COST SHEET ANALYSIS: DABUR

INDIA LIMITED.

Submitted by:Presented by:

Group 3 Section B

Raj Singh Bhati (NMP62)

Rohan Telang (NMP69)
Ruchira Das (NMP70)
Sayan Sengupta (NMP76)
Sumit Mathur (NMP85)
Swaraj Kumar Dhar (NMP87)
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Pradeep Varshney (NMP93)
 Tables of Contents

Sr. No. Sub Sr. No. Topic Page No.

Acknowledgement
 1   2

Objective
2    3

Dabur At-a-Glance
3   4

Costing
4  5

Assumption
5   6

Analysis of Cost Sheet

6   8

Contribution Cost Analysis

7 10

Contribution Costing Tools

8   11

Conclusion
9   13

References
10 14

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 Acknowledgement
We are thankful to Prof. Rupa Manjari Sinha Roy for giving us an opportunity to prepare a cost sheet
and analyze it. This has been very helpful for us in understanding concepts like break even analysis,
marginal costing and its practical implications in business. This project would not have been successful
without his continuous guidance and theoretical inputs.

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 Objective of the Report

The objective of the report is to study the balance sheet of a manufacturing company and carry out the
following:

 Prepare Cost Sheet

 Analyze the cost sheet
 Apply the concepts of marginal costing and CVP analysis

To achieve this purpose we have chosen Dabur India Ltd. and studied its annual report FY2015-16.

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 Dabur At-a-Glance

Dabur India Limited has marked its presence with significant achievements and today commands
a market leadership status. The story of success is based on dedication to nature, corporate and process
hygiene, dynamic leadership and commitment to the partners and stakeholders. Dabur India Ltd is
considered as the leading consumer goods company in India with a turnover of Rs. 55056 million (FY15-
16). The three major strategic business units (SBU) - Consumer Care Division (CCD), Consumer Health
Division (CHD) and International Business Division (IBD). It has 17 ultra-modern manufacturing units
spread around the globe. Products marketed in over 60 countries. Wide and deep market penetration
with 50 C&F agents, more than 5000 distributors and over2.8 million retail outlets all over India. The
master brands are : Dabur-Ayurvedic healthcare products),Vatika - Premium hair care, Hajmola - Tasty
digestives, Réal - Fruit juices & beverages, Fem - Fairness bleaches & skin care products.

Costing
Costing is the technique of ascertaining cost.
A cost sheet is a statement of cost prepared at given interval of time showing various elements of cost of a
product produced, or service rendered during a particular period. This statement gives details about total
cost and cost per unit at different stages of production.

Important components of cost are:

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 a) Prime Cost = Direct material cost + Direct labour cost
b) Works Cost = Prime cost + Factory overheads.
c) Cost of production = Works cost + Office & Administrative overheads.
d) Total Cost (Cost of sales) = Cost of production + Selling & Distribution overheads.

From the balance sheet of Dabur India Ltd. Of FY 2015-16 ,we have prepared the cost sheet.

Assumption

We have assumed the following for the preparation of cost sheet

 As the company has variant products, the selling price per unit cannot be estimated.So all the
calculation of sales has been limites to sales in rupees.

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 Analysis of Cost Sheet

We have collected the data from capital line website for our analysis. Top page of the P&L statement is
pasted here.

6
 Contribution Costing Analysis

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Marginal costing is the ascertainment ,by differentiating between fixed cost and variable cost of marginal
costs and of the effect on profit of changes in volume or type of output.
It is not a system of ascertaining cost but a special technique which is concerned with the changes in costs
resulting from the changes in volume or range of output.

The technique of marginal costing involves:

 Differentiation between fixed cost and variable cost
 Ascertainment of marginal costs
 Ascertaining the effect on profit due to changes in volume i.e cost volume profit analysis.
Tools of marginal costing:
 Contribution
 P/V Ratio
 Break even point
 Margin of safety

FIXED COSTS Rs.in Millions

Employee Cost 3929

Depreciation Cost 659

Selling & Admin

Advertisement 6465

Other Expense 2197

Miscellaneous 2510

Tax 2043

Deferred tax 96

Fixed costs 18619

Variable Cost

Raw Material 21598

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 Power & Fuel Cost 506

Other Manufacturing Cost 7561

Total Variable costs 29665

Total Cost 48284

 Advertisement expense constitutes about 34.72% i.e the company focuses more on
advertisements.
 Profit margin is 17 % of net sales.
 The total depreciation expense incurred during the year is Rs. 659million
 Overall deprecation constitute of 1.4 % of total cost of production.

All the expenses have been classified under two categories of cost:
 Fixed cost
 Variable cost

Fixed cost as a % of Total Cost 38.56

Variable cost as a % of Total Cost 61.44

 Major part of the expense is variable cost accounting to 61.44% while only 38.56% is fixed
cost. That means if variable cost per unit is controlled to some extent then cost can be
controlled. Though Fixed cost seems to be low when compared to variable cost it is also an

indication that company has invested well in fixed assets as 38.56% is a comparably high value.

 The company has invested a considerable amount in advertisement and publicity which accounts
to around 34.72 % of fixed cost.
 Expense on raw materialsconstitutes 72.80% of variable cost. This depends mainly on the
market demands as well the capacity of production.

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Particulars Formula Calculation Result

Break Even Sales(in

Rs. Crores) Fixed cost/(P/V ratio) 18619/0.461182 40372
(Contribution / Sales )
P/V ratio *100 25391/55056 0.461182

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Margin of safety Actual Sales - BEP(Rs) 54312-40372 13580

Margin of safety (Margin of Safety /Actual

Ratio Sales)*100 13580/54312 25.00
Contribution Cost Tools

Working Notes

Sales (S) 55056

Fixed Cost (FC) 18619
Variable Cost (VC) 29665
Contribution (S-VC) 25391
P/V Ratio 0.461182

Suppose the company expects a profit of Rs. 100000 million for the next financial
year
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Column1 Column2
Desired Profit 27358
P/V Ratio 0.488146258
Fixed Cost 18619

Desired sales 100000

Conclusion

Analysis of marginal costing

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  Margin of safety is an advantage to the company. It indicated the extra profit the company earns
over the breakeven point.Dabur’s MOS is 25% which is low. This means that the firm will earn less
profits if there is a slight fall in production or sales.This also contributes to a high angle of incidence
 BEP sales is Rs.40372 crores which is extremely low in comparison to current sales (Rs.55056
crores).
 BEP analysis will help the banker in appraisal of actual/projected performance of the borrower.It
also acts a sensitivity analysis tool to judge the projected performance.
 For the company to reach a profit value of Rs.27358it has to impove its sales by Rs.100000
crores.

References

 Mejorada, Nenita D., Business Finance and Philippine Business Firms. 2006.
 A Framework for Management –Gary Dessler
 Dessler, Gary, A Framework for Management

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  Math Lover Hub Pages. Even Point Analysis. http://mathslover.hubpages.com/hub/Breakeven-
analysis
 http://www.tutor2u.net/business/production/break_even.htm
 http://connection.cwru.edu/mbac424/breakeven/BreakEven.html
 http://www.dinkytown.net/java/BreakEven.html
 http://office.microsoft.com/en-us/templates/TC011165121033.aspx

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