CHAPTER I

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

► To be a vibrant and growth oriented Automotive paint Company. ► To be of national player in the paint industry. ► To be committed to attain sustained excellence in performance, safety, standards, Customer care and environment management. ► To be provide a fillip to the development of the region.

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MISSION: -

● To develop core competencies in manufacturing automotive paints products with A focus on achieving international standards on safety, quality and cost. ● To penetrate the paint market throughout the nation. ● To create a pool of knowledgeable and inspired employees and ensure their Professional and personal growth. ● To contribute towards the development of the region.

NEXT YEAR PROJECTIONS

 Introducing Water – based Paints.  Repositioning of existing Brands in Rural Market.  Broadening of Distribution Network.  Adding more choices for shades and effects.  Enhancing Better Quality  Demand will be generated through the new constructions coming in housing and industries.

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

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INDIAN PAINT INDUSTRY SENARIO

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

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A.

OBJECTIVE OF THE STUDY:

►The primary objective of the study is to estimate the security of the investment or loan provided by Punjab National Bank.
► the other primary objective of the study is to estimate the profit made by the company by Selling its product under the prevailing manufacturing condition.

►Based on the above objective the other objective is to work out the way to Reduce the cost of the products which are manufactured at Gupta Paints and
Chemicals. Provide required data for fixing sales price for submitting tenders, quotations etc

B.

SCOPE OF THE STUDY:
Chemicals .In the present competitive business scenario each and every organization are looking for ways to gain an competitive advantage over their competitors so as to maximize their penetration in the market. The best possible ways to gain a competitive advantage is by achieving an optimal and the minimal cost of production which would give the company an edge over their competitors. The company could sell its products at a cheaper rate compared to its competitors which would help the company to penetrate the market.

The study is only confined to Gupta Paints and

Hence this project tries to work out the cost of production of paints at
Gupta Paints and Chemicals and compare it with its competitors and try to find out the ways to minimize the cost of production and how the company could penetrate the market.

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CHAPTER II METHODOLOGY

2.1 Research Design
For an effectiveness of systematic research a sound plan is needed. The plan is called a research design. It is planning a strategy of conducting research. It plans to what is to be observed, how to record observations. Research design is thus a detailed plan of how the goal of the research will be achieved. So for getting valid results out of the research, the research has been systematically and technically arranged and implemented.  In my first stage I thought and decided to study in brief the Theoretical Overview as what is Working Capital and Working Capital management.  After knowing in brief about the Working Capital and Working Capital management in general, I decided to know as how working capital is calculated and how Punjab National Bank helps the small scale industries in maintain those working capital and what are the steps taken by bank for the security of the loan.

2.2 METHODOLOGY OF THE STUDY:
(1) The present study is based on secondary data collected from the Books of accounts and bills and vouchers of Punjab National Bank Review of last year’s annual Reports. (2) To a small extent, this study is based on primary data collected Through personal interview of the employees, dealers and management personnel.
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2.3 Selection of the Sample This study being analytical in nature was developed with the help of secondary data collected from the statistics obtained from the Punjab National Bank. Many reference books and annual reports were also resources of data. Primary data was used to confirm the findings of secondary data. Informal discussions with concerned executives, dealers and the faculty members were the major sources of the primary data.

2.4 SAMPLING FRAME

A sampling frame may be defined as the listing of the general components of the individual units that compromise the defined population.

a) b)

People: The people include all the empoyees, manager and people from top management of P.N.B. Activities: Activities included observation of work in different departments and having hands on experience at work.

2.5 SAMPLING TECHNIQUE • • • The Probability Sampling Method. Tabulation Method for analysis. Graphical representation of Data

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2.6 Sources

of Data

2.6.1 PRIMARY DATA

The project doesn’t involve any Primary data and the objective also didn’t require any Primary data. Thus the research is based on the secondary data attached with the report. The only Primary data used was to confirm the

findings of secondary data. Informal discussions with concerned executives, dealers and the faculty members were the major sources of the primary data.

2.6.2 SECONDEARY DATA
The project involves the working capital assistance provided by Punjab National Bank to the small scale industries of the local market of Bihar Sharif, so the entire project is based on Secondary Data collected from the Financial Department of the company. The data collected are:• •

Financial Statements Bill and vouchers. Informal discussion with the concerned executives and dealers. The main advantages of Secondary Data are that the information obtained relates to Original figures of the Company. It is not influential by anyone and it is not biased

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

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

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

• • . • •

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CHAPTER III
FINDINGS AND ANALYSIS CONCEPTUAL DEFINATION

Working Capital: The term working capital refers to the capital required to carry on the
daily activities of the business. It is very vital for any sort of business. There are two concept of working capital: 1. Gross working capital. 2. Net working capital.

Gross Working Capital:
assets.

It refers to the firms total investment in current or circulating

Net Working Capital:

The term net working capital has been defined in two different

ways: 1. It is the the excess of current assets over current liabilities. Or we may define it as the difference between current assets and current liabilities. 2. It is that portion of firm’s current assets which is financed by the long term fundd of the company. Thus figouuraticaly we can express net working capital in the following ways: Net working capital = Current assets – Current liabilities. .

Need for working capital :

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

Account Receivable

Cash

Finished Goods

Raw Material

Work In Progress

Types of working capital :
basis of time: 1. Permanent Working Capital. 2. Temporary Working Capital.

Working capital can be divided into two category on the

Permanent working capital:

This refers to that minimum amount oof investment in all current assets which is required at all times to carry out minimum level of business activities.

Temporary working capital: The amount of such working capital keeps on
fluctuating from time to time on the basis of business activities. In other words, it represents additionalcurrent assets required at different times during the operating year.

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estima

Estimation of working capital:

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

1.Components of working capital approach:

In this approach every component of current assets and current liabilities is being estimated. Since we know that working capital is the excess of current assets over its current liabilities. If we estimate the every components of current assets and current liabilities, we can estimate net working capital.

2.Percent of sales approach:

This is the most simple and traditional approach of estimating the working capital requirements. On the basis of past experience between sales and working capital requirements, a ratio can be determined for estimating the working capital requirements in the future.

3.Operating cycle approach:

According to this approach, the requirement of working capital depends upon the operating cycle of the business. The operating cycle begins with acquisition of raw materials and end with collection of receivables. It may broadly classified into four stages. (1) Raw material s and stores storage stage. (2) Work in process stage. (3) Finished goods inventory stage. (4) Receivables stage.
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Symbolically, the duration of working capital cycle can put as follows:

O = R+W+F+D-C. Assessment of working capital requirement by Shiva Sagar Rice Mill Private LTD Operating Statement as per the p/l account for the year ending.

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

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2010 Proj

2011 Proj

2012 Proj

2013 Proj

2014 Proj

2015 proj

Operating statement 1. Gross sales
Domestic sales Export sales Total Less: excise duty Net sales 318.23 00000 318.23 00000 318.23 371.26 00000 371.26 00000 371.26 424.30 00000 424.30 00000 424.30 424.30 00000 424.30 00000 424.30 424.30 00000 424.30 00000 424.30 424.30 00000 424.30 00000 424.30

2.Cost of sales
i.Raw materials( incl. stores and other items used in process of manufacture) Indigenous Imported ii. others spares Imported Indigenous iii. power & fuel iv. direct labour(factory wages & salary) v. other manufacturing expences vi depreciation subtotal (item i to iv ) vii. add : opening stock in process 000.00 000.00 6.05 4.20 2.62 7.92 298.62 000.00 000.00 000.00 7.06 4.41 2.93 7.92 346.22 000.00 000.00 000.00 8.06 4.63 3.05 7.92 393.84 000.00 000.00 000.00 8.06 4.86 3.08 7.92 394.10 000.00 000.00 000.00 8.06 4.86 3.08 7.92 394.10 000.00 000.00 000.00 8.06 4.86 3.08 7.92 394.10 000.00 277.63 000.00 323.90 000.00 370.18 000.00 370.18 000.00 370.18 000.00 370.18 000.00

298.62 346.22 393.84 394.10 394.10 sub-total SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132 394.10
( EAST SIKKIM)

viii. deduct closing stock 000.00 in process Cost of production 298.62

000.00 346.22

000.00 393.84

000.00 394.10

000.00 394.10

000.0017 394.10

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

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LIABLITIES CURRENT LIABLITIES
1. Short term borrowings from banks (including bills purchased and discount and the excess borrowing placed on repayment basis) (i) From applicant bank (ii) From other banks Sub-total A: 2. Short term borrowing from others 3. Sundry creditors(trade) 4. Sundry creditors(capital goods) 5. Advances payments from customers 6. Provision for taxation 7. Dividend payable(including tax thereon) 8. Other statutory liabilities(due within one year) 9. Deposits/instt. On term loans/DPGS/debenture s etc. 10. Other current liabilities and prov. Sub-total B: 11. Total Current Assets
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15.75 0.00 15.75 00.00 00.00 2.78 0.32 0.00 0.00 0.00

15.75 0.00 15.75 0.00 0.00 3.24 0.36 0.00 0.00 0.00

15.75 0.00 15.75 0.00 0.00 3.70 0.42 0.00 0.00 0.00

15.75 0.00 15.75 0.00 0.00 3.70 0.42 0.00 0.00 0.00

15.75 0.00 15.75 0.00 0.00 3.70 0.42 0.00 0.00 0.00

15.75 0.00 15.75 0.00 0.00 3.70 0.42 0.00 0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00

3.10

3.60

4.12

4.12

4.12

4.12

19

18.85

19.35

19.87

19.87

19.87

19.87

TERM LIABLITIES
12. Debentures (not maturing within one year) 13. Preference shares(redeemable after one year) 14. Term loan from(excl. installments, payable within one year) 15. Term deposits(repayable after year) 16. Other term liabilities(unsecured loan) 17. Total term liabilities 18. Total outside liabilities (items 11+17)

0.00 0.00 61.95 0.00 3.41 65.36 84.21

0.00 0.00 56.95 0.00 2.73 59.68 79.03

0.00 0.00 51.95 0.00 2.05 54.00 73.87

0.00 0.00 46.95 0.00 1.37 48.32 68.19

0.00 0.00 41.95 0.00 0.68 42.63 62.50

0.00 0.00 36.95 0.00 0.00 36.95 56.82

NET WORTH
19. Ordinary share capital 20. General reserve 21. Revaluation reserve 22. Other reserves 23. Surplus 24. Net worth 25. Total liabilities 30.00 13.02 0.00 0.00 0.00 43.02 127.23 30.00 23.92 0.00 0.00 0.00 53.95 132.98 30.00 36.66 0.00 0.00 0.00 66.66 140.53 30.00 48.10 0.00 0.00 0.00 78.10 146.29 30.00 59.32 0.00 0.00 0.00 89.32 151.82 30.00 70.46 0.00 0.00 0.00 100.46 157.28

Thus from the above calculation we can see that the total liabilities of the business is 127.23 lacs rupees. The liabilities consists of current liabilities, Term liabilities, and the net worth of the business that is the owner’s capital. Thus Total Liabilities = C.L + T.L + N.W. = 18.65 + 65.36 + 43.02 = 127.23. This can be shown with the help of following chart grph.
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C .L T .L .T Net Worth

C.L T .L 3rdQtr 4thQtr

2010 proj

2011 proj

2012 proj

2013 proj

2014 proj

2015 proj

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CURRENT ASSETS
26. Cash & bank balances 27. Investment other than long term 6.48 6.23 6.77 6.54

i. Govt. and other trustee securities. ii. Fixed deposit with bank iii. Others 28. i. Receivables other than defferd and export receivables including bills purchased and discount by banks.) ii. Export receivables(including bills purchased and discounted by banks) 29. Installment of deffered receivables (due within one year) 30. Inventory Raw material (including store and other items used in the process of manufacture) ii. Stock in process iii. Finished goods iv. Other consumables spares 31.Advances to suppliers of raw material and stores/spares 32. Advance payment of taxes. 33. Other current assets i.

-

-

-

-

4.24

4.95

5.66

5.66

5.66

5.66

0.00

0.00

0.00

0.00

0.00

0.00

0.00 19.86

0.00 23.17

0.00 26.48

0.00 26.84

0.00 26.48

0.00 26.48

13.88 1.00 4.98 -

16.2 1.16 5.81 -

18.51 1.33 6.64 -

18.51 1.33 6.64 -

18.51 1.33 6.64 -

18.51 1.33 6.64 -

11.00 0.00

21.00 0.00

32.00 0.00

46.00 0.00

58.00 0.00

72.00 0.00

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i. Advances to staff ii.Claims recoverable iii. Others due within one year.

-

-

-

-

-

-

34. Total current assets(total of items 26 41.58 to 33)

55.35

70.91

84.68

98.23

111.70

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We have calculated current liabilities and current assets individually. This two figure can be shown with the help of following bar graph.

10 2 10 0 8 0 6 0 4 0 2 0 0 C.A C .L 21 00 21 01 21 02 21 03 21 04 21 05

We can see from the figure that projected current assets of shiv sagar rice mill ltd is in increasing trend from year to year , where as its current liabilities remains almost constant. Since we know that working capital is the firm’s investment in its total current assets and its net working capital is the excess of current assets over its current liabilities. Or it is the proportion of firms current assets which is to be financed by the firm long term funds.

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

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2010 proj Fixed Assets 35.Gross Block(land and building, machinery, 93.10 work in progress etc.) 36.Depreciation to date 37. Net block item Other Noncurrent assets TOTAL ASSETS 7.92 85.18 0.47 127.23

2011 proj

2012 proj

2013 proj

2014 proj

2015 Proj

85.18 7.92 77.26 0.37 132.98

77.26 7.92 69.34 0.28 140.53

69.34 7.92 61.42 0.19

61.42 7.92 53.50 0.09

53.50 7.92 45.58 0.00 157.28

146.29 151.82

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2010 proj TANGIBLE NET WORTH NET WORKING CAPITAL CURRENT RATIO TOL/TNW TOTAL TERM LIABLITIES/TNW NET SALES/TOTAL TANGIBLE ASSETS CURRENT RATIO(WITHOUT T/L INST.) PBDIT/INTEREST PAT/NETSALES ROCE

2011 proj

2012 proj

2013 proj

2014 proj

2015 Proj

43.02 22.73 2.21 1.96 1.52 2.50

53.95 36.00 2.86 1.46 1.11 2.79

66.66 51.04 3.57 1.11 0.81 3.02

78.10 64.81 4.26 0.87 0.62 2.90

89.32 78.36 4.94 0.70 0.46 2.79

100.46 91.83 5.62 0.57 0.37 2.70

2.21 1.88 0.57%

2.86 3.13 3.68%

3.57 3.87 3.57%

4.26 4.02 3.19%

4.94 4.34 3.14%

5.62 4.71 3.12%

16.32% 24.84% 27.26% 25.33% 24.41% 23.56% 27 27 27 28 28

(INVT+RECEIVABLE)/ 27 SALES DAYS

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The elements of cost exhibited in a cost sheet are basically to facilitate the process of cost analysis for managerial decision making and cost control. The important elements of cost are discussed below. Direct material cost Direct material cost refers to the cost of the material which becomes a major part of the finished product. This material of the product can be identified, measured and is directly chargeable to the product. In our cost sheet the raw material, unloading charge and the input tax has been considered as the direct material and the detail of which are given below.

The cost of raw material required to manufacture 100kgs of automotive paints.

OPENING STOCK OF AUTOMOTIVE PAINT The amount of raw material available with the company at the beginning of the month (June) equals to the amount of raw material required to manufacture 2400 kgs of paints Therefore the cost of the opening stock =Rs95.76*2400 =Rs229824 The amount of tax applicable on the opening stock =Rs229824*4% =Rs229824*(4/100) =Rs9193 Therefore the total value of the opening stock =Rs (229824+9193) =Rs239017.
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PURCHASE The total purchase made during the month of June was 22000 kgs of raw material The total cost of 22000kgs raw material=Rs22000*95.76 =Rs2106720 The amount of tax applicable on the opening stock =Rs2106720*4% =Rs2106720*(4/100) =Rs 84269 CLOSING STOCK The amount of raw material available with the company at the end of the month (June) equals to the amount of raw material required to manufacture 1400 kgs of paints Therefore the cost of the closing stock =Rs95.76*1400 =Rs134064 The amount of tax applicable on the closing stock= Rs134064*(4/100) =Rs5363 Therefore the total value of the closing stock =Rs (134064+5363) =Rs139427 TRANSPORTATION EXPENSES This expense includes the cost involved in carriage inward of raw material .The transportation cost involved in procuring the raw material is nil because the rate of raw material are delivered FOR destination, the only charge involved in procuring raw material is the unloading charge which is paid to the labours who unload the raw material from the truck and this cost comes up to Rs 460 Direct labour The workers who work directly with the raw material in converting them to finish goods represent the direct labour. It is the cost which can be identified with, and allocated to the cost centers or cost units. The details of the workers are given below The table below gives the detail of the employees along with the monthly Cost involved in maintaining them.
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DISCRIPTION WORKER Production Supervisor Shop Floor Workers Direct labour Factory Security Guard Store keeper Cleaner

OF NO.S WORKERS 1 17

OF WAGE(Rs) AMOUNT(Rs) 18000 4600 18000 78200 ………………………… 96200 3000 5500 1000 ………………….. 9500 15000 8000 4200 ………………….. 27200 22000 154900

1 1 1 1 1 1 5 29

3000 5500 1000 15000 8000 4200 4400

Indirect wage Finance Manager/Accountant Office manger Office Clerk Office staff expense Salesmen TOTAL

Direct expenses Any expenditure other than the direct material and the labour, directly incurred on a specific product is called direct expenses. It can be identified with and allocated to the cost centre or cost unit. The detail of the direct expense associated with our product is given below. The table below gives the detail of the packaging container required for packing the automotive paints and the associated cost. PARTICULARS 1 LITRE 500 ML 200ML 100ML 50 ML TOTAL QUANTITY (Pcs) 14500 8000 8000 9000 7800 RATE (Rs) 217500 80000 60000 54000 25350 AMOUNT (Rs) 210000 95000 58000 57500 26000 436850

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Factory overhead
All cost incurred in the factory that cannot be considered direct material or direct labour or as direct expense are classified as factory overhead. It includes indirect labour, material and expense. The details of which are given below WORKER WELFARE EXPENSE INSENTIVE 12% of salary in case of maximum production (i.e. 23000kgs) = 96200*(12/100) = Rs11544 Insurance of workers (annually 6000) =Rs 500*No’s of workers =Rs 500*29 =Rs 14500

WASTAGE DURING PRODUCTION The amount of wastage that occurs while manufacturing of paint is assumed to be 2%. Therefore the cost involved in wastage is = (cost of direct material +cost of direct labour)*2% =Rs (2291039+96200)*(2/100) =Rs47745.

Factory Electricity
The table below gives the detail of the electricity consumed at factory along with the monthly Cost involved in the consumption ELECTRICITY CONSUMED 3200KWH TOTAL RATE 3.65 AMOUNT 15247 15247

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Note:-the total cost of electricity includes the meter rent and the taxes. Along with this the rate mentioned above is the rate charged at the lower slab of consumption. In practical the amount of electricity consumed falls in two slabs. Here for simplicity the net amount of bill has been mentioned.

Factory stationary
The total cost involved in factory stationary is given below in the table PARTICULARS Purchase requisition pad Purchase order slip Bin card Store ledgers TOTAL AMOUNT 250 250

Note: - all the stationary and printing requirement are ordered at the beginning of the financial year, hence out here the yearly expense has been averaged to monthly expense

Maintenance expense
The amount allocated for the maintenance of the machinery, electrical fittings and general works is Rs2500. Note:-the maintenance cost dose not remains constant, it may vary according to the need of the work.the amount mentioned above has been averaged from the yearly fund allocated to the maintanance work in the previous financial year.

Depreciation
The amount charged against depreciation is at the rate of 1% of the total fixed assets of Rs 900000 in the form of building and machinery which amounts to Rs 9000. Note:-this amount has been taken from the previous year financial report. SAFTEY EXPENSE The amount allocated for the safety of the factory and the employees for in the form of fire extinguisher and medical first aid is Rs2000. MACHINARY SPARES AND OILS
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The amount allocated for the spare parts like the belts, rotating blades, bush carbon etc is Rs1000. And the amount allocated for the machine oil and grease required for smooth running of machine is Rs 300. Along with this the expense incurred on cleaning materials which consist of broom sticks, cleaner rod, cleaning pad and cleaner liquid comes to Rs 250 Note:-the cost of machinery spares and oil dose not remains constant; it may vary according to the need of the work. The amount mentioned above has been averaged from the yearly fund allocated to the machinery spares and oil in the previous financial year

Administration overhead
OFFICE STATIONARY

It includes cost of planning and controlling the policies and operation of a business enterprise. The details of the administrative overhead are given below

Note: - all the stationary and printing requirement are ordered at the beginning of the financial year, hence out here the yearly expense has been averaged to monthly expense PARTICULARS Envelops PARTICULARS A4 size papers Envelopsrefilling Cartiage A4 size papers Visiting cards Cartiage refilling Letter pads Visiting cards Pen, stapler pin,glues,tapes etc Letter pads TOTAL Pen, stapler pin,glues,tapes etc TOTAL TELECOMMUNICATION EXPENSES
SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132 ( EAST SIKKIM)

AMOUNT 100 AMOUNT 360 100 200 360 100 200 100 100 40 100 900 40 900

33

The telecommunication expenses comprise of the under mentioned services rendered by the telecom department • Broadband service • Fax • Telephone connection The total cost incurred for the above mention services is Rs2865. Note:-the total cost of electricity includes the meter rent and the taxes. Along with this the rate mentioned above is the rate charged at the lower slab of consumption. In practical the amount of electricity consumed falls in two slabs. Here for simplicity the net amount of bill has been mentioned POSTAL EXPENSES The postal expense consists of cost involved in posting the transport consignee copy to the dealers who have made the purchase. This expense comes up to Rs 500. OTHER EXPENSES It includes the expense involved in the office like the expense made in drinking water, tea, snacks and newspaper. This comes up to Rs 3000.

BANK EXPENSES It includes the amount charged by the bank for issuing demand drafts and DACR and it amounts to Rs 500.

The table below gives the detail of the electricity consumed at office along with the monthly Cost involved in the consumption.
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ELECTRICITY CONSUMED 600kwh

RATE 2.65

AMOUNT 1750

Note:-the total cost of electricity includes the meter rent and the taxes. Along with this the rate mentioned above is the rate charged at the lower slab of consumption.

TAXES The total output tax (VAT) charged on the finished product is 12.5% Therefore the total tax charged on the automotive paint is = (factory cost+office &adm overhead+ selling and distribution overhead +profit)*12.5% =Rs (2946525+36715+84500+209622)*(12.5/100) =Rs415920

Selling and distribution overhead
It covers the cost of making sales .it includes expense of creating new demand and retaining existing demand. The details of selling overhead are as follows TRANSPORTATION EXPENSES
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This expense includes the cost involved in carriage outward involved in transporting the finished goods. The cost involved in transporting the finished goods is shown in the table below PARTICULAR Paints carriage charge Loading charge TOTAL QUANTITY 21400 LITS 3200 cartoons RATE (Rs) 1/LITRE 0.5/cartoon AMOUNT(Rs) 21400 1600 23000

ADVERTISING EXPENSES The total cost involved in advertisement is shown below in the table PARTICULARS Festoon Cable TV advertisement TOTAL AMOUNT (Rs) 800 700 1500

TRAVELLING EXPENSE The total cost involved in travelling is given below in the table PARTICULARS Metro pass monthly allowance to salesmen two wheeler expense TOTAL Detail 8*150 5*1200 AMOUNT 1200 6000 800 8000

TOTAL SALES The selling price of 1 litre of automotive paint is Rs196 Therefore the amount of total sales is =Rs196*21390 =Rs4192440. Packaging expense PARTICULAR QUANTITY RATE(Rs) AMOUNT (Rs)

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CARDBOARD CARTOON TOTAL

4000

7.5

30000 30000

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

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

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COST OF DIRECT MATERIAL CONSUMED ADD: OPENING STOCK PURCHASES INWARD CARRIAGE(UNLOADING) INPUT TAX (VAT 4%) LESS: CLOSING STOCK DIRECT WAGES SHOP FLOOR WORKERS PRODUCTION SUPREVISOR DIRECT EXPENSES CONTAINERS PRIME COST ………………………………………… FACTORY OVERHEAD INDIRECT MATERIAL OIL AND GREASE MACHNINARY SPARES INDIRECT WAGES STORE KEEPER SECURITY EXPENSES WORKERS WELFARE EXPENSE INSURANCE INSENTIVE ELEMENT FACTORY EXPENSES WASTE STATIONARY ELECTRICITY

239017 2106720 460 84269 139427 2291039

78200 18000

96200

436850

436850 ……………… 2824089

300 1000 5500 3000 14500 11544 AMOUNT(RS) TOTAL COST(RS) COST PERUNIT(RS)

47745 200 15247

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INSURANCE CLEANING STAFF CLEANING MATERIAL MAINTENANCE OF FACTORY SAFTEY EXPENSE DEPRECIATION OF PLANT FACTORY

1000 1000 250 2500 2000 & 9000 ………………

114786 …………… 2938875

FACTORY COST …………………………………………… OFFICE AND ADMINISTRATIVE OVERHEAD: SALARY: OFFICE CLERK MANAGERS FINANCE MANAGER/ACCOUNTANT PARTNERS FEES OFFICE: OUTPUT TAX (VAT 12.5%) STATIONARY LIGHTING TELECOMMUNICATION POSTAL SERVICES OTHER EXPENSES BANK EXPENSES COST OF PRODUCTION …………………………………………… SELLING AND DISTRIBUTION OVERHEAD SALESMEN SALARY TRAVELLING EXPENSE SALESMEN ADVERTISING PACKAGING EXPENSES CARRIAGE OUTWARD SALES PROMOTION DIACOUNT ON SALE 22000 OF 8000 1500 30000 23000 38530 419244 414964 900 1750 2865 500 3000 500 4200 8000 15000 50000

501679 ……………… 3440554

542274 ……………

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COST OF GOOD SOLD PROFIT SALES

3982818 209622 4192440.

The cost of production of 21390 litres (23000kgs) of automobile paint is Rs3982818 Therefore the cost of production of 1 litre of automobile paint is = Rs3982818 /21390 =Rs 186.2

And the total sale of 21390 litres (23000kgs) of automobile paint comes up to Rs 4192440. Therefore the selling price of 1litre of automobile paint is = Rs 4192440/21390 = Rs 196.

Therefore the profit made by the company on the sale of 21390 litres (23000kgs) of automobile paint is given by = total sales –cost of production. = Rs 4192440- 3982818 = Rs 209622 And the profit per litre is = total profit/total production = Rs209622/21390 =Rs9.8

SYNTHETIC ENAMEL It is an oil-based paints and can have various combinations of solvents as the diluents, including aliphatics, aromatics, alcohols, and ketones. It is essentially used for the preservation of all types of architectural structures, including factories, from ordinary attacks of weather. Uncoated wood and metal are particularly susceptible to deterioration, especially in cities where soot and sulfur dioxide accelerate such action. Aside from their purely protective action, paints, varnishes, and lacquers increase the attractiveness of manufactured goods, as well as the aesthetic appeal of
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a community of homes and their interiors.It is a fast-drying paint containing pigment suspended in an oil base. Theses paints can be diluted with thinner, and become water-resistant when dry. Depending on how much the paint is diluted or modified with acrylic gels, mediums, or pastes, the finished automotive painting can resemble a watercolor or an oil painting, or have its own unique characteristics not attainable with other media. PRODUCTION PROCESS FOR SYNTHETIC ENAMEL PAINTS The synthetic enamel paints are manufactured in the multiple of 100 kgs and the whole process can be divided into five steps that are Charging, Dispersing, Stabilization Discharging and washing, Make up The amount of raw material required in each step of the manufacturing process is given below. Charging and dispersing In this step the following raw material are mixed in an attritor for 3 hours and are then dispersed upto 7+ level on the henchman gauge. 05 kgs of Phillip Carbon 10 kgs of RDCO 08kgs of MTO 0.5 kg of zinc octate Stabilization In this step the raw material mixed in the above step is stabilized with the help of 10kgs of RDCO 05 kgs of MTO, and then it is run for 30 mins in attritor. Discharging and washing In this step 03 kgs of MTO is added to the stabilized mixture in order to disperse the paint so formed. Make up In this step the above mixture is mixed and stirred in a stirrer followed by the addition of the under mentioned chemicals 45 kgs of RDCO 5 kgs of Long Oil Alkyd 5 kgs of Malic 1 kgs of Calcium Octate 0.5 kgs of Cobalt Octate 0.5 kgs of Lead Octate 0.1 kgs of MEK Oxide 1.2 kgs of MTO 100kgs
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The total quantity of raw material used is 100kgs and the weight per liter of the paint obtained by the above process is 1.01 which gives a yield of 99 liters per 100kgs of raw materials used. The direct material consists of the Raw materials required, inward carriage and the input tax to manufacture 100 kgs of synthetic enamel. . The details of the raw material along with it cost is given below in the table PARTICULARS RDCO MTO Zinc Octate Soya Lecithin Long Oil Alkyd Malic Calcium Octate Cobalt Octate Lead Octate MEK Oxide Phillips Carbon QUANTITY(Kgs) 65 17.2 0.5 0.2 5 5 1 0.5 0.5 0.1 5 RATE(per Kgs) 72 56 120 40 80 78 120 330 120 220 220 AMOUNT(Rs) 4680 963 60 8 400 390 120 165 60 22 1100

TOTAL

100

7968

TRANSPORTATION EXPENSE The transportation expense is same as that of automotive paint

OPENING STOCK OF SYNTHETIC PAINT The amount of raw material available with the company at the beginning of the month (June) Equals to the amount of raw material required to manufacture 1200 kgs of paints Therefore the cost of the opening stock =Rs79.68*1200 =Rs95616
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The amount of tax applicable on the opening stock =Rs95616*4% =Rs95616*(4/100) =Rs3825 Therefore the total value of the opening stock =Rs (95616+3825) =Rs99441 PURCHASE The total purchase made during the month of June was 23500 kgs of raw material The total cost of 22000kgs raw material=Rs23500*79.68 =Rs1872480 The amount of tax applicable on the opening stock =Rs1872480*4% =Rs1872480*(4/100) =Rs 74899 CLOSING STOCK The amount of raw material available with the company at the end of the month (June) equals to the amount of raw material required to manufacture 1700 kgs of paints Therefore the cost of the closing stock =Rs79.68*1700 =Rs135456 The amount of tax applicable on the closing stock= Rs135456*(4/100) =Rs5418 Therefore the total value of the closing stock =Rs (135456+5418) =Rs140874 Direct labour –the cost of direct labour is same as that in case of automotive paint Direct expense The details of the containers required to pack synthetic enamels are given below in table PARTICULARS 500 ML QUANTITY(Kgs) 3940 RATE(per Kgs) 10 AMOUNT(Rs) 38000

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1 litre 4 litre 20 litre TOTAL

8000 1450 350

15 27.5 125.5

126000 36400 42840 243200

FACTORY OVERHEAD
WASTAGE DURING PRODUCTION The amount of wastage that occurs while manufacturing of paint is 2%. Therefore the cost involved in wastage is = (cost of direct material +cost of direct labour)*2% =Rs (1906406+96200)*(2/100) =Rs40052 The other cost associated with the factory overhead remains the same as that of automotive paint

Office and Administrative overheadThe cost associated with this overhead remains the same as in case of automotive paint. The only cost that vary is that in case of output tax (VAT12.5%) The total output tax (VAT) charged on the finished product is 12.5% Therefore the total tax charged on the automotive paint is = (factory cost+office &adm overhead+ selling and distribution overhead +profit)*12.5% =Rs (2350939 +86715+84500+170775)*(12.5/100) =Rs 336616 SALES PROMOTION Sales promotion is given to the customers in the form of cash back offer. Under this scheme there is a sticker in the cap of the synthetic paint in which the prize money amount is wrriten, when a customer returns the cap he gets the amount written on the cap. The amount written on the cap varies from Rs zero to Rs 50.in this form an amount of Rs 42200 is distributed.

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

GUPTA PAINTS AND CHEMICALS COST SHEET OF SYNTHETIC PAINT For the month June (2009-10) Production 22770 Lits ELEMENTS AMOUNT(RS) TOTAL COST (RS) COST PERUNIT(RS)

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COST OF DIRECT MATERIAL CONSUMED ADD: OPENING STOCK PURCHASES INWARD CARRIAGE(UNLOADING) INPUT TAX (VAT 4%) LESS: CLOSING STOCK DIRECT WAGES SHOP FLOOR WORKERS PRODUCTION SUPREVISOR DIRECT EXPENSES CONTAINERS PRIME COST …………………………………………… FACTORY OVERHEAD INDIRECT MATERIAL OIL AND GREASE MACHNINARY SPARES INDIRECT WAGES STORE KEEPER SECURITY EXPENSES WORKERS WELFARE EXPENSE INSURANCE INSENTIVE ELEMENT FACTORY EXPENSES WASTE STATIONARY

99441 1872480 460 74899 140874 78200 18000 96200 1906406

243200

243200 ……………… 2245806

300 1000 5500 3000

14500 11544 AMOUNT(RS) TOTAL COST(RS) COST PERUNIT(RS)

40052 200

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ELECTRICITY INSURANCE CLEANING STAFF CLEANING MATERIAL MAINTENANCE OF FACTORY SAFTEY EXPENSE DEPRECIATION OF PLANT FACTORY

15247 1000 1000 250 2500 2000 & 9000 ………………

107093 ……………… 2352899

FACTORY COST …………………………………………… OFFICE AND ADMINISTRATIVE OVERHEAD: SALARY: OFFICE CLERK MANAGERS FINANCE MANAGER/ACCOUNTANT PARTNERS FEES OFFICE: OUTPUT TAX (VAT 12.5%) STATIONARY LIGHTING TELECOMMUNICATION POSTAL SERVICES OTHER EXPENSES BANK EXPENSES COST OF PRODUCTION ………………………………………… SELLING AND DISTRIBUTION OVERHEAD SALESMEN SALARY TRAVELLING EXPENSE SALESMEN ADVERTISING PACKAGING EXPENSES CARRIAGE OUTWARD SALES PROMOTION DIACOUNT ON SALE OF 22000 8000 1500 30000 23000 42200 341550 336861 900 1750 2865 500 3000 500

4200 8000 15000 50000

423576 ……………… 2776475

468250

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COST OF GOOD SOLD PROFIT SALES

…………… 3244725 170775 3415500

T he cost of production of 22770 litres (23000kgs) of synthetic paint is Rs 3244725 Therefore T he cost of production of 1 litre of automobile paint is = Rs 3244725/22770 = Rs142.5 And the total sale of 22770 litres (23000kgs) of automobile paint comes up to Rs. 3415500 Therefore the selling price of 1litre of automobile paint is = Rs 3415500/22770 = Rs 150 Therefore the profit made by the company on the sale of 21390 litres (23000kgs) of automobile paint is given by = total sales –cost of production. = Rs3415500-3244725 = Rs 170775 And the profit per litre is = total profit/total production = Rs170775/22770 =Rs 7.5

STOVING PAINT It is a nitrocellulose based paint which is mainly used to protect the metals from deterioration and rusting along with the protective function it also add to the aesthetic appeal of the product.It is a fast-drying paint containing pigment suspended in an NC base. Stoving paints can be diluted with thinner, and become water-resistant when dry. Depending on how much the paint is diluted or modified with acrylic gels, mediums, or pastes, the finished automotive painting can resemble a watercolor or an oil painting, or have its own unique characteristics not attainable with other
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media. These paints are basically industrial paint and are used in fan, tube Patti and other industries. PRODUCTION PROCESS FOR STOVING PAINTS The stoving paints are manufactured in the multiple of 100 kgs and the whole process can be divided into five steps that are Charging, Dispersing, Stabilization, and Discharging and washing, Make up The amount of raw material required in each step of the manufacturing process is given below. Charging and dispersing In this step the following raw material are mixed in a ball mill for 48hours and are then dispersed upto 7+ level on the henchman gauge. 15kgs of rutyl titanium 08 kgs of coconut oil alkyd 06kgs of Xylene Stabilization In this step the raw material mixed in the above step is stabilized with the help of 04kgs of coconut oil alkyd 02kgs of xylene. 02kgs of N-Butanol and the above mixture is mixed in the ball mill for 30 minutes. Discharging and washing In this step the under mentioned raw materials are added to the stabilized mixture 04 kgs of Xylene Make up In this step the above mixture is mixed and stirred in a stirrer followed by the addition of the under mentioned chemicals 44 kgs of coconut alkyd 13.5 kgs of MF resin 1 kgs of Di-Acetone Alcohol 0.5 kgs of N-Butanol 100kgs The total quantity of raw material used is 100kgs and the weight per liter of the paint obtained by the above process is 1.1 which gives a yield of 91 liters per 100kgs of raw materials used. The direct material consists of the Raw materials required, inward carriage and the input tax to manufacture 100 kgs of synthetic enamel.

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The details of the raw material along with it cost is given below in the table PARTICULARS Rutyl titanium Coconut oil alkyd N -Butanol Di- acetone alcohol Xylene. MF resin TOTAL QUANTITY(Kgs) 15 66 0.5 1 12 13.5 100 RATE(per Kgs) 150 88 80 105 65 130 AMOUNT(Rs) 2250 5808 40 105 780 1755 10738

OPENING STOCK OF STOVING PAINT The amount of raw material available with the company at the beginning of the month (June) Equals to the amount of raw material required to manufacture 600 kgs of paints Therefore the cost of the opening stock =Rs107.38*600 =Rs64428 The amount of tax applicable on the opening stock =Rs64428*4% =Rs64428*(4/100) =Rs2577 Therefore the total value of the opening stock =Rs (64428+2577) =Rs67005 PURCHASE The total purchase made during the month of June was 24000 kgs of raw material The total cost of 22000kgs raw material=Rs24000*107.38 =Rs2577120 The amount of tax applicable on the opening stock =Rs2577120*4%
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=Rs2577120*(4/100) =Rs 103085 CLOSING STOCK The amount of raw material available with the company at the end of the month (June) equals to The amount of raw material required to manufacture 1600 kgs of paints Therefore the cost of the closing stock =Rs107.38*1600 =Rs171808 The amount of tax applicable on the closing stock= Rs171808*(4/100) =Rs6872 Therefore the total value of the closing stock =Rs (171808+6872) =Rs178680 TRANSPORTATION EXPENSE The transportation expense is same as that of automotive paint Direct labour – The cost of direct labour is same as that in case of automotive paint.

Direct expenses - the cost of direct expense includes the cost of container, the details of which is given below PARTICULAR 1 Lits 500ml 200ml 100ml 50ml TOTAL QUANTITY 13300 9000 9500 10000 5800 RATE 15 10 7.5 5.75 3.25 AMOUNT 199500 90000 71250 57500 18850 437100

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FACTORY OVERHEAD
WASTAGE DURING PRODUCTION The amount of wastage that occurs while manufacturing of paint is 2%. Therefore the cost involved in wastage is = (cost of direct material +cost of direct labour)*2% =Rs (2568990+96200)*(2/100) =Rs53304 The other cost associated with the factory overhead remains the same as that of automotive paint

Office and Administrative overheadThe cost associated with this overhead remains the same as in case of automotive paint. The only cost that vary is that in case of output tax (VAT12.5%) The total output tax (VAT) charged on the finished product is 12.5% Therefore the total tax charged on the automotive paint is = (factory cost+office &adm overhead+ selling and distribution overhead +profit)*12.5% =Rs (3230035+86715+84500+170775)*(12.5/100) =Rs453935 SALES PROMOTION Sales promotion is given to the customers in the form of cash back offer. Under this scheme there is a sticker in the cap of the stoving paint in which the prize money amount is wrriten, when a customer returns the cap he gets the amount written on the cap. The amount written on the cap varies from Rs zero to Rs 50.in this form an amount of Rs 67050 is distributed. DEALER MARGIN Therefore the total discount allowed to the dealers is = = (total sales *10% =Rs 4604600*10%
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=Rs 4604600*(10/100) =Rs 460460

GUPTA PAINTS AND CHEMICALS COST SHEET of STOVING PAINT For the month June (2009-10) Production 20930 Lits ELEMENTS AMOUNT(RS) TOTAL COST (RS) COST PERUNIT(RS)

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COST OF DIRECT MATERIAL CONSUMED ADD: OPENING STOCK PURCHASES INWARD CARRIAGE(UNLOADING) INPUT TAX (VAT 4%) LESS: CLOSING STOCK DIRECT WAGES SHOP FLOOR WORKERS PRODUCTION SUPREVISOR DIRECT EXPENSES CONTAINERS PRIME COST ………………………………………… FACTORY OVERHEAD INDIRECT MATERIAL OIL AND GREASE MACHNINARY SPARES INDIRECT WAGES STORE KEEPER SECURITY EXPENSES WORKERS WELFARE EXPENSE INSURANCE INSENTIVE

67005 2577120 460 103085 178680 78200 18000

2568990

96200

437100

446500 ……………… 3102290

300 1000

5500 3000 14500 11544

ELEMENT FACTORY EXPENSES WASTE STATIONARY ELECTRICITY

AMOUNT(RS)

TOTAL COST(RS)

COST PERUNIT(RS)

53304 200 15247

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INSURANCE CLEANING STAFF CLEANING MATERIAL MAINTENANCE OF FACTORY SAFTEY EXPENSE DEPRECIATION OF PLANT FACTORY FACTORY COST …………………………………….

1000 1000 250 2500 2000 & 9000 ……………

120345 …………… 3222635

OFFICE AND ADMINISTRATIVE OVERHEAD: SALARY: OFFICE CLERK MANAGERS FINANCE MANAGER/ACCOUNTANT PARTNERS FEES OFFICE: OUTPUT TAX (VAT 12.5%) STATIONARY LIGHTING TELECOMMUNICATION POSTAL SERVICES OTHER EXPENSES BANK EXPENSES COST OF PRODUCTION ……………………………………………

4200 8000 15000 50000

453010 900 1750 2865 500 3000 500

539725 ……………… 3762360

SELLING AND DISTRIBUTION OVERHEAD SALESMEN SALARY 22000 TRAVELLING EXPENSE OF 8000 SALESMEN ADVERTISING PACKAGING EXPENSES CARRIAGE OUTWARD SALES PROMOTION DIACOUNT ON SALE 1500 30000 23000 67050 460460

612010 ……………..

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COST OF GOOD SOLD PROFIT SALES

4374370 230230 4604600.

T he cost of production of 20930 litres (23000kgs) of automobile paint is Rs 4374370 Therefore T he cost of production of 1 litre of automobile paint is = Rs4374370 /20930 =Rs 209 The total sale of 21390 litres (23000kgs) of automobile paint comes up to Rs 4604600. Therefore the selling price of 1litre of automobile paint is = Rs 4604600/20930 = Rs 220. Therefore the profit made by the company on the sale of 21390 litres (23000kgs) of automobile paint is given by = total sales –cost of production. = Rs 4604600-4374370 = Rs230230 And the profit per litre is = total profit/total production = Rs230230/20930 =Rs 11

AUTOMOTIVE PRIMER It is a nitrocellulose based primer which is mainly used to protect the metals from deterioration and rusting along with the protective function it also add to the aesthetic appeal of the product.It is a fast-drying paint containing pigment suspended in an NC base. Automotive primer is used before the application of automotive paint, its main function is to help the paints to run smoothly and evenly on the metal surface and also help to enhance the gloss of the paint. It can be diluted with thinner, and become water-resistant when dry.
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PRODUCTION PROCESS FOR AUTOMOTIVE PRIMER The automotive primers are manufactured in the multiple of 100 kgs and the whole process can be divided into five steps that are Charging, Dispersing, Stabilization, and Discharging and washing, Make up The amount of raw material required in each step of the manufacturing process is given below. Charging and dispersing In this step the following raw material are mixed in a pot mill for 72 hours and are then dispersed upto 4.5+ level on the henchman gauge. 20 kgs of Red Oxide Powder. 08 kgs of Clay Powder. 08 kgs of Soap Stone 08 kgs of whiting 0.5 kgs of Aluminum Sterter 12 kgs of RLO 15 kgs of MTO Stabilization In this step the raw material mixed in the above step is stabilized with the help of 02 kgs of coconut oil alkyd 04kgs of xylene. Discharging and washing In this step the under mentioned raw materials are added to the stabilized mixture 02 kgs of benzene 03 kgs of ½ sec cotton 02 kgs of 5/6 sec cotton 07 kgs of ethyl acetate 03 kgs of butyl acetate 01 kgs of di- acetone alcohol 01 kgs of n- butanol 0.5 kgs of Zinc Octate Make up In this step the above mixture is mixed and stirred in a stirrer followed by the addition of the under mentioned chemicals 02 kgs of coconut alkyd 01 kgs of benzene 100kgs
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The total quantity of raw material used is 100kgs and the weight per liter of the paint obtained by the above process is 1.24 which gives a yield of 81 liters per 100kgs of raw materials used. In our cost sheet the raw material, unloading charge and the input tax has been considered as the direct material and the detail of which are given below. The direct material consists of the Raw materials required, inward carriage and the input tax to manufacture 100 kgs of synthetic enamel. The details of the Raw material required to manufacture 100 kgs of Automotive Primer is given below PARTICULARS Red Oxide Powder Clay powder Soap Stone Whiting Aluminum Sterter RLO MTO coconut oil alkyd benzene zinc octate cotton ethyl acetate butyl acetate di- acetone alcohol n- butanol Xylene. TOTAL QUANTITY(Kgs) 20 8 8 8 0.5 12 15 4 3 0.5 5 7 3 1 1 4 100 RATE(per Kgs) 7 6 10 7 70 76 56 88 50 120 160 65 98 105 80 65 AMOUNT(Rs) 140 48 80 56 35 912 840 352 260 800 455 294 105 80 150 60 4667

OPENING STOCK OF AUTOMOTIVE PRIMER The amount of raw material available with the company at the beginning of the month (June) Equals to the amount of raw material required to manufacture 1800 kgs of paints Therefore the cost of the opening stock =Rs46.67*1800
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=Rs84006 The amount of tax applicable on the opening stock =Rs84006*4% =Rs84006*(4/100) =Rs3360 Therefore the total value of the opening stock =Rs (84006+3360) =Rs87366. PURCHASE The total purchase made during the month of June was 21800 kgs of raw material The total cost of 22000kgs raw material=Rs21800*46.67 =Rs1017406 The amount of tax applicable on the opening stock =Rs1017406*4% =Rs1017406*(4/100) =Rs 40696 CLOSING STOCK The amount of raw material available with the company at the end of the month (June) equals to The amount of raw material required to manufacture 1400 kgs of paints Therefore the cost of the closing stock =Rs46.67*1400 =Rs28002 The amount of tax applicable on the closing stock= Rs28002*(4/100) =Rs1120 Therefore the total value of the closing stock =Rs (28002+1120) =Rs29122 TRANSPORTATION EXPENSE
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The transportation expense is same as that of automotive paint DIRECT LABOURThe cost involved in direct labour is same as in case of automotive paint DIRECT EXPENSE The cost associated with direct expense includes the cost of container, the detail of which is given below PARTICULAR 1 Lits 500ml 200ml 100ml 50ml TOTAL QUANTITY 10000 10400 9500 11000 8600 RATE 15 10 7.5 5.75 3.25 AMOUNT 150000 104000 71250 66000 27950 419200

Factory overhead
WASTAGE DURING PRODUCTION The amount of wastage that occurs while manufacturing of paint is 2%. Therefore the cost involved in wastage is = (cost of direct material +cost of direct labour)*2% =Rs (1116806+96200)*(2/100) =Rs24260 The other cost associated with the factory overhead remains the same as that of automotive paint

Office and Administrative overheadThe cost associated with this overhead remains the same as in case of automotive paint.
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The only cost that vary is that in case of output tax (VAT12.5%) The total output tax (VAT) charged on the finished product is 12.5% Therefore the total tax charged on the automotive paint is = (factory cost+office &adm overhead+ selling and distribution overhead +profit)*12.5% =Rs (1748807+86715+84500+170775)*(12.5/100) =Rs256304 SALES PROMOTION Sales promotion is given to the customers in the form of cash back offer. Under this scheme there is a sticker in the cap of the primer in which the prize money amount is wrriten, when a customer returns the cap he gets the amount written on the cap. The amount written on the cap varies from Rs zero to Rs 50.in this form an amount of Rs 69106 is distributed.

DEALER MARGIN The total discount allowed to the dealers is 10% of the total sales = (total sales *10%) =Rs 2608200*(10/100) =Rs 260820

GUPTA PAINTS AND CHEMICALS COST SHEET AUTOMOTIVE PRIMER For the June (2009-10) Production 18630 Lits ELEMENTS AMOUNT(RS) TOTAL COST (RS) COST PERUNIT(RS)

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COST OF DIRECT MATERIAL CONSUMED ADD: OPENING STOCK PURCHASES INWARD CARRIAGE(UNLOADING) INPUT TAX (VAT 4%) LESS: CLOSING STOCK DIRECT WAGES SHOP FLOOR WORKERS PRODUCTION SUPREVISOR DIRECT EXPENSES CONTAINERS PRIME COST ……………………………………… FACTORY OVERHEAD INDIRECT MATERIAL OIL AND GREASE MACHNINARY SPARES INDIRECT WAGES STORE KEEPER SECURITY EXPENSES WORKERS WELFARE EXPENSE INSURANCE INSENTIVE ELEMENT FACTORY EXPENSES WASTE STATIONARY

87366 1017406 460 40696 29122 78200 18000 96200 419200 419200 ……………… .. 1632206 1116806

300 1000

5500 3000 14500 11544 AMOUNT(RS) TOTAL COST(RS) COST PERUNIT(RS)

24260 200

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ELECTRICITY INSURANCE CLEANING STAFF CLEANING MATERIAL MAINTENANCE OF FACTORY SAFTEY EXPENSE DEPRECIATION OF PLANT FACTORY

15247 1000 1000 250 2500 2000 & 9000 ………………

91301 ……………… 1723507

FACTORY COST ………………………………………… OFFICE AND ADMINISTRATIVE OVERHEAD: SALARY: OFFICE CLERK MANAGERS FINANCE MANAGER/ACCOUNTANT PARTNERS FEES OFFICE: OUTPUT TAX (VAT 12.5%) STATIONARY LIGHTING TELECOMMUNICATION POSTAL SERVICES OTHER EXPENSES BANK EXPENSES 253142 900 1750 2865 500 3000 500 4200 8000 15000 50000

COST OF PRODUCTION …………………………… SELLING AND DISTRIBUTION OVERHEAD SALESMEN SALARY 22000 TRAVELLING EXPENSE OF 8000 SALESMEN ADVERTISING PACKAGING EXPENSES CARRIAGE OUTWARD SALES PROMOTION DIACOUNT ON SALE 1500 30000 23000 69106 260820

339857 ……………… 2063364

414426 …………

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COST OF GOOD SOLD PROFIT SALES

2477790 130410 2608200.

T he cost of production of 18630 litres (23000kgs) of automobile primer is Rs2477790 Therefore T he cost of production of 1 litre of automobile paint is = Rs2477790/18630 =Rs 133 And the total sale of 18630 litres (23000kgs) of automobile primer comes up to Rs 2608200 Therefore the selling price of 1litre of automobile paint is = Rs2608200/18630 = Rs 140 Therefore the profit made by the company on the sale of 21390 litres (23000kgs) of automobile paint is given by = total sales –cost of production. = Rs 2608200-2477790 = Rs 130410 And the profit per litre is = total profit/total production = Rs 130410/18630 =Rs 7

SYNTHETIC PRIMER It is an oil-based paints and can have various combinations of solvents as the diluents, including aliphatics, aromatics, alcohols, and ketones. It is essentially used for the preservation of all types of architectural structures, including factories, from ordinary attacks of weather. Uncoated wood and metal are particularly susceptible to deterioration, especially in cities where soot and sulfur dioxide accelerate such action. Aside from their purely protective action, paints, varnishes, and lacquers increase the attractiveness of manufactured goods, as well as the aesthetic appeal of
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A community of homes and their interiors.It is a fast-drying paint containing pigment suspended in an oil base. Theses paints can be diluted with thinner, and become water-resistant when dry. Depending on how much the paint is diluted or modified with acrylic gels, mediums, or pastes, the finished automotive painting can resemble a watercolor or an oil painting, or have its own unique characteristics not attainable with other media. It is basically applied before the application of synthetic enamel, its main function is to help the synthetic enamel to run smoothly and evenly and also enhance the gloss of the paint. PRODUCTION PROCESS FOR SYNTHETIC PRIMER The synthetic enamel paints are manufactured in the multiple of 100 kgs and the whole process can be divided into five steps that are Charging ,Dispersing, Stabilization, Discharging and washing, Make up The amount of raw material required in each step of the manufacturing process is given below. Charging and dispersing In this step the following raw material are mixed in an attritor for 72 hours and are then dispersed upto 4.5+ level on the henchman gauge. 20 kgs of Red Oxide Powder. 08 kgs of Clay Powder. 08 kgs of Soap Stone 08 kgs of whiting 0.5 kgs of Aluminum Sterter 12 kgs of RLO 15 kgs of MTO Stabilization In this step the raw material mixed in the above step is stabilized with the help of 16 kgs of RLO 0.7 kgs of Cobalt octate 01 kgs of Lead Octate 01 kgs of Lead Octate 0.5 kgs of Manganese Octate 0.8 kgs of Zinc Octate and then it is run for 30 mins in attritor. Discharging and washing In this step 4.8 kgs of MTO is added to the stabilized mixture in order to disperse the paint so formed. Make up
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In this step the above mixture is mixed and stirred in a stirrer followed by the addition of the under mentioned chemicals 04 kgs of MTO 100kgs The total quantity of raw material used is 100kgs and the weight per liter of the paint obtained by the above process is 1.35 which gives a yield of 74 Liters per 100kgs of raw materials used. Raw material required to manufacture 100 kgs of Synthetic Primer PARTICULARS Red Oxide Powder Clay powder Soap Stone Whiting Aluminum Sterter RLO MTO Cobalt octate Lead octate Calcium octate Manganese octate Zinc octate TOTAL QUANTITY(Kgs) 20 8 8 8 0.5 28 23.8 0.7 1 1 0.5 0.8 100 RATE(per Kgs) 7 6 10 7 70 76 56 330 120 120 140 120 AMOUNT(Rs) 140 48 80 56 35 2128 1333 231 120 120 70 96 4457

OPENING STOCK OF SYNTHETIC PRIMER The amount of raw material available with the company at the beginning of the month (June) Equals to the amount of raw material required to manufacture 700 kgs of paints Therefore the cost of the opening stock =Rs44.57*700 =Rs31199 The amount of tax applicable on the opening stock =Rs31199*4%
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=Rs31199*(4/100) =Rs1248 Therefore the total value of the opening stock =Rs (31199+1248) =Rs32447 PURCHASE The total purchase made during the month of June was 25000 kgs of raw material The total cost of 22000kgs raw material=Rs25000*44.57 =Rs1114250 The amount of tax applicable on the opening stock =Rs1114250*4% =Rs11142501*(4/100) =Rs 44570 CLOSING STOCK The amount of raw material available with the company at the end of the month (June) equals to The amount of raw material required to manufacture 2700 kgs of paints Therefore the cost of the closing stock =Rs44.57*2700 =Rs120339 The amount of tax applicable on the closing stock= Rs120339*(4/100) =Rs4814 Therefore the total value of the closing stock =Rs (120339+4814) =Rs125153

TRANSPORTATION EXPENSE The transportation expense is same as that of automotive paint
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DIRECT LABOURThe cost associated with direct labour is same as that in case of automotive paint DIRECT EXPENSE The details of the containers required to pack synthetic enamels are given below in table PARTICULAR 500 ML 1 Lits 4Lits 20Lits TOTAL QUNATITY 8000 2600 1655 600 RATE 10 15 27.5 125.5 AMOUNT 8000 39000 45513 75300 167813

Factory overhead
WASTAGE DURING PRODUCTION The amount of wastage that occurs while manufacturing of paint is 2%. Therefore the cost involved in wastage is = (cost of direct material +cost of direct labour)*2% =Rs (1066574+96200)*(2/100) =Rs23255 The other cost associated with the factory overhead remains the same as that of automotive paint

Office and Administrative overheadThe cost associated with this overhead remains the same as in case of automotive paint. The only cost that vary is that in case of output tax (VAT12.5%) The total output tax (VAT) charged on the finished product is 12.5%
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Therefore the total tax charged on the automotive paint is = (factory cost+office &adm overhead+ selling and distribution overhead +profit)*12.5% =Rs (1494310+86715+84500+170775)*(12.5/100) =Rs105938

SALES PROMOTION Sales promotion is given to the customers in the form of cash back offer. Under this scheme there is a sticker in the cap of the thinner bottle in which the prize money amount is wrriten, when a customer returns the cap he gets the amount written on the cap. The amount written on the cap varies from Rs 1to Rs 50.in this form an amount of Rs 7843 is distributed. DEALER MARGIN Therefore the total discount allowed to the dealers is = (total sales –profit-cost of productionselling &administrative overhead) =Rs (2118760. - 105938 -1802458-84500) =Rs 125864

GUPTA PAINTS AND CHEMICALS COST SHEET OF SYNTHETIC PRIMER For the month June (2009-10) Production 21620 Lits ELEMENTS AMOUNT(RS) TOTAL COST (RS) COST PERUNIT(RS)

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COST OF DIRECT MATERIAL CONSUMED ADD: OPENING STOCK PURCHASES INWARD CARRIAGE(UNLOADING) INPUT TAX (VAT 4%) LESS: CLOSING STOCK DIRECT WAGES SHOP FLOOR WORKERS PRODUCTION SUPREVISOR DIRECT EXPENSES CONTAINERS PRIME COST ………………………………………… FACTORY OVERHEAD INDIRECT MATERIAL OIL AND GREASE MACHNINARY SPARES INDIRECT WAGES STORE KEEPER SECURITY EXPENSES WORKERS WELFARE EXPENSE INSURANCE INSENTIVE ELEMENT FACTORY EXPENSES WASTE STATIONARY ELECTRICITY INSURANCE

32447 1114250 460 44570 125153 78200 18000 1066574 96200

167813

167813 ……………… 1330587

300 1000

5500 3000 14500 11544 AMOUNT(RS) TOTAL COST(RS) COST PERUNIT(RS)

23255 200 15247 1000

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CLEANING STAFF CLEANING MATERIAL MAINTENANCE OF FACTORY SAFTEY EXPENSE DEPRECIATION OF PLANT FACTORY

1000 250 2500 2000 & 9000 ……………

90296 ……………… 1420883

FACTORY COST …………………………………………… OFFICE AND OVERHEAD: SALARY: ADMINISTRATIVE

OFFICE CLERK MANAGERS FINANCE MANAGER/ACCOUNTANT PARTNERS FEES OFFICE: OUTPUT TAX (VAT 12.5%) STATIONARY LIGHTING TELECOMMUNICATION POSTAL SERVICES OTHER EXPENSES BANK EXPENSES

4200 8000 15000 50000

211005 900 1750 2865 500 3000 500

COST OF PRODUCTION …………………………………………… SELLING AND DISTRIBUTION OVERHEAD SALESMEN SALARY 22000 TRAVELLING EXPENSE OF 8000 SALESMEN ADVERTISING PACKAGING EXPENSES CARRIAGE OUTWARD SALES PROMOTION DIACOUNT ON SALE COST OF GOOD SOLD 1500 20000 23000 7843 211876

297720 ……………… 1718603

294219 ……………… 2012822

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PROFIT SALES

105938 2118760

T he cost of production of 21620 litres (23000kgs) of synthetic paint is Rs 2012822 Therefore T he cost of production of 1 litre of automobile paint is = Rs 2012822/21620 = Rs93.1 And the total sale of 21620 litres (23000kgs) of automobile paint comes up to Rs. 2118760 Therefore the selling price of 1litre of automobile paint is = Rs2118760/21620 = Rs 98. Therefore the profit made by the company on the sale of 21620 litres (23000kgs) of automobile paint is given by = total sales –cost of production. = Rs2118760-2012822 = Rs 105938 And the profit per litre is = total profit/total production = Rs105938/21620 =Rs 4.9

NC THINNER They are mainly used to dilute the paints according to the need. They help the paint to run smoothly and evenly and also enhance the glow of the paint PRODUCTION PROCESS FOR NC THINNER
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All the raw materials namely Benzene, Diacetone Acetate, Butyl Acetate, N-butanol and Ethyl Acetate are added in the small ball mill and are mixed for 4 hours in the same after they have been thoroughly mixed them are discharged in the stirrer and are then packaged. Raw material required to manufacture 100 kgs of NC Thinner PARTICULARS Benzene Diacetone Acetate Butyl Acetate N-butanol Ethyl Acetate TOTAL QUANTITY(Kgs) 75 10 7.5 2.5 5 100 RATE(per Kgs) 50 105 98 80 65 AMOUNT(Rs) 3750 1050 735 200 325 6060

OPENING STOCK OF NC THINNER The amount of raw material available with the company at the beginning of the month (June) Equals to the amount of raw material required to manufacture 1300 kgs of paints Therefore the cost of the opening stock =Rs60.6*1300 =Rs78780 The amount of tax applicable on the opening stock =Rs78780*4% =Rs78780*(4/100) =Rs3151 Therefore the total value of the opening stock =Rs (78780+3151) =Rs81931

PURCHASE The total purchase made during the month of June was 25000 kgs of raw material The total cost of 22000kgs raw material=Rs25000*60.6
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=Rs1515000 The amount of tax applicable on the opening stock =Rs1515000*4% =Rs1515000*(4/100) =Rs 60600 CLOSING STOCK The amount of raw material available with the company at the end of the month (June) equals to The amount of raw material required to manufacture 2700 kgs of paints Therefore the cost of the closing stock =Rs60.6*3300 =Rs199980 The amount of tax applicable on the closing stock= Rs199980*(4/100) =Rs7999 Therefore the total value of the closing stock =Rs (199980+7999) =Rs207979

TRANSPORTATION EXPENSE The transportation expense is same as that of automotive paint

Direct labour –
The cost of direct labour is same as that in case of automotive paint DIRECT EXPENSE THE DETAILS OF THE CONTAINER REQUIRED TO PACK THINNER PARTICULARS 1 litre pvc bottle 0.5 litre pvc bottle QUANTITY(Kgs) 15000 16000 RATE(per Kgs) 3 2 AMOUNT(Rs) 45000 32000

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TOTAL

77000

Factory overhead
WASTAGE DURING PRODUCTION The amount of wastage that occurs while manufacturing of paint is 2%. Therefore the cost involved in wastage is labour)*2% =Rs (1450012+96200)*(2/100) =Rs30924 The other cost associated with the factory overhead remains the same as that of automotive Paint = (cost of direct material +cost of direct

Office and Administrative overheadThe cost associated with this overhead remains the same as in case of automotive paint. The only cost that vary is that in case of output tax (VAT12.5%) The total output tax (VAT) charged on the finished product is 12.5%
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Therefore the total tax charged on the automotive paint is = (factory cost+office &adm overhead+ selling and distribution overhead +profit)*12.5% =Rs (1719177+86715+84500+126500)*(12.5/100) =Rs252112 SALES PROMOTION Sales promotion is given to the customers in the form of cash back offer. Under this scheme there is a sticker in the cap of the thinner bottle in which the prize money amount is wrriten, when a customer returns the cap he gets the amount written on the cap. The amount written on the cap varies from Rs 1to Rs 50.in this form an amount of Rs 16996 is distributed.

DEALER MARGIN Therefore the total discount allowed to the dealers is 10 % of the sales price = (total sales *10%) =Rs 2530000*(10/100) =Rs 253000

GUPTA PAINTS AND CHEMICALS COST SHEET OF NC THINEER For the June (2009-10) Production 23000Lits ELEMENTS AMOUNT(RS) TOTAL COST (RS) COST PERUNIT(RS)

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COST OF DIRECT CONSUMED

MATERIAL 100838 1575600 460 63024 289910 78200 18000 96200 1450012

ADD: OPENING STOCK PURCHASES INWARD CARRIAGE(UNLOADING) INPUT TAX (VAT 4%) LESS: CLOSING STOCK DIRECT WAGES SHOP FLOOR WORKERS PRODUCTION SUPREVISOR DIRECT EXPENSES CONTAINERS PRIME COST ………………………………………… FACTORY OVERHEAD INDIRECT MATERIAL OIL AND GREASE MACHNINARY SPARES INDIRECT WAGES STORE KEEPER SECURITY EXPENSES WORKERS WELFARE EXPENSE INSURANCE INSENTIVE ELEMENT FACTORY EXPENSES WASTE STATIONARY

77000

77000 ……………… 1623212

300 1000

5500 3000 14500 11544

AMOUNT(RS)

TOTAL COST(RS)

COST PERUNIT(RS)

30924 200

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ELECTRICITY INSURANCE CLEANING STAFF CLEANING MATERIAL MAINTENANCE OF FACTORY SAFTEY EXPENSE DEPRECIATION OF PLANT FACTORY

15247 1000 1000 250 2500 2000 & 9000 ………………

97965 ……………… 1721177

FACTORY COST …………………………………… OFFICE AND ADMINISTRATIVE OVERHEAD: SALARY: OFFICE CLERK MANAGERS FINANCE MANAGER/ACCOUNTANT PARTNERS FEES OFFICE: OUTPUT TAX (VAT 12.5%) STATIONARY LIGHTING TELECOMMUNICATION POSTAL SERVICES OTHER EXPENSES BANK EXPENSES COST OF PRODUCTION …………………………………………… SELLING AND DISTRIBUTION OVERHEAD SALESMEN SALARY TRAVELLING EXPENSE OF SALESMEN ADVERTISING PACKAGING EXPENSES CARRIAGE OUTWARD SALES PROMOTION DIACOUNT ON SALE 22000 8000 1500 20000 23000 16996 253000 251112 900 1750 2865 500 3000 500 4200 8000 15000 50000

337827 …………… 2059004

345496

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COST OF GOOD SOLD PROFIT SALES

……………… 2403500 126500 2530000

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

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AUTOMOTIVE PRIMER SYNTHETIC ENAMEL SYNTHETIC PRIMER STOVING PAINT THINNER

140 150 98 220 110

133 142.5 93.1 209 104.5

7 7.5 4.9 11 5.5

Comparative study of sales price of automotive paint

COMPETITORS
The company mainly concentrates on the automotive paint and primer business, hence has to compete with other players in the same field. The main competitors of the company are kamdehnu paints, Asian paints, provolac paints, Berger paints, gautam paints and some others.

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Market share in automotive paint in and around Kolkata

SALE OF PRODUCTS ATTRIBUTES AUTOMOTIVE PAINT QUANTITY(Lits)

11000

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AUTOMOTIVE PRIMER SYNTHETIC ENAMEL SYNTHETIC PRIMER STOVING PAINT THINNER

3000 3000 1500 2000 2500

CHAPTER-IV

Conclusion & Recommendation
CONCLUSION

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

Recommendation:Gupta Paints and Chemical has a market share of over 16% in the auto motive paint sector and the same is true in case of other category of paints in the market of Kolkata
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But as they say, there is always some room for improvement. Following are some of the recommendations based on the observations under study for Gupta Paints And Chemical which will enable them in better Utilization of their ResourcesAssets and Manpower , thus reducing different Costs at different categories . This will indirectly increase the Profits of the Company, and thus better Services can be provided by the Company for higher Sales and Market Share.

a. The company should try to increase the production ,by replacing the old ball mills, with new age technologically advanced pot mills and arritors which would lead in reduction in the time required for the production of paint from 48 hours to 12 hours.

b. The company should install a belt conveyor for packaging instead of following a manual process of pacakaging.This change would lead in reduction in the labour cost and time but along with this will give uniformity to the product in the form of weight and tidiness.

c. The company should switch to PVC containers for packing the paints instead of using tin container; this would lead to slight reduction in the cost of containers.

d. The company should adopt a policy of division of labour which would add to the efficiency of the labour as well the company.

e. The company should install colorant machine at all its dealer counter as soon as possible. By doing this the company now has to produce only the bases while the choice of the color can be made at the dealer counter. This change would lead to reduction in the cost of holding inventory.
SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132 ( EAST SIKKIM)

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f. The company should focus on its corporate customers like railways along with this it should try to build more corporate customer base.

g. The company should try to build a direct relationship with the manufacturers of raw material, instead of depending on dealers.

h. The company should also focus on the decorative paint market which is under tapped till now by the company.

i.

Better utilization of different resources will lead to the marginal Reduction in its customers than the

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

SIKKIM MANIPAL INSTITUTE OF TECHNOLOGY, MAJITAR, RANGPO -737132 ( EAST SIKKIM)

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