MYSORE SANDAL SOAP

NAME: ISHITA SINGH

Reg No. 2021BBAH07ASB205

SEC(D)

Course: B.B.A. (Hons.)

Batch: 2021-2024. Semester: “4”

Alliance School of Business

Alliance University, Bangalore

1
 INDEX
INTRODUCTION 3

ABOUT PRODUCTION 4

INVENTORY VALUATION METHOD OF THE COMPANY 6

FINANCE AND COST ASPECT OF THE COMPANY 7

CONCLUSION 9

2
 INTRODUCTION

Mysore Sandal Soap is a brand of soap that originated in the city of Mysore in
the state of Karnataka, India. The soap is made using pure sandalwood oil,
which is a prized ingredient in many traditional Indian skincare products. The
unique scent and texture of Mysore Sandal Soap have made it a popular choice
among consumers in India and abroad.

The soap is manufactured by the Karnataka Soaps and Detergents Limited

(KSDL), a government-owned company based in Bangalore. KSDL was
established in 1916, and it has been producing Mysore Sandal Soap since 1918.
Over the years, the company has expanded its product line to include other
personal care items such as shampoo, body wash, and hand wash.

Mysore Sandal Soap is known for its high quality and natural ingredients, and it
has won many accolades and awards over the years. The soap is also a symbol
of pride for the people of Karnataka, who consider sandalwood to be a precious
resource of their state.

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 PRODUCTION

Mysore Sandal Soap is a popular brand of soap that is known for its distinctive
sandalwood fragrance. The soap is made using a traditional method that has
been perfected over many years.

Here is a brief overview of the production process of Mysore Sandal Soap:

1)Collection of raw materials: The main ingredient of Mysore Sandal Soap is

pure sandalwood oil, which is derived from the heartwood of sandalwood trees.
The sandalwood oil is collected by steam distillation of the wood chips. Other
raw materials include coconut oil, castor oil, and palm oil.

2)Mixing of raw materials: The raw materials are mixed together in a large
mixing tank. The mixture is heated and stirred to ensure that all the ingredients
are well blended.

3)Saponification: The mixture is then transferred to a large vessel called a

saponification vessel. Here, the mixture is heated and treated with an alkaline
solution, such as sodium hydroxide. This process, known as saponification,
produces soap.

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4)Addition of sandalwood oil: Once the soap has been produced, pure
sandalwood oil is added to the mixture. This gives the soap its characteristic
sandalwood fragrance.

5)Pouring and shaping: The soap mixture is then poured into moulds and
allowed to cool and harden. The moulds are removed, and the soap is cut into
bars.

6)Drying: The bars of soap are then allowed to dry for several weeks. During
this time, the soap hardens and the fragrance of the sandalwood oil intensifies.

7)Packaging: The dried bars of soap are then wrapped in paper and packaged
for distribution.

That's a brief overview of the production process of Mysore Sandal Soap. The
process has been refined over many years to ensure the highest quality soap is
produced.

5
 INVENTORY VALUATION SYSTEM OF MYSORE SANDAL SOAP

The FIFO (First-In-First-Out) method is a common inventory valuation method used by

companies to manage their inventory costs. It might be FIFO for Mysore Sandal Soap
Company, a manufacturer of sandalwood-based soaps and other personal care products.

Under the FIFO method, the company begins inventory valuation by estimating how many
units of each type of soap it will produce in the next fiscal quarter. It then reduces this
inventory count by the amount it produced during that quarter.

This is done until the inventory count reaches zero. From this point on, the company
valuation assumes that any new soap products will be FIFOed into inventory.

The FIFO method can be more accurate than other methods, such as the average cost method,
because it considers how much each type of soap is used.

This method assumes that the first units of inventory purchased are the first units sold. This
means that the cost of the oldest inventory is used to calculate the cost of goods sold (COGS),
while the cost of the most recent inventory is used to value the ending inventory.

For example, if the Mysore Sandal Soap Company purchases 1,000 units of sandalwood oil
for $10 per unit in January and then purchases 2,000 units of sandalwood oil for $12 per unit
in February, the company will assume that the 1,000 units purchased in January were sold
first. If the company sells 1,500 units of soap in March, the COGS will be calculated using
the cost of the 1,000 units purchased in January, which is $10 per unit. The remaining 500
units sold will be valued using the cost of the 1,000 units purchased in January and the 500
units purchased in February, which is an average cost of $11 per unit.

At the end of March, the Mysore Sandal Soap Company will use the cost of the 500 units
purchased in February to value the ending inventory, which is $12 per unit.By using the FIFO
method, the Mysore Sandal Soap Company can accurately track the cost of its inventory and
manage its costs more effectively. It can also ensure that the cost of goods sold is based on
the oldest inventory, which reflects the true cost of production.

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Finance and cost aspects of the company:
As it depends on various factors such as the soaps being made, the raw
materials used, labour costs, and other overhead expenses, Karnataka Soap and
Detergent Limited's soap production process.

The cost of making soap, however, usually includes raw materials like oils, fats,
alkalis, fragrances, and colorants, as well as labour costs. Other costs, such as
manufacturing overheads, packaging, and marketing expenses, may also be
included in the cost of making soap.

To determine the actual cost of making soap, Karnataka Soap and Detergent
Limited likely uses cost accounting methods such as activity-based costing
(ABC) or process costing. By using these methods, the company can calculate
the cost per soap produced by allocating raw materials, labour, and overhead to
the soap production process. To stay competitive in the marketplace,
manufacturing companies like Karnataka Soap and Detergent Limited have to
manage their costs well.

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COST ASPECT OF THE COMPANY

COST OF GOODS SOLD:

PROFIT COMPUTATION FROM 2011 to 2016

Fixed cost; 335000000

350000000

300000000
Variable cost;
240000000
250000000

200000000
Cost

150000000
Total cost; 90000000
100000000
RELATIONSHIP
50000000
BETWEEN FIXED,
VARIABLE AND TOTAL COST
0
2011-12 2012-13 2013-14 2014-15 2015-16

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 CONCLUSION:

The effectiveness of the cost control mechanism used by KS&DL is

examined in this study.

The company's biggest sales turnover was 357.02 cores, or 315.71 crores, in
the 2014–15 fiscal year. 231.12 crores in 2011–12, 286.21 crores in 2012–13,
and in 2013–14, respectively. By growing its production and sales volume
over the past 12 years, it has demonstrated progressive growth.

In the breakdown of total cost, prime costs account for the majority of the
weight each year, accounting for 83%, 87%, 91.5%, 92%, and 93% in the
years 2011, 2012, 2013, 2014, and 2015, respectively.

Due to a lack of raw materials, the manufacturing is inconsistent. This

year, the company's break-even sales are at 94.80% of capacity. The
business uses a traditional production technique that has been in place for
a while.