ACCM507: ACADEMIC TASK I

STUDENT NAME: - Kunarapu Gopi ROLL NUMBER: -RQ2139B34

. Krishna

REGISTRATION NUMBER: - 12101890 ASSIGNED COMPANY: ANDHRA PAPER

. Limited

Course Instructor: Dr. Sukhpreet Kaur Course Title: FINANCIAL REPORTING,

STATEMENTS AND ANALYSIS-II

Course Code: ACCM507 Class – MBA Section – Q2139

Date of Submission: 16/12/2021 BATCH - 2021

(Master of Business Administration)

MITTAL SCHOOL OF BUSINESS

Company profile:
In the year 2020, the company was granted the name Andhra Paper Limited. This company,
which began as Andhra Pradesh Paper Mills in 1964 and was previously known as
International Paper APPM Limited, has a long history.
West Coast Paper Mills Ltd bought the company's controlling interest from IP in October of
this year (WCPM). WCPM, a subsidiary of the S.K. Bangur Group, is India's oldest and
largest maker of printing, writing, and packaging paper. The WCPM was founded in 1955
and is located in Dandeli, Karnataka's Uttara Kannada district. As a result, the company
became a WCPM subsidiary.
The company makes writing, printing, and copier papers for both the domestic and
international markets. Our Rajahmundry and Kadiyam producing facilities have a combined
capacity of 240,000 TPA. The company is based in Hyderabad and employs approximately
2,500 people.

Fixed Cost of the Company (2019, 2020, 2021)

Fixed Cost refers to a cost that does not change with an increase or decrease in the number of
goods or services produced or sold.
• Fixed cost are business expenses which is also known as indirect cost
• These costs are less controllable than variable costs.
• These costs are set at predetermined rates by the business based on necessities of the
company
• These costs are not dependent on the business activities instead it is related with a period of
time.
 SR.NO FIXED COST 2019 2020 2021

1) Insurance 408.11 351.29 674.21

2) Rates and Taxes 329.57 213.09 242.47

3) Rent 445.93 107.15 218.88

4) Depreciation. 6,656.79 6,961.83 6,726.89

5) Auditors Fees 74.7 82.5 68.8
6) Legal Expenses 577.39 1,524.30 663.2
7) Director Sitting Fee 44.4 41.97 43.75
TOTAL 8536.89 9282.13 8638.2

REASONS-
Rent, Auditors Fees, Legal Expenses, Insurance, Rates and Taxes, Depreciation Costs And
the Director's sitting fee is a fixed cost because it is not part of the manufacturing process and
is not dependent on the number of units produced. Depreciation is a fixed expense since it
occurs at the same rate throughout the asset's useful life. Because the rate of depreciation is
unaffected by the level of activity or output.
2)VARIABLE COST OF THE COMPANY- Variable costs are the costs that changes with
the quantity of goods and services that a business produces.
• Variable cost increases with increase in production or sales and when there is decrease in
production or sales variable costs decreases.
• In variable cost , product cost is considered only based on variable manufacturing cost.

The below given table shows the variable cost of the company for the past
three years

SR.NO VARIABLE COST 2019 2020 2021

1) Direct Material (Raw Material) 4,859.51 4,904.10 5,251.54

2) Power and Fuel 8,827.33 9,776.88 9,131.60

3) Bad Debt 3.33

4) Travelling and conveyance 302.28 220.33 57.3

5) Direct Labour(Wages) 12,979.17 13,596.43 12,321.96
6) Repairs And Maintenance 3266.95 4278.11 2435.01
7) Processing Charges 284.06 316.45 283.87
8) Stores and Spares Consumed 18,973.00 19,151.31 13,067.50

9) TOTAL 49,492.30 52,246.94 42,548.78

REASON
Direct Material and Direct labour costs are direct costs. These costs are variable because
these costs change with changes in the production level.
Indirect Sources of Information (Cost of stores & spares consumed), Power and fuel,
repairs and maintenance, and Processing Charges are all variable costs because, in the case of
indirect material, if production changes, the requirement for spare parts changes as well; in
the case of power and fuel, a change in production level affects the consumption of power
and fuel; and in the case of repairs & maintenance, a change in production level affects the
requirement for spare parts.
Travelling and Conveyance are variable costs because Travel expenses will rise and fall in
tandem with your efforts to boost sales and develop company relationships.

Cost sheet of ANDHRA PAPER LTD for the year 2019,20,21.

Particulars Amounts ( In lakhs ) Total Cost
2021 2020 2019 2021 2020 2019
Direct Raw materials 5,251.54 4,904.10 4,859.51
Direct Wages ( Labour ) 12,321.96 13,596.43 12,979.17
PRIME COST (1) 17,573.50 18,500.53 17,838.68
Add : Factory overheads
Factory power & Fuel 9,131.60 9,776.88 8,827.33
Depreciation 6,726.89 6,961.83 6,656.79
Repairs and maintenance 2435.01 4278.11 3266.95
Consumption of Stores and spares 13,067.50 19,151.31 18,973.00
Weaving and processing charges 283.87 316.45 284.06
Add : Opening stock of WIP 2,041.70 1,226.28 961.28
Less : Closing stock of WIP -1,046.76 -2,041.70 -1,226.28
Less:Sale of Factory Scrap -543.06 -536.71 -696.58 32,096.75 39,132.45 37,046.55
WORK COST (2) 49,670.25 57,632.98 54,885.23
Add : Office and Administration overheads
Rent 218.88 107.15 445.93
Rates and Taxes 242.47 213.09 329.57
Conveyance & Travelling Expenses 57.3 220.33 302.28
Audit Fees 68.8 82.5 74.7
Insurance 674.21 351.29 408.11
Legal & Professional Fee 663.2 1,524.30 577.39
Director sitting fees 43.75 41.97 44.4 1968.61 2540.63 2182.38
COST OF PRODUCTION (3) 51,638.86 60,173.61 57,067.61
Add : Opening stock of finished Goods 6,412.40 1,275.01 1,420.51
Less : Closing stock of finished Goods -2,148.31 -6,412.40 -1,275.01 4,264.09 -5,137.39 145.50
COST OF GOODS SOLD (COGS) 55,902.95 55,036.22 57,213.11
Add : Selling and Distribution Overheads
Forwarding, transportation and other
sales expenses 924.93 1,244.18 1,319.11
Bad debts 3.33 924.93 1247.51 1319.11
COST OF SALES / TOTAL COST(4) 52,563.79 61,421.12 58,386.72
Add : Profit 35,384.76 64,300.88 82,563.65
Sales 87,948.55 1,25,722.00 1,40,950.37
1. Prime cost : Prime cost is a initial cost which is made for manufacturing a particular
product like raw material , labour wages and other expenses related to production is
considered as prime cost.

➢ Prime Costs = Materials consumed + Direct wages

➢ Material Consumed = Opening Raw materials + Purchases of raw material -

. Closing Raw Material
2. Work cost : Work cost is also known as factory cost , manufacturing cost and
production cost which is calculated by adding the prime cost with the factory
overheads and by adjusting the opening WIP and closing WIP.

➢ Work cost = Prime cost + Factory Overheads + Op. stock of WIP - Closing of
WIP

3. Cost of Production : Cost of production leads to the total cost incurred by the firm in
order to produce particular quantity of product.

➢ Cost of Production = Factory cost + Office and Administration Overheads.

4. Cost of sales or Total Cost : Total cost is the final value of a product which can be
determined after summing up all the selling and distribution overheads to the cost of
goods sold ( COGS ).

➢ Total cost = Cost of production + Selling and Distribution Overheads

➢ Total Sales = Total cost + Net Profit

Contribution margin= net sales- total variable cost

2020 2021
Contribution margin=1,25,722.00 - contribution margin=87,948.55 -
52,246.94 =73,475.06 42,548.78 = 45,399.77

1)PV RATIO of the ANDHRA PAPER Limited for the Past Years (2020 and
2021) PV RATIO=Contribution Margin/Net sales *100

2020 2021

PV RATIO= PV RATIO=
73,475.06/1,25,722*100 45,399.77/87,948.55*100
=58.44% =51.62%
The Profit Volume (P/V) Ratio is the measurement of the rate of change of profit due
to change in volume of sales. P/V ratio =contribution x100/sales. Contribution means
the difference between sale price and variable cost of the company.

In the year 2020 the pv ratio is high(58..644%)it indicates the high profit margin of
the company. And in the year 2021 the PV Ratio is low (51.62%)it indicates low
profit margin of the company. In the year 2021 the net sales is lower compared to
2020.Even through decrease in net sales in 2021there is LOW profit margin it shows
that Decrease of price of products of company in 2021.

2)Break - Even Point of the ANDHRA PAPER Limited for the Past2 Years (2020
and 2021)
Break Even Point= Total Fixed Cost/PV Ratio

2020 2021

Break Even Point=9,282.13/58.44% Break Even Point=8638.2/51.62%

=158.83 =167.34

The breakeven point is calculated by dividing the fixed costs of production by PV

ratio f that respective year. The breakeven point is the level of production at which the
costs of production equal the revenues for a product.

The Break even point is decreased from the year 2021 to 2020 this shows increase in
the average contribution margin earned on each sale. And it also shows reduction in
the fixed cost from 2021 to 2020.

3) Margin of Safety of the Ruby Mills Limited for the Past Years (2020 and
2021)-
Margin of Safety = Profit /PV Ratio

YEAR 2020 2021

PROFIT 64,300.88 35,384.76

PV RATIO 58.44% 51.62%

MARGIN OF SAFETY 1,100.288 685.48

It refers to the difference between actual sales and break-even point. Managers can
utilize the margin of safety to know how much sales can decrease before the company
or a project becomes unprofitable.
The margin of safety is decreased in the year 2021 as compared to 2020 it indicates
increase in the risk of doing business and increase in the risk of making loss.

SCREEN SHOTS OF ANNUAL REPORT-