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Report on Cost Accumulation & Cost Determination Procedures

Final Project Report of Cost Accounting

Submitted To:
Sir Muhammad Ashraf Bhutta
Submitted By:
Urooj Khursheed (7151-FMS/MBA/F15)
Abida Hussain (7150-FMS/MBA/F15)
Kishwar Noreen (7154-FMS/MBA/F15)
Hira Mustafa (7143-FMS/MBA/F15)

MBA-31
Acknowledgement

We would like to express our special thanks of gratitude to my


instructor Mr. Ashraf Bhutta who gave us the golden
opportunity to do this wonderful project on the topic Cost
Accumulation & Cost Determination Procedures, which also
helped us in doing a lot of Research and we came to know about
so many new things we are really thankful to him.
Secondly we would also like to thank our parents and friends
who helped us a lot in finalizing this project within the limited
time frame.
Table of contents

1. Introduction
History
2. Mission
3. Vision
4. Products & Prices
5. SWOT Analysis
6. Job Order Cost Sheets
Introduction

Pak Suzuki Motor Company Limited is a name of repute in Automobile assembling and
manufacturing in Pakistan. It is due to its committed and dedicated workforce through which it
has sustained leadership position in the automobile sector in terms of production & sales.

The firm was founded in 1983 as a joint venture between the government of Pakistan and Suzuki
Motor Japan, formalizing the arrangement by which Awami Auto Ltd. had produced the Suzuki
SS80 from 1982. Suzuki originally owned 25% of the stock, and have gradually increased their
holding; they now own 73.09%. Pak Suzuki is the market leader in Pakistan Automobile Market
by having more than 60%(December, 2011) of Market Share. Having Market Share of more than
50% since its inception, Pak Suzuki always strive to introduce new and innovative Products and
Services. Its recently launched Suzuki Swift Brand has helped Pak Suzuki increase their Market
Share in 1300cc segment. Apart of giving automobile related services like Suzuki Finance and
Suzuki Insurance, Pak Suzuki also deals in Pak Suzuki Certified Used Cars

Most of cars by Suzuki Pakistan generally lack essential features which are standard in other cars,
such as airbags, rear windshield defogger and rear seat belts. As of 2006, the Pakistani-
assembled Suzuki Mehran is sold equipped with a CNG tank and is one of the few cars in the
world which still uses a carburetor-based engines.
History

However, despite all the shortcomings and serious quality criticisms, the Suzuki Cars are
Pakistan's highest selling cars due to the lack of alternatives available owing to the monopolistic
nature of Pakistan's auto industry and restrictions imposed on imports by the government of
Pakistan.

Pak Suzuki Motor Company Limited was formed as a joint venture between Pakistan
Automobile Corporation and Suzuki Motor Corporation (SMC) - Japan. The Company was
incorporated as a public limited company in August 1983 and started commercial operations in
January 1984. The initial share holding of SMC was 12.5% which was gradually increased to
73.09%.

Pak Suzuki is pioneer in Automobile Business having the most modern and the largest
manufacturing facilities in Pakistan with an Annual production capacity of 150,000 vehicles. The
vehicles produced include cars, small vans, Pickups, Cargo vans and Motorcycle. Pak Suzuki
holds more than 50% Market Share.

Following the aggressive policy of Indigenization, Suzuki vehicles have a healthy local content
upto 72%. This was made possible by strong support of our vendors.

Pak Suzuki has the largest Dealers network offering 3S (Sales, Service and Spare Parts) facilities
across Pakistan.

Caring for the Environment Pak Suzuki was pioneer in introduction of Factory fitted CNG
vehicles.

Pak Suzuki always endeavors to go aggressively for the sound development of the society by
increasing motorization, industrialization and creating job opportunities thus improving the
peoples living standards with the combined efforts of all the dealers, vendors and Pak Suzuki
employees.

Pak Suzuki is also exporting Suzuki Ravi pickup, Liana and components to Bangladesh and
Europe thus earning precious foreign exchange for the country.
Companys Mission

Our mission to realize our vision is:

To provide automobile of international quality at competitive price.


To improve skills of valued employees by imparting training and inculcating in them a
sense of participation.
To achieve maximum indigenization and promote Pakistan`s automobile vending
industry.
To make valuable contribution to social development of Pakistan through development of
industry in general and automobile industry in particular.

Companys Vision

Excellence in all respects


Product variety & Prices

Following are some varieties of Moped with their and Prices:

SWIFT (1300 cc)


Due to failure of Liana Pak Suzuki introduced another 1300cc car
in Jan 2009. Swift has all the latest features like power steering,
central locking, Auto Transmission and the ABS. All the 1300cc
cars in Pakistan have price range of Rs.1300000 to Rs.1400000,
while Swift was introduced at Rs.99900. It has still advantage of
price competition as compare to other 1300cc cars in Pakistan.
Price: Rs. 1,049,000/-
The European inspired exterior gives Swift a distinctive look. A
unique stylish and design that turns a head where you go. The
spirited engine makes for exhilarating drive and gives you ultimate
freedom where the road takes you.
Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky
Silver, Aqua Blue, Eminent Blue

LIANA (1300 & 1600 cc)


Liana is a luxurious and highest price car of Pak Suzuki. It was
made to compete 7Pak Suzuki biggest competitors like Toyota and
Honda. Liana has the same features which are available in Corolla
and Civic but still it couldnt make its market as compare to both
these cars. Liana has replaced the Pak Suzukis Baleno in 2005-06,
since Pak Suzuki tried several ways to establish its position but
failed to do so.
It was made for a people of high income group but due to high
prices in which the market was already giving names like corolla
and civic who has their strong brand name and customer loyalty,
liana was failed to capture the market.
Price: Rs. 1,230,000/-
The Suzuki Liana available in 1300 cc manual transmission and
1600cc automatic transmission takes you out of ordinary and into
the realm. Liana is entirely different car, its style, dimension and
comfort will inspire you to see everyday as an open door to a new
age.
Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky
Silver, Aqua Blue, Eminent Blue

CULTUS (1000cc)

Price: Rs. 897,000/-


Cultus is the blend of space and craft. Its trim body
Conceals ample space & flexblity for both
passenger and storage. Cultus ensures everyone,
exceptional Value and quality.

Colors: Pearl Red, Graphite Grey, Solid white,


Indigo, Silky Silver, Aqua Blue, Eminent Blue

MEHRAN
Mehran has the highest growth rate in automobile
sector in Pakistan. Pak Suzuki always changes the
different parts of Mehran either exterior or interior
whenever it comes to its maturity level Mehran
attracts the people who have a salary package
between 20,000 to 30,000 per month. The
youngsters also prefer the Mehran because of its
size and economical price. Small business people
also prefer Mehran because of its low maintenance
cost. Mehran also attracts people who move from
bike to the cars.

Price: Rs. 514,000/-


Unrivalled in its class, Mehran is Pakistans largest
selling car. More smart features like head turning
lamp, matching front grill and a two spoke steering
wheel gives it the tidy look. Functional economy,
peak performance or unmatched fuel efficiency,
Mehran VXR is the leader.

Colors: Pearl Red, Graphite Grey, Solid white,


Silky Silver, Eminent Blue
APV
Price: Rs. 1,775,000/-
APV 1500 cc (Imported) The New APV gives you
everything you ever wanted in your vehicle.
Spacious interior for comfort, tough engine to carry
large loads and plenty of room for passengers to
enjoy a comfortable day long ride.
Colors: Pearl Red, Graphite Grey, Solid white,
Indigo, Silky Silver, Aqua Blue, Eminent Blue

JIMNY
Price: Rs. 1,850,000/-
JIMNY 4X4 JEEP 1300cc (Imported) Steady,
sturdy and smart, Suzuki Jimny with new wide
tread brings you the ultimate pleasure of a real 4-
wheel drive. It has got all the sporting spirit to go
along for adventurous free souls.
Colors: Solid white, Silky Silver

BOLAN VAN
Price: Rs. 609,000/-
The Suzuki Bolan Hi-roof gives you everything you
ever wanted in a van. Spacious interior for comfort,
tough engine to carry large loads and plenty of
room for passengers to enjoy a comfortable day
long ride. Air-conditioned model (dual thrust) has
been recently introduced.
Colors: Pearl Red, Solid white, Silky Silver
ALTO (1000cc)

Price: Rs. 662,000/-


Alto has a bright, roomy and comfortable
cabin which keeps body relax and strong
and lighter body shell resulting in smooth
drive due to reduction of unpleasant noise harshness
and vibration. Its small turning radius and compact
body make parking a breeze.

Colors: Olive Green, Pearl Red, Graphite Grey,


Solid white, Indigo, Silky Silver, Aqua Blue,
Eminent Blue

RAVI PICKUP
Ravi is for the people doing small business
especially cargo services like home delivery
services, TCS and market delivery. All people
doing business of these types are loyal customers to
Ravi. Although the competitor launched the
Shehzore which has captured the some market share
of Ravi but although its sell did not decline too
much.

Price: Rs. 489,000/-

RAVI Pick Up 800cc Suzuki Ravi is the veritable


cargo vehicle with an amazing capacity for load
bearing and durability. Undoubtedly, the unrivalled
commercial vehicle in its class, Ravi is the bread
winner for millions in Pakistan. This light
commercial vehicle referred to as the mini
revolution, replaced the animal-drawn vehicles in
Pakistan.

Colors: Pearl Red, Solid white, Silky Silver


SWOT Analysis

Strengths:

1) Highest Market Share


2) Low Price Vehicles
3) Resale of Local Assembled Cars
4) Large Distribution Channels
5) Rising per capita income with changing demographic distribution
6) Highly Innovative and deep product line
7) Highly maintained supply chain
8) Well Managed and highly competitive staff
9) Well defined and beurcratic organizational structure
10) Complete understand between Distributors
11) Easy available of spare parts.

Weaknesses:

1) Scarcity of raw material


2) Bargaining power of supplier is low
3) Lack of coordination and linkage with Government/semi government supporting
bodies
4) Less Technical Training Institute
5) Less distribution channels in sub urban
Opportunities:

1) Increasing Demand for Cars


2) Efficient Efi engine
3) Large Market size to operate
4) Global spare part market
5) Space saving Small size CNG cylinders

Threats:

1) Local Competitors like Toyota, and Honda


2) Foreign Investment and setup production facilities
3) Smuggling of Auto Parts
4) Inflation rate
5) Heavy Taxes
6) Competition from import cars
7) Increase of Fuel Prices
Job Order Cost Sheets

UZUKI PAKISTAN

Address: Plot No. 94-B, Street 7, I-10/3, Islamabad Date Initiated:

Vehicle: Swift Date Completed:

Defect: Inspection Units Completed: 1

Kilometers: 9500 Km

Direct Material Amount in Rs.


Break Pad 5328
Oil Filter 962
Engine Oil 1996
Total 8286

Labor Amount in Rs.


Labor 1 500
Labor charges for additional catlatic converter 1963
Total 2463

Factory Overhead Amount in Rs.


Handling Charges 222
Other Expenses ( depreciation, salaries, 37
telephone charges, electricity, stationary)
Total 259

Direct Material Rs. 8286 Selling price Rs. 12900


Labor Rs.2463 Cost to Make & Sell Rs. 11008
FOH Rs.259 Profit Rs. 1892
Total Rs.11008
UZUKI PAKISTAN

Address: Plot No. 94-B, Street 7, I-10/3, Islamabad Date Initiated:

Vehicle: Cultus Date Completed:

Defect: Inspection Units Completed: 1

Kilometers: 7600 Km

Direct Material Amount in Rs.


Air Filter 384
Oil Filter 153
Engine Oil 1718
Total 2255

Labor Amount in Rs.


Based on per job Card 500

Factory Overhead Amount in Rs.


Handling Charges 278
Other Expenses ( depreciation, salaries, 37
telephone charges, electricity, stationary)
Total 315

Direct Material Rs. 2255 Selling price Rs. 4555


Labor Rs.500 Cost to Make & Sell Rs. 3070
FOH Rs.315 Profit Rs. 1485
Total Rs.3070
U ZUKI PAKISTAN

Address: Plot No. 94-B, Street 7, I-10/3, Islamabad Date Initiated:

Vehicle: Mehran Date Completed:

Defect: Oil Change Units Completed: 1

Kilometers: 5400 Km

Direct Material Amount in Rs.


Oil Filter 153
Engine Oil 1497
Total 1650

Labor Amount in Rs.


Based on per job Card 500

Factory Overhead Amount in Rs.


Handling Charges 166
Other Expenses ( depreciation, salaries, 37
telephone charges, electricity, stationary)
Total 203

Direct Material Rs. 1650 Selling price Rs. 1921


Labor Rs.500 Cost to Make & Sell Rs. 2353
FOH Rs.203 Loss Rs. (432)
Total Rs.2353