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A STUDY ON COST OF PRODUCTION OF SLR LTD

COMPANY

EXECUTIVE SUMMARY
Title of the study
To undergone the project of this company identifying cost of the
company, company performance, each performance cost segment of the
company, five year balance sheet of the company and different iron-ore
performance of the company.
SLR metaliks ltd, it is well known for its quality, production and good
transportation also, it contains different iron- ore like sponge iron,
diamond and iron-ore etc.., but at present the company concentrated ironore only.
The study was conducted is to collect the objective of the company to
find different types of cost of product and overall cost of production. The
data for study is collected from annual reports of the company internets,
which included the income and expenditure of profit and loss account of
the company.

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A STUDY ON COST OF PRODUCTION OF SLR LTD


COMPANY

1) STATEMENT OF THE PROBLEM


A study on the cost of Iron ore extraction at SLR Company.
2) OBJECTIVE

To find the total production cost.


To find the different types of cost.
Finding the remedies to decrease cost.
To understand the role of variable cost in production.

3) SCOP OF THE PROBLEM


It includes collection, analysis of expenses and measurement of production at
different stages of manufactures.
It is the formal mechanism by means of which cost of product is ascertained and
controlled.
Setting the standard cost before starting of production and compared with the
actual at the end of the production.
4) LIMITATION
There is no time value.
Due to maintenance charges dependence up on Government rules and
regulation.
Is difficult to know the contribution of different department to calculate
accuracy of the cost.
5) METHODOLOGY
Descriptive method: using secondary data in cost sheet, balance sheet, fund
cost sheet and journals.
Analysis is based on the comparative of previous year performance in
graphical representation.

LITERATURE REVIEW
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COMPANY

Yen and Chu, 1991, low volume and high variety are often associated with
customization, and typical manufacturing processes require job-shop and

batch process.
Lynde and Richmond (1992) estimate a translog cost function using aggregate
US nonfinancial corporate business sector data for the period 1958 to 1989.
They impose constant returns to scale on all inputs, public capital included,
and assume firms behave competitively. Their findings suggest that publicly
financed infrastructure reduces the costs of production in the nonfinancial

corporate business sector.


The production literature usually treats location choice in the context of
international production (Ferdows, 1997). This act is usually followed by
establishing production and distribution facilities in the host country based on

certain capabilities.
Lempel and Mint berg (1996) have identified five main customization

strategies based on the stage of customer involvement.


Yen and Chu, 1991, low volume and high variety are often associated with
customization, and typical manufacturing processes require job-shop and

batch process.
Keeler and Ying (1988) estimate a translog cost function for regional trucking
firms in the US road freight transport industry, during the period 1950 to 1973.
They find that highway infrastructure has a significant effect on the
productivity growth of the trucking industry, generating benefits that would
justify about half of the cost of the Federal-aid Highway System.

OVERVIEW OF IRON AND STEEL INDUSTRY


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A STUDY ON COST OF PRODUCTION OF SLR LTD


COMPANY
1.

INTRODUCTION
Steel is crucial to the development of any modern economy and is
considered to be the backbone of the human civilisation. The level of per
capita consumption of steel is treated as one of the important indicators of
socio-economic development and living standard of the people in any country.
It is a product of a large and technologically complex industry having strong
forward and backward linkages in terms of material flow and income
generation. All major industrial economies are characterised by the existence
of a strong steel industry and the growth of many of these economies has
been largely shaped by the strength of their steel industries in their initial
stages of development.

2.

HISTORICAL PERSPECTIVE
The finished steel production in India has grown from a mere 1.1
million tonnes in 1951 to 36.957 million tonnes in 2003-04. During the first two
decades of planned economic development, i.e. 1950-60 and 1960-70, the
average annual growth rate of steel production exceeded 8%. However, this
growth rate could not be maintained in the decades that followed. During
1970-80, the growth rate in steel production came down to 5.7% per annum
and picked up marginally to 6.4% per annum during 1980-90. The production
during the last decade has doubled.
Though India started steel production in 1911, steel exports from India
began only in 1964. Exports in the first five years were mainly due to
recession in the domestic iron and steel market. Upon revival of the domestic
demand there was a decline in exports. India once again started exporting
steel only in 1975 touching a figure of 1 million tonnes of pig iron export and
1.40 million tonnes of steel export in 1976-77. Thereafter, exports again fell
rapidly to meet rising domestic demand. It was only after liberalisation of the
steel sector that the exports of iron and steel have once again started
increasing. During
2002-03 India exported 4.506 million tonnes of finished steel recording a
growth of 66.6%. This trend has continued with exports of finished carbon
steel being 4.835 million tonnes during 2003-04. The total volume of Finished
(Carbon) Steel exported during the current year (April-October 2004) is
provisionally estimated at 2.1 MT which is lower by 19.2% exported during the
corresponding period of last year.
Though the country's production of iron and steel is sufficient to meet
the domestic demand, some quantity of steel is always needed to be imported
especially those grades and qualities, which are required in small quantities,
and therefore do not justify setting up of production capacities. During 20022003, India imported 1.51 million
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COMPANY

COMPANY PROFILE

SLR Metaliks Limited


Plant has a Blast Furnace designed and engineered by
M/s. MECON Limited, with a volume of 292 m 3 and can
produce twenty thousand tones of pig iron per month on
full capacity. M/s. Centre for Engineering and Technology
Ltd, Ranchi have designed 6 MW captive BF Gas based
power plant. M/s. Sino India Metallurgical Engineering
and supply have designed Sinter plant of 25 M 2 with a
production capacity of 3.48 lakh tones per annum that can
take care of 70% sinter input to our Blast furnace.
Our dedicated team
consisting
of
qualified,
experience
and
trained
professionals from the industry and well known in their
respective fields, successfully commissioned the plant and
started producing quality foundry grade pig iron. Within
two years of operation we could establish our marketing
network successfully. Presently we have been catering
many of the reputed engineering and automotive
foundries across the country.

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COMPANY

Vision,Mision,Quality policy

Mission

Achieve continual growth in steel business.

Delight our customers through product quality, cost and delivery

Sustain Environment

Vision

To become the preferred supplier of Pig Iron by 2008 2009.

Quality Policy
Dominal iron ore an operating unit of SLR Limited, is committed to achive
sustained consistency in quality of iron ore mined, processed & produced by
adopting & continually improving scientific quality management system
through active involvement of all the employee to ensure optimum satisfaction
of all the stakeholders.

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A STUDY ON COST OF PRODUCTION OF SLR LTD


COMPANY

Product/ service profile

We produce compositions within fairly narrow ranges of specifications. The objective is to


optimize effective utilization of customers costs due to lowering of additives,
standardization of process parameters, process procedures and minimization of rejects.
We manufacture Basic, Foundry and Nodular grade pig iron for the steel mills and
foundries. High Fe Iron Ore in the form of lumps and fines are used to produce pig iron.
High quality lump coke and coke breeze are used as fuel. Other raw materials include
graded Manganese Ore, Lime stone, Dolomite and quartzite.

Pig iron is heaped in batches according to the Heat Numbers produced. Test
certificates are issued to every heat produced indicating the grades of pig iron.
Care is taken to ensure that there is no mix-up of heaps. The process is closely
monitored by the experienced & competent engineers to ensure the most
stringent quality of Pig Iron, with flexible controls made to suit individual and
specialized requirements. The final batch manufactured by us is analyzed by
Spectrometer.

Pig Iron specification


Grades of Pig iron

C%

Si%

Mn%

S%

P%

SLR IV (Foundry Grade)

3.4 to 4.3

2.0 to 2.5

0.5 to 0.8

0.06 max

0.12 max

SLR III (Foundry Grade)

3.4 to 4.3

1.5 to 1.99

0.5 to 0.8

0.06 max

0.12 max

SLR II (S G Grade)

3.4 to 4.3

1.5 to 2.0

0.20 max

0.02 max

0.06 max

SLR I (Basic Grade)

3.4 to 4.3

0.8 to 1.49

0.5 to 0.8

0.06 max

0.12 max

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A STUDY ON COST OF PRODUCTION OF SLR LTD


COMPANY

SWOT ANALYSIS
STRENGTH

Largest producer of iron ore by volume.

Financial strength characterized by high net worth, zero debt, good credit
rating.

Good work culture- skilled, experienced and dedicated workforce.

Good brand image of SLRS iron ore in domestic/ international market.

Highly mechanized Iron ore mines.

Core competence in iron ore mining.

WEAKNES

Geographically remote location of the projects acting as deterrent in attracting


and retaining talent and also for reaching suppliers and services.

Delay in forest and environment and other clearances affecting time schedules
for operating and commission of new machined affecting our investment
plans.

Extreme foggy weather condition causing stoppage of mining operations at


Bailadila complex during monsoon months.

The company has not diversified into other sector. As been, any adverse
impact on mining sector hits the profitability of the company.

OPPOURTUNITIES

Continues diversifying and expanding its mining activities and products.

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A STUDY ON COST OF PRODUCTION OF SLR LTD


COMPANY

Expand and establish its presence as an integrated producer of iron and steel.

Up gradation of Evacuation Infrastructure.

Financial power for investment in new projects as a Navaratna Company.

Expand its international presence through the acquisition of legacy iron ore
ltd.

THREATS

Entry of MNCs and other Indian private companies into iron mining.

The Industry being cycle in nature. SLR Metaliks is exposed to sharp


fluctuations in demand for in products.

Regulatory issue arising due to judicial verdicts may also affect mining and
allotment of mining lease.

The company faces risks in respect of high inventory of stocks and its
disposal.

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A STUDY ON COST OF PRODUCTION OF SLR LTD


COMPANY

INFRASTRUCTURE FACILITIES
The following are the infrastructure facilities provided by the companies
1. Power: SLR Limited has the following facilities for getting the required
amount of power from .
2. Water: Major requirements of water are being pumped from nearly TB Dam
by laying a pipeline.
3. Transportation: It have a heavy transportation facility.
4. Natural resources: The SLR Limited has good natural resources.

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COMPANY

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A STUDY ON COST OF PRODUCTION OF SLR LTD


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A STUDY ON COST OF PRODUCTION OF SLR LTD


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A STUDY ON COST OF PRODUCTION OF SLR LTD


COMPANY

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A STUDY ON COST OF PRODUCTION OF SLR LTD


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COMPANY

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SHARE CAPITAL
ALLOCATED
RESERVES & SURPLUS

GRANTS IN AID

TOTAL

APPLICATION OF FUNDS
FIXED ASSETS :

9,990,002,393

GROSS BLOCK

A STUDY ON
COST OF PRODUCTION OF SLR LTD
SOURCES OF FUNDS

COMPANY
SHAREHOLDERS' FUNDS:

BALANCESHEET ON2009-2010
2009-2011

PARTICULAR

9,990,
002,393

3,710,034,054

Less: DEPRECIATION

9,990,
002,393

1,603,446,924

INVESTMENTS

CURRENT ASSETS,LOANS
& ADVANCES :

NET BLOCK

2,106,587,130

58,220,992

2,164,
808,122

4
8,8
0
1
3,5
2

CAPITAL WORK IN
PROGRESS

15
2,8
1

20
20

2
5,2
7

4,8
4

INVENTORIES

2,500

794,352,483

SUNDRY DEBTORS

CASH & BANK


BALANCES

OTHER CURRENT
ASSETS

LOANS & ADVANCES

488,568,125

9,7
1

87,373,792

4,2
4

574,576,874

5,9
5

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Less: CURRENT
LIABILITIES &
PROVISIONS:

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1,944,871,274

4,1
5

1
4,0
6

A STUDY ON COST OF PRODUCTION OF SLR LTD


COMPANY
BALANCESHEET ON 2009-2011

PROFIT AND LOSS ACCOUNT 2009-2011

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PARTICULARS

INCOME

INCOME FROM SERVICES

INCOME FROM SALE OF POWER

OTHER INCOME

ACCRETION/(DECRETION) TO STOCK

A STUDY ON COST OF PRODUCTION OF SLR


LTD

SALES

13,563,612,359
COMPANY

2009-2010

EXPENDITURE

CONSUMPTION OF STORES & SPARES

POWER

PAYMENTS & BENEFITS TO


EMPLOYEES

REPAIRS & MAINTENANCE

ROYALTY & CESS

SELLING EXPENSES:

38,408,414

19,888,503

13,687,563,298

332,582,006

509,200,971

110,614,261

930,109,326

77,818,874

590,436,358

65,654,022

RAISING & TRANSPORTATION


CHARGES

TOTAL

24
1,4
45,
34
0

- FREIGHT OUTWARDS

1
2,
1
0
1,
8
1
5

78,
89
0,7
83

- OTHERS

------------

320,336,123

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OTHER EXPENSES

393,714,545

4
6,
5
0
1,
8
2
1
-------

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COMPANY

BALANCE SHEET 2011-2014

PRTICULARS

Equity and Liabilities


Shareholders' Funds:

Share Capital

Reserves & Surplus

14,421,550,2
97

Non-current Liabilities :

Deferred Tax Liability (Net)

Other Long term Liabilities

Long Term Provisions

Trade payables

Other current Liabilities

Short term Provisions

28,764,291

978,047,442

2,044,053,27
1

Head office account

TOTAL
ASSETS :
NON-CURRENT ASSETS :

17,8

37,

1,03

3,24

1,16

28,764,291

14,421,550,
297

Current Liabilities :

2011-2012

3,022,100,7
13
6,629,805,0
18

10,842,610,
283

Fixed Assets :

Tangible Assets

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1,063,523,05
3

A STUDY ON COST OF PRODUCTION OF SLR LTD


COMPANY

Intangible Assets

Capital Work in Progress

Non-current investments

Long term Loans and


Advances

577,213,055

1,686,255,31
6

3,326,991,42
4

2,500

726,409,235

Other non-current assets


CURRENT ASSETS :

Inventories

Trade receivables

Cash and bank balances

Short term Loans and


Advances

Other Current Assets

816,736,977

4,683,128,77
7

14,422,143

1,274,794,47
4

124,753

PROFIT AND LOSS ACCOUNT 2011-2014

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597,

6,03

7,79

144,

1,45

4,89

35,

1,42

4,053,403,1
59

TOTAL

6,789,207,1
24

10,842,610,
283

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COMPANY

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2011-2012
2012-2013
A STUDY ON COST
OF PRODUCTION OF
SLR LTD
COMPANY

PARTICULARS

19,271,245,
564

I. Revenue from Operations

Less : Excise duty

Net Sales

II. Other Income

III. Total Revenue (I + II)

IV. Expenses :
Consumption of raw
materials
Consumption of Stores &
Spares

19,271,245,
564

90,250,666
19,361,496,
230

27,742,5
57,174

574,766,240

Changes in Inventories of
Finished Goods

Employee Benefit expense

Power, Electricity and Water

96,659,193

Repairs & Maintenance

Royalty & Cess


Selling Expenses-Freight
Outwards
-Others

114,138,042
1,736,465,5
53

0
27,135,655

406,553,079
1,155,453,8
84

27,135,655

Share of Head Office and


R&D Expenses

201,023,045

Depreciation

258,595,526

Other Expenses

Total Expenses
V. Profit before exceptional
and extraordinary items and
tax (III-IV)
VI.Exceptional items
VII. Profit before
extraordinary items (V-VI)

654,648,485
4,412,332,5

Profit for the period

Add: Profit/(Loss) brought


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forward from Previous Year
Less: Profit/(Loss) transferred

to Head Office
Profit for the period carried

over to Balance Sheet

14,949,163,
686
527,613,389
14,421,550,
297

14,421,550,
297
15,272,899,
174
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15,272,899,
174
14,421,550,
297

86
64

27,742,557,
174

49,006,546
27,791,563,

720

0
626,267,90
9
645,554,21
3
1,287,777,8
59
109,524,55
1

81,159,423
2,850,234,9

44

57
3,395,002,1
43

0
338,934,71
8
227,840,21
6
1,623,208,4
36
9,894,395,9
99
17,897,167,
721
0
17,897,167,
721

17,897,167,
721
14,421,550,
297
14,421,550,
297
17,897,167,
721

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COMPANY

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QUICK RATIO=

QUICK ASSETS
CURRENT LIABILITIES

Year

Curren
t
assets

Current
liability

20092010

194487
1274

2567213
642

0.75

20102011

644319
504

1903139
132

0.33

20112012

678920
7124

3050865
004

2.22

20122013

781357
3870

4310138
120

1.81

20132014

108289
42226

3446723
708

3.14

Ratio

3.5
3
2.5
2

3.14

1.5

2.22

1
0.5

0.75

1.81

0.33

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

The above table shows the assets ratio of SLR ltd. The graph it show the
sufficiency of the company in meeting short term current obligation. There is
steep decline from 0.75 in the year 2009-2010 to 3.33 in the year 2010-2011 to
2.2 in the year 2011-2012to 1.81 in the year 2012-2013 to 3.14 in the year
2013-2014.

Quick ratio=

quick assets
current liability

QUICK RATIO=

QUICK ASSETS
CURRENT LIABILITIES

Year

Quick
assets

Current
liability

Rati
o

2009
2010

115051
8791

2567213
642

0.44

2010
2011

644319
504

1903139
132

0.33

2011
2012

597247
0147

3050865
004

1.95

20122013

63592431
95

431013812
0

1.47

20132014

95315670
82

344672370
8

2.76

3
2.5
2
2.76

1.5
1.95

1
0.5

0.44

1.47

0.33

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

The above table shows the quick ratio of SLR ltd. The graph it show the
sufficiency of the company in meeting short term quick obligation. There is
steep decline from 0.44 in the year 2009-2010 to 0.33 in the year 2010-2011 to
1.95 in the year 2011-2012to 1.47 in the year 2012-2013 to 2/76 in the year
2013-2014.

NET WORKING CAPITAL RATIO=

NET WORKINGCAPITAL
TOTAL ASSETS

Year

20092010

Net
workin
g
capital
622342
368

Total
assets

Rati
o

194487127
4

0.32

20102011

849092
494

105404663
8

0.80

20112012

222533
8425

678920712
4

3.27

20122013

350343
5750

781357387
0

0.44

20132014

73822185
12

1082894226

6.81

Graph shows net working capital.

7
6
5
4

6.81

3
3.27

2
1

Column2

0.8

0.32

0.44

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

The above table shows the net working ratio of SLR ltd. The graph it show the
sufficiency of the company in meeting short term net working obligation.
There is steep decline from 0.32 in the year 2009-2010 to 0.80 in the year
2010-2011 3.27 in the year 2011-2012 to 0.44 in the year 2012-2013 to 6.81 in
the year 2013-2014.

PROFIT MARGIN =

NET INCOME
SALES

Year

20092010

Ratio

0.74

193119
63235

0.79

Gr
ap
h

192712
45564

0.74

17897167
721

277425
57174

0.64

21553544
244

318606
64310

0.67

Net
income

Sales

99900023
93

135636
12359

20102011

15272899
174

20112012

14421550
297

20122013

20132014

shows profit margin ratio

0.8
0.7
0.6
0.5
0.4

0.74

0.79

0.74

0.64

0.67

0.3
0.2
0.1
0
2009-2010

2010-2011

2011-2013

2012-2013

2013-2014

The above table shows the profit margin ratio of SLR ltd. The graph it show
the sufficiency of the company in meeting short term profit margin obligation.
There is steep decline from 0.74 in the year2009-2010 to 0.79 in the year

2010-2011to 0.74 in the year 2011-2012to 0.64 in the year 2012-2013 to 0.67
in the year 2013-2014.

INVENTORY

TURN
SALES
=
RATIO INVENTORY

Year

20092010

Sales

Inventor
y

Ratio

13563661
2359

7716368
20

17.57

20102011

19311963
235

6020398
08.5

32.07

20112012

19271245
564

8167369
77

23.59

20122013

27742557
174

1454330
675

19.07

20132014

31860664
310

1297375
198

24.55

Graph shows inventory turnover ratio

35
30
25
20

32.07

15

23.59

17.57

10

24.55

19.07

5
0
2009-2010

2010-2011

2011-2013

2012-2013

2013-2014

The above table shows the inventory turnover ratio of SLR ltd. The graph it
show the sufficiency of the company in meeting short term inventory turnover
obligation. There is steep decline from 17.57 in the year 2009-2010 to 32.07
2010-2011 23.59 in the year 2011-2012to 19.47 in the year 2012-2013 to
24.55 in the year 2013-2014.

SOLVENCY RATIO=

AFTER TAX NET PROFIT + DEPRCIATION


CURENT LIABILITY

Year

Anp+De
p

Current
liability

20092010

10192010
430

2567213
642

3.97

20102011

15512011
683

1903139
132

8.15

20112012

14421550
297

3050865
004

4.72

Ratio

20122013

17897167
721

4310138
120

4.15

20132014

21553544
244

3446723
708

6.25

Graph shows solvency ratio

10
8
6
4
2

8.15
4.72

3.97

4.15

6.25

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

The above table shows the solvency ratio of SLR ltd. The graph it show the
sufficiency of the company in meeting short term solvency obligation. There is
steep decline from 3.97 in the year 2009-2010 to 8.15 in the year 2010-2011to
4.72 in the year 2011-2012to 4.15 in the year 2012-2013 to 6.25 in the year
2013-2014.

THEORETICAL BACKGROUND OF THE STUDY


INTRODUCTION OF COST

Cost is defined as the value of the sacrifice made to acquire goods/services,


measured in monetary terms by the acquisition of assets or incurrence of
liability at the time of benefits are acquired . At time of acquisition, the cost
incurred is for the present or future benefits. When these benefits are utilized,
the costs become expense. An expense is defined as a cost that has given a
benefit and is now expired. Unexpired costs that can give future benefits are
classified as assets. Expense are matched against revenues to determine net
income/loss for a period Revenue is defined as the prices of products sold
/services rendered.

MEANING OF COST

Cost means a sacrifice. It is the amount of expenditure incurred, on a given


thing or in rendering service. It is nothing but outlay.

DEFINITION OF COST

According to I.C.M.A London says that Cost is the amount of expenditure


incurred on or attributable to a given thing

INTRODUCTION OF PRODUCTION

Production is the result of co-operation between different factors or agents of


production. The factory of production concerns itself with the problems of
combining various inputs of factors.

Production is a process where in inputs or resources are transformed into


outputs and it is the making of something out of something else. It may consist
not only of goods but also of services as well. Therefore, production in
economics means production of wealth or value, and not merely utility. In the
process of production man tries to create from or place or time utility and
value in a commodity.

DEFINITION OF PRODUCTION

According to Hicks, says that Production means any activity directed to the
satisfaction of other peoples wants through exchange.

LET US VIEW THE COMBINEND COST OF PRODUCTION

The expenses incurred in the production of a commodity are included in the


cost of production. The most generally accepted concept of cost of production
is the money of cost of production which means the aggregate money
expenditure incurred by a firm on various items in the production of a
commodity.

For the production of any commodity or services, the firm has to employ
various factors of production and pay for their services. In other words, it has
to incur various expenses in a specified period of time to produce a given
output. The total of such payments to the factors of production is called cost
of production

DEINIATION OF COST PRODUCTION

Cost of production means the total amount of expenditure, implicit and


explicit, incurred in the production of a commodity or services.

ELEMENTS OF COST

There are broadly three elements of cost

1. Material

2. Labor

3. Expenses

MATERIAL

The substance from which the product is made is known as material. It may be
in a raw state-raw material e.g. timber for furniture and leather for shoe, etc. It
may also be in manufactured state- components, e.g. battery for car, speaker
for radio, etc, Materials can be direct and indirect.

Direct Material: All materials which become an integral part of the finished
product, the cost of which are directly and completely assigned to the specific
physical units and charged to the prime cost, are known as direct material.

Indirect Material: All materials, which cannot be conveniently assigned to


specific physical units, are termed as indirect material. Such commodities do
not form part of the finished products. Consumable stores, lubrication oil,
stationery and spare parts for the machinery are termed as indirect materials.

LABOUR

Human efforts used for conversion of material into finished products or doing
various jobs in the business are known as labor. A payment made towards the
labor is called labor cost. Labor can be direct and indirect.

Direct Labor: Direct labor is all labor expended and directly involved in
altering the condition, composition or construction of the product. The wages
paid to skilled and unskilled workers for manual work or mechanical work for
operating machinery, which can be specifically allocated to a particular unit of
production, is known as direct wages or direct labor cost.

Indirect Labor: Labor employed to perform work incidental to production of


goods or those engaged for office work, selling and distribution activities are
known as 'indirect labor'.

EXPENSE

All expenditures other than material and labor incurred for manufacturing a
product or rendering service are termed as 'expenses'. Expenses may be direct
or indirect.

Direct Expenses: Expenses which are specifically incurred and can be directly
and wholly allocated to a particular product, job or service are termed as
'direct expenses'. It is also known as 'chargeable expenses'.

Indirect Expenses: All expenses excluding indirect material and indirect


labour, which cannot be directly and wholly attributed to a particular product,
job or service, are termed as 'indirect expenses'.

TYPES OF COST

Fixed cost
Variable cost
Average cost
Marginal cost

FIXED COST

Fixed cost are those cost which do not vary with the output and typically
includes rent, depreciation, insurance set up-cost and normal profit. They are
also called as overheads.

Definition of fixed cost

A cost that does not change with an increase or decrease in the amount of
goods or services produced .Fixed costs are expenses that have to be paid by a
company, independent of any business activity. It is one of the two
components of the total cost of goods or service, along with variable cost.

Total

cost= Cost

Total tons produced

Total Cost = Total variable cost+ Total fixed cost


Total fixed cost = Total variable cost- Total cost
Total fixed cost = TFC=Constant
VARIABLE COST

Variable costs are costs that do vary with output, and they are called direct
costs. Examples of typical variable costs include fuel, raw material, and some
labor cost.

Definition of variable costs

A corporate expense that varies with production output, variable costs are
those costs that vary depending on a companys production volume; they rise
as production increases and all as production decreases. Variable costs differ
from fixed costs such as rent, advertising, insurance and office supplies, which
tend to remain the same regardless of production output. Fixed costs and
variable costs comprise total cost.

Variable cost=

Total variable cost


Total Tons produced

Total Variable Cost= TVC = TVC (q)

Total Variable Cost = Total Fixed Cost- Total Cost

Total Variable Cost =Total Quantity of Output * Variable cost per unit

AVERAGE COST

The average cost is the total cost divided by the number of goods produced. It
is also equal to the sum of average variable costs and average fixed costs.
Average cost can be influenced by the time period for production. Average
costs are the driving factor of supply and demand within a market. Economists
analyze both short run and long run average cost. Short run average costs vary
in relation to the quantity of goods being produced. Long run average cost
includes the variation of quantities used for all inputs necessary for
production.

Average Total Cost = ATC (q) or AC (q)

Average Fixed Cost = AFC

TFC
q

Average Variable Cost = AVC (q) =

ATC = AFC + AVC

Where,

TC = Total cost.

Q = Quantity.

AFC = Average Fixed Cost.

TC (q)
q

TVC (q)
q

AVC = Average Variable Cost.

MAGINAL COST

In economics, marginal cost is the change in the total cost when the quantity
produced changes by one unit. It is the cost of producing one more unit of a
good. Marginal cost includes all of the costs that vary with the level of
production.

Marginal Cost = MC (q)

ChangeTC(q)
Changeq

MC (q1, q2)

TC (q 2)TC (q 1)
q 1q 2

Marginal Fixed Cost = MFC =

ChangeTFC
Changeq

=0

Marginal Variable Cost =

ChangeTVC ( q)
Changeq

MC = MFC + MVC = O + MVC = MVC

TOTAL COST

Total cost, not surprising, is just the all- inclusive cost of production a given
quantity of output. Mathematically speaking, total cost is a function of
quantity.

Total Cost = TC = TC (q)

Total Cost /Unit=

YE

Total Cost
Sales

AR

TOTAL

COST/

COST in

UNITS

Rs

in Rs

(lakhs)

E
S
i
n
(
R
s

200

34561.16

)
6

9-

201

201

6
5

39363.44

0-

201

560.51

744.95

201

4
5

1-

201

201

0
7

2-

53465.00

105399.5

201

0
4

20627.08

963.33

1354.74

507.68

201

3-

201

6
3

The total cost is high in the year 2012-2013 compared to its previous years. In
the year 2013-2014 the total cost has decreased from 1354.74 to 507.68 and
it is low cost compared to its previous year. The total cost has decreased due to
decrease in the sales cost. It is favorable to the company.

Variable Cost /unit=

YEAR

Total Variable Cost


Sales

TOTAL

VARIAB

LE

COST

in Rs

(lakhs)

UNITS

in Rs

241.00

388.65

485.48

965.07

in
(
R

2009-2010

14860.52

s)
6
1.
6

2010-2011

20536.72

6
5
2.
8

2011-2012

26944.14

4
5
5.
5

2012-2013

75082.98

0
7
7.
8
0

2013-2014

31800.63

782.68

0.
6
3

1200
1000
800
600
965.07

400
200

782.68
388.65

241

485.48

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION

The variable cost is high in the year 2012-2013 compared to its previous year.
In the year 2013-2014 the variable cost has decreased from 965.07 Rs to
782.68 Rs, but it is high when compared to 2011-2012, 2010-2011 and 20092010. As the royalty, tiers and tubes cost has decreased when compared to the
previous year, so the variable cost as decreased. Even though it is favorable to
the company, still it has to control the variable cost.

Total
Fixea Cost /unit=Cost

Sales

YEAR

TOTAL

SALES

UNIT

FIXED

in (Rs)

in Rs

COST

in Rs

2009-

(lakhs)
19700.64

2010
2010-

18705.71

52.84

354.00

2011
2011-

21244.72

55.50

382.78

2012
2012-

30316.53

77.80

389.67

2013
2013-

16567.42

40.63

407.76

61.66

319.50

2014

450
400
350
300
250
200
150

319.5

354

382.78

389.67

407.76

2011-2012

2012-2013

2013-2014

100
50
0
2009-2010

2010-2011

INTERPRETATION

The fixed cost is high in the year 2013-2014 compared to its previous years
and its low in the year 2009-2010. The fixed cost has increased due to increase
in the repairs and maintenance cost. It is unfavorable to the company as it
affects the total cost. It results in the less profit.

COMPARING THE COST OF DIFFERENT PARTICULARS

2009 to 2010

Particulars

Cost

3325

61.66

53.93

Rising &

Transportation

Consumption of
stores & spares
Power

Royalty

Selling expenses

Unit

.82

3923

61.66

63.62

.29
918.

61.66

14.89

14
5904

61.66

95.75

.36
788.

61.66

12.79

91

Sales

120
100
80
60
95.75

40
59.26

63.62

20
14.89

0
R&T

CS&S

POWER

12.79
ROYALTY

S.EX

INTERPRETATION

The royalty is high in the year 2009-2010 than the other variable input. The
selling expense is less than other expenses. The major variable cost is raising
& transportation and consumable stores and spares.

IN 2010 TO 2011

Particulars

Rising &

Transportation

Consumption of
stores & spares
Power

2109.9

Sale

Unit

s
52.8

39.93

4262.3

3
887.61

52.8

80.66

4
52.8

16.79

24.25

8.83

Royalty

1281.8

4
52.8

Selling expenses

0
465.01

4
52.8

Cost

INTERPRETATION

The consumable stores and spares are high than other inputs. The selling and
expense is less than other inputs. The major variable cost is raising and
transportation and consumable and spare of the total variable cost.

IN 2011 TO 2012

Particulars

Cost

Sales

Unit

Rising &

4103.

55.50

73.94

Transportation

Consumption of

4437.

55.50

79.95

stores & spares


Power

76
766.4

55.50

13.80

1
1736.

55.50

31.29

66
271.3

55.50

4.88

96

Royalty

Selling expenses

90
80
70
60
50
40

73.94

79.95

30
20

31.29

10

13.8

4.88

0
R& T

CS&S

POWER

ROYALTY

S.EX

INTERPRETATION

The consumable and spares cost is high than the other inputs. The selling
expense is less than the other inputs. The major cost is raising and
transportation and consumable and spares.

IN 2012 TO 2013

Particulars

Rising &

Transportation

Consumption of
stores & spares
Power

Royalty

Selling expenses

Cost
6714.

Sales
77.80

Uni

t
86.

81

5055.

55
860.8

8
2850.

35
3394.

30

77.80
77.80
77.80
77.80

99

64.

98
11.9

0
36.

63
43.
62

100
90
80
70
60
50
40

86.3
64.98

30
20

36.63

10

43.62

11.9

0
R& T

CS &S

POWER

ROYALTY

S,EX

INTERPRETATION

The rising and transportation is high than the other inputs. The power is less
than the other input. The major cost is raising and transportation and
consumption spares and stores.

IN 2013 TO 2014

Particulars

Rising &

Transportation

Cost

Sales

Unit

1779.6

40.63

43.78

Consumption of

605.55

40.63

14.90

stores & spares


Power

490.56

40.63

12.07

1437.7

40.63

35.38

1
883.59

40.63

21.74

Royalty

Selling expenses

50
45
40
35
30
25
20
15
10
5
0

43.78

43.78
35.38
21.74

14.9
R& T

CS& S

POWER

ROYALTY

S. EX

INTERPRETATION

The power and raising and transportation is high than the other inputs.
Consumable stores and spares is less than the other inputs, so here major cost
is transportation and raising and power

Cost items
sales

Total Items=

IN 2009 TO 2010

Particulars

Consumption of

Cost

Sales

Unit

1168.7

61.66

18.95

stores & spares

930.09

61.66

15.08

2816.3

61.66

45.67

Repairs &

8
778.19

61.66

12.62

maintenance
Misc exp

3616.3

61.66

58.65

6
2020.0

61.66

32.76

Sales and wages

Electricity

Depreciation

70
60
50
40
30

58.65
45.67

20
10

32.76
18.95

15.08

CS & S

S&W

12.62

0
ELECTRICITY

RE &MA

MISC EX

DEP

INTERPRETATION

The miscellaneous expense and electricity is high than the other inputs.
Repairs and maintenance is less than other inputs so, the major cost is
electricity and miscellaneous.

IN 2010 TO 2011

Cost

Sales

Unit

Consumption of

1275.51

52.84

24.13

stores & spares


Sales and wages

1006.32

52.84

19.00

Particulars

Electricity

2144.15

52.84

40.57

Repairs &

852.26

52.84

16.12

maintenance
Misc exp

2033.75

52.84

38.48

Depreciation

2391.13

52.84

43.88

50
45
40
35
30
25
40.57

20
15

24.13

10

19

43.88

38.48

16.12

5
0
CS & S

S&W

ELECTRICITY

R& M

M. EX

DEP

INTERPRETATION

The depreciation is high than the other inputs. Repairs and maintenance is less
than the other input, so here major cost is electricity and depreciation.

IN 2011 TO 2012

Particulars

Cost

Sales

Unit

Consumption of

1309.90

55.50

23.60

stores & spares


Sales and wages

1155.54

55.50

20.82

Electricity

2210.41

55.50

39.82

Repairs &

1141.38

55.50

20.56

maintenance

Misc exp

2442.53

55.50

44.00

Depreciation

2585.96

55.50

46.59

50
45
40
35
30
25
20

39.82

15
10

23.6

20.82

CS&S

S &W

44

46.59

M.EX

DEP

20.56

5
0
ELECTRICITY

R& M

INTERPRETATION

The depreciation is high than the other inputs. Repairs and maintenance is less
than the other inputs so, in this year major cost is miscellaneous expense and
depreciation.

IN 2012 TO 2013

Particulars

Cost

Sales

Unit

Consumption of

1207.

77.80

15.51

stores & spares


Sales and wages

13
1287.

77.80

16.55

78
3623.

77.80

46.57

Electricity

72

Repairs &

811.5

77.80

10.43

maintenance
Misc exp

9
951.9

77.80

12.23

1
2278.

77.80

29.28

Depreciation

40

50
45
40
35
30
25

46.57

20
15
10
5

29.28
15.51

16.55

CS & S

S&W

10.43

12.23

R& M

M.EX

0
ELECTRICITY

DEP

INTERPRETATION

The electricity is high than the other inputs. Repairs and maintenance is less
than the other inputs so here major cost is electricity and depreciation.

IN 2013 TO 2014

Particulars

Cost

Sales

Unit

Consumption of

2116.36

40.63

52.08

stores & spares


Sales and wages

2159.49

40.63

53.15

Electricity

330.27

40.63

8.13

Repairs &

1532.33

40.63

37.77

maintenance
Misc exp

1405.06

40.63

34.58

Depreciation

880.50

40.63

21.67

60
50
40
30
52.08

53.15

20

37.77

34.58
21.67

10
8.13
0
CS & S

S&W

ELECTRICITY

R &M

M.EX

DEP

INTERPRETATION

The salary and wages is high than the other inputs. Electricity is less than the
other inputs so here major cost is stores and spares and electricity.

VARIABLE COST ITEMS PER UNIT

Rising & Transportation

Year

Rising

SALES

UNIT

&
Transpo
rtation

2009-2010

3325.82

61.66

53.93

2010-2011

2109.96

52.84

39.93

2011-2012

4103.96

55.50

73.94

2012-2013

6714.81

77.80

86.30

2013-2014

1779.61

40.63

43.78

Rising and Transportation


86.3
73.94
53.93
43.78

39.93

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION

The rising and transportation cost is high in the year 2012-2013 that is 86.3 Rs
than the rest years. It is less in the year 2010-2011 that is 39.93. It is varying
from year to year.

Consumption of stores & spares

Year

Consumpt

ion of

SALE

UNIT

stores &

2009-

spares
3923.29

61.66

63.62

4262.33

52.84

80.66

4437.76

55.50

79.95

2010

20102011

2011-

2012

2012-

5055.55

77.80

64.98

605.55

40.63

14.90

2013

20132014

Consumable stores& spares


80.66

79.95
64.98

63.62

14.9
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION

The consumable stores and spares is high cost in the year 2010-2011 that is
80.66. In the current year the cost is 14.9 very less than previous years. From
the year 2011-2012 the cost has decreased. This is favorable to the company.

Power

Year

Powe

SAL

ES

N
I

2009-

2010

T
918.1

61.6

1
4
.
8
9

2010-2011

887.6

52.8

1
6
.
7
9

2011-2012

766.4

55.5

1
3
.
8
0

20122013

862.9
1

77.8
0

1
1

.
0
9

20132014

490.5
6

40.6

1
2
.
0
7

Power
16.79
14.89

13.8
11.09

2009-2010

2010-2011

2011-2012

2012-2013

12.07

2013-2014

INTERPRETATION

The power cost is high in the year 2010-2011 that is 16.79 more than the other
year. The cost is fluctuating year by year.

Royalty

Year

Royalt

2009-

2010

2010-2011

5904.3

2011-2012

12811.

17364.

2012-

2013

20132014

28502.

14375.
71

95.75

52.

242.3

55.

50

35

61.

84

66

66

80

UNI

LE

SA

77.

80

40.
63

312.8

366.3
5

353.8
0

Royalty
95.75

24.25

2009-2010

2010-2011

36.63

31.29

2011-2012

35.38

2012-203

2013-2014

INTERPRETATION

The royalty is high in year 2009-2010 that is 95.75 than rest of the years .It is
less in the year 2010-2011 that is 24.25.the cost has increased from the year
2010-2011 to 2012-2013 and it has decreased from 36.63 to 35.38 in the year
2012-2013 to 2013-2014.

Selling & expenses

Year

Selling&
expense

SAL
ES

UNI
T

788.91

61.66

12.79

465.01

52.84

8.83

271.35

55.50

4.88

3394.99

77.80

43.62

883.59

40.63

21.74

20092010

20102011

20112012

20122013

20132014

Selling expense
43.62

21.74
12.79
8.83
2009-2010

2010-2011

INTERPRETATION

4.88
2011-2012

2012-2013

2013-2014

The selling and expense is high in year 2013-2014 that is 43.62 more than
other years. It is less in the year 2012-2013 that is 4.88. The cost is fluctuating
year by year. This year it has decreased.

FIXED COST ITEMS PER UNIT

Consumption of stores & spares

Year

Stores &

spares

2009-

SALE

UNIT

1168.72

61.66

18.95

1275.51

52.84

24.13

1309.90

55.50

26.60

1207.13

77.80

15.51

2116.36

40.63

52.08

2010

20102011

20112012

20122013

20132014

Consumption stores nd spares


52.08

24.13
18.95

2009-2010

23.6
15.51

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION

The fixed cost item of stores and spares is the high in the year 2013-2014 that
is 52.08 with compare to the previous years. It is less in the year 2012-2013
that is 15.51. In the current year the cost has increased tremendously from
15.51 to 52.08.

Salary and wages

Year

Salary &

SALES

UNIT

wages

2009-

930.09

61.66

15.08

1006.32

52.84

19.00

1155.54

55.50

20.82

1287.78

77.80

16.55

2159.49

40.63

53.15

2010

20102011

20112012

20122013

20132014

Salary and wages


53.15

19

15.08

2009-2010

2010-2011

INTERPRETATION

20.82

2011-2012

16.55

2012-2013

2013-2014

The salary and wages high in the year 2013-2014 that is 53.15 compare to
previous years. It is less in the year 2009-2010 that is 15.08. the salary and
wages has increased tremendously from 16.55 to 53.15 Rs.

Electricity

Year

Electri

SALES

UNIT

city

2009-

2816.38

61.66

45.67

2010

2010-2011

2144.15

52.84

40.57

2011-2012

2210.41

55.50

39.82

2012-

3623.35

77.80

46.57

330.27

40.63

8.13

2013

20132014

Electricity
46.57

45.67
40.57

39.82

8.13
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION

The electricity cost is high in the year 2012-2013 that is 46.57 the rest of
years. It is less in the year 2013-2014 that is 8.13. The cost is varying year by
year.

Repairs & maintenance

Year

Repairs
&
maintena
nce

SALES

UNIT

2009-

778.19

61.66

12.62

852.26

52.84

16.12

1141.38

55.50

20.56

811.59

77.80

10.43

1532.33

40.63

37.77

2010

20102011

20112012

20122013

20132014

Repairs & maintenance


37.77

20.56
16.12

12.62

2009-2010

10.43

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION

The repairs and maintence cost is high in the year 2013-2014 that is 37.77. It
is less in the year 2012-2013 that is 10.43. in the current year the cost has
increased tremendously.

Repairs & maintenance

Year

Repairs

SALES

UNIT

&
maintena
nce

2009-

778.19

61.66

12.62

852.26

52.84

16.12

1141.38

55.50

20.56

811.59

77.80

10.43

1532.33

40.63

37.77

2010

20102011

20112012

20122013

20132014

Repairs & maintenance


37.77

20.56
16.12

12.62

10.43

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION

The repairs and maintenance cost is high in the year 2013-2014 that is 37.77.
It is less in the year 2012-2013 that is 10.43. in the current year the cost has
increased tremendously.

Miscellaneous expense

Year

Misc

SALES

UNIT

61.66

58.65

52.84

38.48

exp

2009-

2010

2010-

3616.3
6

2033.7

2011

20112012

2442.5

55.50

44.00

2012-

951.91

77.80

12.23

1405.0

40.63

34.58

2013

20132014

Misellneous expense
58.65
44
38.48

34.58

12.23

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION

The miscellaneous expense is high in the year 2009--2010 that is 58.65 it is


less than the previous year. It is less in the year 2012-2013 that is 12.23.

Depreciation

Year

Depreci

SAL

UNIT

ation

ES

2009-2010

2020.08

61.66

32.76

2010-2011

2391.13

52.84

43.88

2011-2012

2585.96

55.50

46.59

2012-2013

2278.40

77.80

29.28

2013-2014

880.50

40.63

21.67

Depriciation
46.59
43.88
32.76

29.28
21.67

2009-200

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION

The depreciation cost is high in the year 2011-2012 that is 46.59 the rest of
years. It is less than the year 2013-2014 that is 21.67.in the current year the
cost has decreased.

COST SHEET ON NMDC LTD COMPANY

PARTICULAR

Royalty

20

201

201

10
27

2011

33
27

Rising & Transfer

.89

99
27

4
332

8
325

16.

Other Expense

3.8

6.3

.89

99

Prime Cost
Add :Factory

02.

1.8

96
17

35

35

Overhead

Tools
Indirect materials

40.
02

671

4.1

4.1

.96

6
24

8
951

2033

42.

7.9

.75

5
26

480

384

1947

5.1

58.

72.

9.4

28

91

25
1
56

671

4.6

9.3

2109

62

285

02.

285

03.

56
0.8

41

1281

36
15

13.

36

2523

59
36
36

4
325

6.3

3
332
3.8

33

04.

13.

12
27

2523

82

201

20

25.

3-

33

201
2-

14.
Maintenance cost
Direct Expense

11-

14.
Direct Material

20

2010

09

20

23

285.

1.5

68
6876

6
79

.49

195

.51
876

41.

5.1

9,2

87

26.

44

6.1

Stores & Spares

Power

Repairs &

Depreciation

.84

66
96

8
109

6.5

5.2

.09

9
11

852.

41.

42.

.13

53
44

Total Factory

2.7

Overhead
Add: Administrative
Overhead

Salary& Wages

Lease Rent

36

Cost of production
Add: Selling &

Distribution
Loading & Dispatch

8.2

19
46.

35

227

674

416
.11

773

11

128

338

1006

4.5

77.

9.3

2.32

4
17

78

285

1281

4.6

02.

1.8

6
30

35

86

59

41
48

02.

89

811.

36

.08
285

2.89

59
04.

352

11.7

66.

55

09

.88

8.4

341

5.1

93

3651

01.

86

38
24

2391

28

1090

8
26

626
2.6

26

47.

9
20
20.

57

5537

4
77
8.1

maintenance

4
91
8.1

110

108

460
.06

811

5938

0.8

847

61.

7.01

.02

17

2189
.1

23
46.

247
5.6

360
7.2

46
78
8.9

Selling & Expense

Selling & Expense

1
24
14.

45
46

Cost of sales

50.

03.

01

67

02

84

121.

Profit

2.0

272

872

2.14

1
26

.69

.29

81.7

14.

929

579

14
13

42
19

.3

.55

36.

1931
19.6
3

27
12.
46

418

74.

12

273

.61

.26

INTERPRETATION
2012-2013 as compared to previous years 2009-

2010, 2010-2011, 2011-2012 & 2013-2014. The prime cost is unfavorable to


the company.

In the current year factory overhead is more than the previous year, because
here inputs are more than previous year they are material cost and repairs. The
remaining cost is less than previous cost.

24,
707

The prime cost is high in

134

656

109

91

56

Sales

145

2552

22

6216

76
40

2
18

8
251

17.

02

5
339

465.

63
8.0

32
26

The factory cost of 2012-2013 is high compared to the rest years. The factory
cost is unfavorable to the company due to increase in factory overheads and
depreciation cost as compared to 2010-11 to 08-09 but depreciation of 11-12 is

less than 10-11 , even though the factory cost is high, because of more prime
cost.

Cost of production iron-ore in the year 2014-2013 high, because the cost of
stores and spares overhead is more as compared to other four years and cost of
tools is less as compared to 2010-2011, 2011-2012 but the cost tools is more
as compared to earlier year because of high administrative over head . Hence it
is not unfavorable.

Cost of sales is 2012-2013 is more due to high sales values as compared to the
other four years. Hence it is favorable to the company. Profit of 2012-2013 is
high. This is due to low finance charges as compared to 2009-2010 and 20102011 but it is more as compared to 2011-2012 and also due to high profit.

The company performance in the year 11-12 is good. But it is difficult to cell
whether the iron-ore segment has performed well or co-generation. Segment
has performed well.

Material unit=

Material cost
sales

Year

Prime

Sales

cost

2009-2010

15560.8

unit

2010-2011

16955.5
1

Per

13563

0.11

0.09

6.12

19311
9.63

2011-2012

23911.1
2

2012-2013

2013-2014

0.12

0.16

1.42

2.46

44734.4
4

19271

27365
6.61

35216.5

24707.

26

1.6
1.4
1.2
1
0.8

1.42

0.6
0.4
0.2
0

0.11

0.08

0.12

0.16

2009-2010

2010-1011

2011-2012

2012-2013

2013-2014

INTERPRETATION

The material cost is high in the current year than its previous year.

Factory unit=

Factory overhead
sales

Year

Factory
overhea

Sales

Per

2009-

unit

10721.88

135636.12

0.08

17033.49

193119.63

0.09

18471.59

192712.46

0.09

19408.61

273656.61

0.07

38838.86

24707.26

1.57

2010

20102011

20112012

20122013

20132014

1.8
1.6
1.4
1.2
1
0.8

1.57

0.6
0.4
0.2
0

0.08

0.09

0.09

0.08

2009-2010

2010-2011

2011-2012

2012-2013

INTERPRETATION

2013-2014

The factory cost in the year 2013-2014 is high as compared to 2009, 2010,
2011 and 2012, due to increase in factory overheads, power and maintenance
year by year. It is unfavorable to the company.

Administrative unit =

Administrative overhead
sales

Year

Administr

Sales

Per unit

ative
overhead

2009-

15205.45

2010

2010-2011

135636

0.11

0.12

0.15

0.15

0.16

.12

22874.12

193119
.63

2011-2012

28919.2

192712
.46

2012-

41380.13

2013

20132014

273656
.61

3849.4

24707.
26

0.18
0.16
0.14
0.12
0.1
0.08
0.06

0.11

0.12

2009-2010

2010-2011

0.15

0.15

0.16

2011-2012

2012-2013

2013-2014

0.04
0.02
0

INTERPRETATION

The administrative cost in the year 2013-2014 is high as compared to 2009,


2010, 20101and 2012, due increase in administrative cost salary and lease rent
cost as compared to 2011 and 2012. The administrative cost is unfavorable to
the company.

S ellingdistributionunit=

sellingdistribution overhead
sales

Year

Selling
and

Sales

Per
unit

distributi
on
overhead

2009-

5149.82

135636.1

2010

2010-

2011-

2775.31

193119.6

2012-

2617.67

192712.4

2013-

0.01

0.01

0.13

1.16

36425.67

273656.6

2013

2012

0.04

2011

28711.12

24707.26

2014

1.4
1.2
1
0.8
0.6

1.16

0.4
0.2
0

0.04
2009-2010

0.01
2010-2011

0.01
2011-201

0.13
2012-2013

2013-2014

INTERPRETATION

The selling and distribution cost in the year 2013-2014 is high as compared to
previous year. The selling cost is unfavorable to the company due to increase

in selling cost, loading and selling expenses as compared to 2009 and 2012 but
loading and expenses 2013-2014 less than the 2010 and 2011.

Profit /unit =

profit
sales

Year

Profit

Sales

Per
unit

2009-2010

182274

.14

2010-2011

255281

2011-2012

269114

2012-2013

418929

2013-2014

134579
.55

193119.

1.32

192712.

1.39

1.53

5.44

46

.3

1.34

63

.42

12

.77

135636.

273656.
61

24707.2
6

6
5
4
3

5.44

2
1

1.34

1.32

1.39

1.53

2009-2010

2010-2011

2011-2012

2012-2013

0
2013-2014

INTERPRETATION

The profit of the cost sheet in the year 2013-2014 is high than the previous
year. It is due to increase in the material cost, factory cost, administrative cost
and selling cost in 2013 less than the 2010 and 2009. In this company cost of
profit is high compared to previous year.

FINDINGS
1) The total cost has increased continuously from 2009 to 2013 but it has
decreased in the current year from 1354.74 to 507.68. It is due to decrease in
the variable cost. The fixed cost has increased in the year 2013-2014 only in
407.75.
2) The fixed cost is increasing year by Year. In the current year the fixed has
increased from 389.67 to 407.75. The reason is increase in the consumption
stores and spares, sales and wages, repair and maintenance and miscellaneous
expenses.
3) The variable cost has continuously increased from 2009 to 2013. In the current
year the variable cost has decreased from 965.07 to 782.68 compared to
previous year.

4) The major fixed cost are consumption store and spares is the year 20132014 52.08

salary and wages is the year 2012-2012 in 53.15

and

depreciation in the year 2011-2012 is 46.59.

5) The minor costs are miscellaneous expense in the year 2012-2013 is 34.58
and repairs and maintence in year 2013-2014 is 37.77.

6) The major variable cost royalty in the year 2009-2010 is 95.75 and
consumable stores and spares in the year 2010-2011 is 80.66, rising and
transportation in the year 2012-2013 is 86.3.
7) The minor variable cost selling and expense in the year 2012-2013 in 43.62
and power in the year 2010-2011 is 16.79.
8) The cost of sales very high in the year 2012-2013.Due to high in prime cost,
variable cost and administrative cost hence it is unfavorable to the company.
9) The current year Repairs and Maintenance and Salary and Wages increasing
tremendously.

SUGGESTION
1) Since the total cost has increased due to increase in variable cost .The
management has to control the variable cost.
2) The increase in the variable cost is due to increase in raising and
transportation and consumables and spares. So the management has to
control the two costs.
3) Even though the fixed has increased slightly. The company has to control
the cost since as the year passes it may lead in the increase of the total
cost.
4) To control the fixed cost the management has to control the major cost that
is consumption store and spares cost.
5) The material cost as control in current year.
6) Due to control the current year repairs and maintence and salary and
wages.
7) The factory overhead and administrative overhead has to be control by the
management.

CONCLUSION

It has been an excellent opportunity for me to carry out the study on cost of
production at at i. It has helped to a great extent to have an insight into the
practical realities of the subject. I tried my best effort for the completion of my
project study.

I have been able to study and I feel it essential to receive various aspects of my
study and some findings and few suggestions.

The variable cost increased continuously from 2009-2014. The variable cost
decreased from 965.07 to 782.68 compared to previous year. And also the
fixed as due to control the year to year.

In the cost sheet factory overhead and administrative overhead has to be


control by the management.

BIBLIOGRAPHY

BOOKS

Cost Accounting----------------------------------------------M Y Khan

PK

Jain

Cost Accounting----------------------------------------------Dr. G.B. Baligar

ARTICLES

Annual reports of the company.

Cost sheet of the company.

WEB BLIOGRAPHY
www.slrsltd.co.in
Slr ltd company

ANNEXURE

PHYSICAL PERFORMANCE
Production
Product
2011
-

201
2-

Perc
enta

2012

201
3

Percentage
change

272.6

271.
84

Diamond
(Carats)

18,04
3.44

Sponge Iron
(Tones)

37,26
0.00

31,5
33.3
9
36,2
89.0
0

ge
cha
nge
36,2
89.0
0
75%

75%

SALES OF IRON ORE

Physical
performance in
lakh tones

Particulars

201
1201
2

246.
72

16.0
2

273.

Total Sales
01

FINANCIAL PERFORMANCE

262.
74

Domestic
Export
through
MMTC

Operating Results

269.
16

3.85

201
2201
3

perc
enta
ge

cha
nge

-8%

316
%

-4%

V
al
ue
s(
rs
in
co
re
)

20
11
20
12
10
,8
94
.6
0
27
2.
93
11
,1
67
.5
6

Perc

201
2201
3

12
%

250
%

-5%

enta
ge
of

Parameter
Profit Before Tax
from
continuing
operations (PBT)
(Rs. in crore
Profit Before Tax
from
continuing
operations (PBT)
(Rs. in crore
Net Worth (Rs. in
crore)
Book value per
share (Rs.)
Earnings per
Share (Rs.)

2011
-12

10,76
0

201
213

12%

9,46
2

7,265

61.53

18.33

24,39
6

cha
nge

13%

6,34
2

27,5
05
69.3
7

16

13%

13%
13%