witnessing how QUALITY EXCELLENCE IS REACHED FROM COWS TO CONSUMERS. T. At the end of a month’s training at the organization. MYMUL. To define in short. researcher can safely say that he got acquainted with the minute details of the manner in which raw milk is processed and made available to all in need. my experience at the MYMUL plant can be narrowed down to witnessing what was written about as the motto of MYMUL.

At this breakeven point (BEP). The analysis covers a single product or a constant sales mix. furniture). Cost Volume Profit analysis expands the use of information provided by the Break Even analysis.g. 8. The assumptions underlying CVP analysis are: The behavior of the both costs and revenues is linear throughout the relevant range of activity. 9. The behavior of costs revenue is linear . is largely in the manufacturing sector. A critical part of CVP analysis is the point where the total revenues equal to costs (both fixed and variable costs). 6. materials) are constant. Prices of production inputs (e. Total variable cost are proportional to volume. 5. units). 2. This assumption precludes the concept of volume discounts on either purchase material or sales. Total fixed cost remain constant. 10.a company will experience no income or loss. Revenue and costs are being compared over a single volume base (e. the basic Cost Volume Profit model has the following underlying assumptions. According to Horngren and Foster(1991). 4. Cost Volume Profit analysis the same basic assumption as in breakeven analysis. Cost Volume Profit analysis or Break Even analysis as it is often commonly called.g. THE BASIC COST VOLUME PROFIT MODEL As mentioned earlier. Insurance and other financial service industries.JOHN INSTITUTE OF TECHNOLOGY Page 34 . Changes in activity are the T. Selling price are constant. This BEP can be an initial examination that precedes more detailed CVP analysis.g. 3. However the concept itself is applicable to service enterprises such as banking. All cost can be divided in to their fixed and variable elements. 1. Traditionally cost volume profit analysis has been applied largely to manufacturing enterprises which have a which have tangible product base (e.COST VOLUME PROFIT ANALYSIS PART B INTRODUCTION COST VOLUME PROFIT ANALYSIS Cost Volume Profit is a planning tool which is extremely useful in predicting sales and profit levels given a certain cost structure. Efficiency and productivity are constant. Volume is not only drivers of cost. 7. Cost can be classified accurately as either fixed or variable.

variable costs prices and profits. It provides information to management in most précis manner it is an effective and report system. A critical part of Cost Volume Profit analysis is the point where the total revenues equal to the total costs (both fixed and variable costs). It indicates the level of sales at which costs and revenues are in equilibrium point isd commonly known as the breakeven point.JOHN INSTITUTE OF TECHNOLOGY Page 35 .e.COST VOLUME PROFIT ANALYSIS only factors that affect costs. The break even analysis establishes a relationship between revenue and cost with respect to volume. fixed costs. Cost Volume Profit analysis is an analytical technique for studying the relationship between volume. The breakeven point may be defined as that point of sales volume at which total revenue is equal to total cost. useful for elementary instruction and for short-com decisions. a cost which would be avoided if that unit was produced or provided. It is a simplified model. Marginal costing is the ascertainment of marginal cost and the effect on profit of changes in volume or type of output by differentiating between fixed cost and variable cost. These are two approaches to compute the breakeven point is (i) formula approach & (ii) the chart approach. It is a variable cost of one unit of a product or a service i. The concept of T. The breakeven analysis is the most widely used form of CVP analysis. All produced are sole (there is no ending finished goods inventory). The components of Cost Volume Profit analysis are        Level or Volume of activity Unit selling price Variable cost per unit Total fixed assets Sales mix Cost Volume Profit (CVP) in managerial economics is a form of cost accounting. When a company sells more than one type of products the sales mix (the ratio of each product to total sales) will remain constant. Cost Volume Profit analysis expands the use of information provided by breakeven analysis. Marginal Cost and Marginal Costing The term Marginal Cost is the ascertain the amount of at any given volume if output by which aggregate costs are changed if the volume of output is increased or decreased by one unit.

price and volume. Stock valuations are not distorted with present years fixed costs. Meaning and concept of contribution In Marginal Costing costs are classified into fixed and variable costs.COST VOLUME PROFIT ANALYSIS marginal costing is based on the behavior of costs that vary with the volume of output. Formulae used in Marginal Costing and Contribution Sales = Variable cost + Fixed Cost + Profit Sales – Variable cost = Contribution Fixed Cost + Profit = Contribution Therefore.JOHN INSTITUTE OF TECHNOLOGY . Profitability of the products or the company is determined with reference to their contribution margin. Contribution is a pool of amount from which total fixed costs will be deducted to arrive at the profit or loss. Sales – Variable Cost = Fixed Cost + Profit Contribution – Fixed Cost = Contribution (4) (5) (1) (2) (3) This fundamental marginal cost equation plays a vital role in profit projection and has a wider application in managerial decision – making problems. prices are determined with reference to marginal cost and contribution margin. Advantages of Marginal Costing and Contribution   It is simple to understand variable versus fixed cost concept. From this approach it is possible to identify the amount of contribution per product towards fixed overheads and profits. will bear a relation to sales and the ratio of contribution to sales remains constant at all levels. Page 36    T. Contribution is the difference between sales and marginal or cost of sales. So. the difference between sales and variable cost. i. Its shows the relationship between cost. It is also known as variable costing. Under marginal costing.e. Under or over absorption do not arise in marginal costing. contribution. A useful short term survival costing technique particularly in very competitive environment or recessions where orders are accepted as long as it covers the marginal cost contributes towards fixed costs so that losses are kept to minimum. The sales and variable cost vary directly with the number of units sold or produced.

The effect of production and sales policies is more clearly seen and understood. profitability of products.JOHN INSTITUTE OF TECHNOLOGY . It fails to recognize that in the long run. each product makes towards fixed cost and profit leads to the preparation of statement showing the total contribution each product class has made towards the recovery of period costs. The concept of contribution helps in deciding breakeven point. It ignores fixed costs to products as if they are not important to production.COST VOLUME PROFIT ANALYSIS    Its provide better information hence is a useful managerial decision making tool. Its over simplified costs into fixed and variable as if it is so simply to demarcate them. In the long run. fixed costs may become variable. management must consider the total costs not only the variable portion. Difficulty to classify properly variable and fixed cost perfectly. price discrimination etc. Key or limiting factor analysis Ranking the products based on profitability Profit planning Make or Buy decisions BEP and CVP analysis Accept or reject special orders Page 37 T.  Contribution Analysis and its application in Managerial Decision The analysis of the contribution per unit. Limitation of Marginal Costing and Contribution       Marginal Cost has its limitation since it makes use of historical data while decision by management relates costs to future events. departments etc. It is not a good costing technique in the long run for pricing decision as it ignores fixed cost. It concentrates on the controllable aspects of business by separating fixed and variable costs. export sales. Stock valuation under this of costing is not accepted by the Inland Revenue as it ignore the fixed cost element. to perform the fallowing activities:          Selecting the optimum product mix Sales mix for profit maximization Fixing selling prices under different circumstances such as trade depression. hence stock valuation can be distorted if fixed cost is classified as variable.

COST VOLUME PROFIT ANALYSIS  Continuing or discontinuing the product or operations. This will given total cost line. we can say that: Contribution = Fixed Cost at BEP Break Even Chart: Break even analysis is made through Graphical Charts. Breakeven point is the volume of sales or production where there is neither profit nor loss. Variable cost and fixed cost to determine the level of operation at which all the costs are equal to its sales revenue. Assumptions of Breakeven Analysis:   Breakeven analysis is only a supply side (i. This chart shows fixed and variable cost and sales revenue so that profit or loss at any given level of production or sales can be ascertained. This is an important technique used in profit planning and managerial decision making. the points starting from horizontal axis and draw total cost line.    Select a scale for production on horizontal axis and a scale for costs and sales on vertical axis. It is method of studying the relationship among sales revenue. Construction of Breakeven Chart: The construction of Breakeven Chart involves the drawing of fixed cost of fixed cost line. Cost only) analysis as it tells you noting about what sales are actually likely to be for the product at these various prices. It is NO LOSS NO PROFIT situation. Plot variable cost for some activity levels starting from the fixed cost line and join these points. It is an analysis used to determine the probable profit or loss at any level of operations.JOHN INSTITUTE OF TECHNOLOGY Page 38 . Alternatively total cost at different levels. Plot fixed cost on vertical axis and draw fixed cost line passing through this point parallel to horizontal axis. Thus. Break Even Analysis Meaning: Break even analysis refers to the ascertainment of level of operations where total revenue equals to total cost.e. It assumes that Fixed cost are constant T. total cost line and sales line as follows.

e. which is not possible in reality. the sales mix is constant). Profitability of Products Processes of Departments T.e. A change is fixed cost does not affect the Profit Volume Ratio. Linearity) It assumes that the quantity of goods produced in equal to the quantity of goods sold (i. there is no change in the quantity of goods held in inventory at the beginning of the period and the quantity of goods held in inventory at the end of the period). It indicates the relationship of contribution to sales. The concept of Profit Volume Ratio helps in determining the following:      Breakeven Point Profit at any Volume of Sales Sales volume required to earn a desired quantum of profit. = Fixed Cost PV Ratio BEP in Rs. = BEP = Breakeven units x Selling price per unit Fixed Cost / Sales – variable cost Profit Volume Ratio: Reveals the rate of contribution per product as a percentage of total turnover.JOHN INSTITUTE OF TECHNOLOGY Page 39 .COST VOLUME PROFIT ANALYSIS   It assumes average variable costs are constant per unit of output. In breakeven charts. When multiple products are there breakeven chart fails to depict the BEP. at least in the range of likely quantities of sales (i.e. it is assumed that total cost and total revenue can be presented in a straight line. A fundamental property of marginal costing system is that Profit Volume Ratio remains constant at different levels of activity. it assumes that the relative proportions of each product sold and produced are constant (i.    Formulae used in Break Even Analysis Break Even Point in units = Fixed Cost Contribution per unit BEP Sales in Rs. It helps in knowing the profitability of the business. In multi-product companies.

materials and other services. provided the is elastic.COST VOLUME PROFIT ANALYSIS The contribution can be increased by increasing the sale price or by reduction of variable costs. Formulae of PV Ratio P/V Ratio = Sales – Variable cost Sales Contribution Sales P/V Ratio = Change in Contribution Change in Sales Change in Profit Change in Sales P/V Ratio = I – Variable Cost to Sales Ratio Margin of Safety: It refers to the sales in excess of break even volume. any loss of sales may be a serious matter. there can be substantial falling of sales may and yet a profit can be made.  Increasing the selling price. machine. Selling more profitable products. if margin is small. On the other hand. If margin of safety is unsatisfactory. thereby increasing the overall Profit Volume Ratio.  Reducing Fixed costs. If it is large.  Reducing Variable costs  Substitution of existing product(S) by more profitable lines  Increase in the volume of output T. it may be possible for a company to have a higher margin of safety in order to strengthen the financial health of the business. Otherwise the same quality will not sold. Thus Profit Volume Ratio can be improved by the fallowing:    Increasing Selling price Reducing Marginal costs by effectively utilizing men. possible steps to rectify the causes of management of commercial activities as listed below can be undertaken. The size of margin of safety is an extremely valuable guide to the strength of a business. It is calculated as the difference between sales or production units at the selected activity and the breakeven sales or production.JOHN INSTITUTE OF TECHNOLOGY Page 40 . It should be able to influence price.

the denominator will be weighted average contribution margin. most of the firms turn out many products. BEP in Multiple Product Situations: In real life. they will provide significance information to the management about the profitability.JOHN INSTITUTE OF TECHNOLOGY Page 41 . If the margin of safety and Angle of incidence are considered and studied together. A high margin of safety with wider Angle of Incidence will represent the most profitable position of the business concern and vice versa. The calculation of breakeven point in a multi-product firm follows the same pattern as in a single product firm.COST VOLUME PROFIT ANALYSIS  Modernization of production facilities and the introduction of the most cost effectively technology. While the numerator will be the same fixed costs. It is an indicator of profitability above the BEP. The modified formula is as fallows Break Even Point (in unit) = Fixed Cost Weighted average contribution Margin Per unit T. Formulae of Margin of Safety Margin of Safety = Margin of Safety = Total Sales – Break Even Sales Profit P/V Ratio Margin of Safety = Profit x Selling price per unit Selling price per unit – variable cost per unit Margin of Safety = Margin of Sales Total Sales x 100 Angle of Incidence: The angle which sales line makes with the total cost line is known as angle of incidence.

COST VOLUME PROFIT ANALYSIS One should always remember that weights are assigned in proportion to the relative sales of all products. Peda. Mysore Pak and other products with a view to maximize the profits.JOHN INSTITUTE OF TECHNOLOGY Page 42 . This report may be helpful to the accounts department and management department at Mysore Milk Dairy. To identify the breakeven point (BEP) of sales and BEP in units per month for milk. T. It will be the contribution margin of each product multiplied by its quantity. Peda. Mysore pak. Ghee. SCOPE OF THE STUDY:   The cost volume profit analysis presented in the report is confined to MYMUL where multi products are manufactured. The modified formula is as fallows. In order know the cost of products and also to the break even analysis of actual and budgeted figures. Breakeven Point in Sales Revenue: Here also. Masala Majjige and Lassi. The denominator will be weighted average contribution margin ratio which is also called weighted average P/V Ratio. numerator is the same fixed costs. Breakeven Point (in Revenue) = Fixed Cost weighted average P/V Ratio OBJECTIVE OF THE STUDY:   To indicate the priorities for the dishes: Milk. Ghee.


Limited information: Due to incompleteness and the provide information was completely relied on.  T. with detail study. no costing technique is followed and hence the available information regarding the cost accounting system practiced here.COST VOLUME PROFIT ANALYSIS LIMITATIONS OF THE STUDY:   Time constrains: The major limitation of this project report move effective.JOHN INSTITUTE OF TECHNOLOGY Page 44 . there may be not 100% accuracy in this presentation. In MYMUL. is presented in this report.


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