Cost analysis of NESTLE Co.

CA ppt
Semester VI
Group 8
 NESTLE
Introduction
• Nestle is a multinational packaged foods company founded and
headquartered in Vevey, Switzerland.
• Nestle products are sold in almost every country in the world.
• Factors of production for the short run are divided into fixed cost and
variable cost.
• Nestle India's net sales rose 18.24 per cent to Rs 4,591 crore during
the period under review against Rs 3,882.57 crore in the
corresponding period of the last fiscal.

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What is Cost Analysis?
A cost analysis is a comparison of
expenses, usually to determine whether
costs are beneficial to a business. The
most common use for this type of
expense analysis is a cost-benefit
analysis, which reveals whether a cost
can give a business a high ROI or
return on investment. A high ROI
means that the company receives more
value than the money it spent on a
particular investment.

Manisha 31
Job Costing & Contract Costing

Arthi 35
Process Costing
• This is useful when a product passes through various processes,
yielding different by products of commercial value. This is
useful in industries like refineries.

Standard Costing
• Standard costing means assigning the expected budgeted costs
to the goods manufactured, the goods in inventory and the
goods sold. In other words, the amounts assigned are the costs
that should occur when manufacturing products.
Priya 40
Marginal Costing :
Marginal costing in economics and managerial accounting refers to
an increase or decrease in the total cost of production due to a change in
the desired output quantity. It is variable, depending on the inclusion of
resources required to produce or deliver additional units of a product or
service.

Activity Based costing :

Activity Based costing (ABC) assigns manufacturing overhead costs
to products in a more logical manner than the traditional approach of
simply allocating costs on the basis of machine hours. Activity-based
costing first assigns costs to the activities that are the real cause of
overhead. It then assigns the costs of those activities only to the product
that is actually demanding the activities.
Parameshwari 13
Statement showing cost analysis for the month of 2020 of
manufacturing company Production 5000 In units

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H. WORKS COST [D+E+F-G] 352000 70.4

I. Add: Office Overheads

Salaries 60000

Printing and Stationary 12000 72000 14.4

J. Cost of production [H+I] 424000 84.8

K. Add: Opening stock of finished goods 60000

Less: Closing stock of finished goods (40000)

L. Cost of goods sold [J+K] 444000 88.8

M. Add: Selling and Distribution

Overheads

Advertising Expenses 30000

Carriage Outward 20000 50000 10

N. Cost of Sales/Total Cost [L+M] 494000 98.8

Add: Profit 406000 81.20

SALES 900000 180

 ADVANTAGES

• Bolstered Research and Development

• Partnership with big companies
• Product availability
• Plant based meal

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 Disadvantages
• Nestle has strict operating standards, which
means no cutting corners.
• Nestle has a limited product line.
• Nestle has purchasing restrictions.

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 IMPORTANCE
As stated by Nestle Company, quality
management system act as a worldwide
platform whereby they ensure the food
safety, and compliance to the quality
standards to create value for consumers.
Their system is audited and verified by
independent auditor to show conformity to
internal standards, ISO norms, laws and
regulatory requirements Ancy 34
 Conclusion
Nestle products are
available almost everywhere
and analyzing its cost helps
us to achieve the goal in a
better way.

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Thank You