Description
my group presentation on process costing
PROCESS COSTING
Presented By:
Bhagyashree Naik Mayura Shelatkar Nayantara Shirke Ankit thakur Abhay Yadav Chetan Gavande
1192 1206 1207 1214 1217 1178
Definition
? Process
costing is a costing system in which the product or service cost is obtained by assigning costs to masses of like units
Meaning
?
In manufacturing unit raw material has to pass through different stages of manufacturing of product .
?
Each stage through which the product passes is called as “PROCESS”
So for determination of cost complied with each process separate account is made
?
Where its being used
?
Its most widely used in the mass production industries of standard products For eg:- Textile mills , sugar industries, oil refining , paper , paint industry etc.
?
BASIC FEATURES
Each plant or factory is divided into a number of processes. ? Manufacturing activities are done continuously and simultaneously. ? The output of one process is the input of another. ? End product is not distinguishable each other ? Any unit of end product cannot be lined to any lot of input. ? Materials are generally issued from stores. ? Overheads are generally absorbed on predetermined ratios.
?
Process Costing
Direct Materials, Direct Labor Indirect Manufacturing Costs
Department A
Department B
Finished Goods
Cost of Goods Sold
A common example wherein process costing may be applied is “ sugar manufacturing industry “
The process in the industry are :?
CANE SHREDDING
?
MILLING
HETING AND ADDING LIME
?
?
CLARIFICATION
EVAPORTION
?
?
CRYSTALIZATION AND SEPERATION
SPINNING AND DRYING
?
The procedures of process costing are designed to:
? ? ? ? ?
Accumulate materials, labour, and factory overhead costs by departments. Determine a unit cost for each department. Transfer costs from one department to the next and to finished goods. Assign costs to the inventory of work in process (WIP) If accurate units and inventory costs are to be established by process costing procedures, costs of a period must be identified with units produced in the same period
Elements/Components Of Costs Involved In The Manufacturing Process
Direct Materials: Two types of material come in process costing.
? ? ? ?
Primary Material / Secondary Material Direct Labour.
Direct Expenses
Production Overheads
?
NORMAL LOSS: An expected decline in efficient production that is unavoidable and inevitable.
ABNORMAL LOSS: Abnormal loss is that loss which could have been avoided. It occurs because of negligence, carelessness, theft, mischief, fraud of employees or inefficiency.
?
?
ABNORMAL GAIN: More output over the expected or normal output realized is called an abnormal gain. SCRAP VALUE : Loss generated ( in physical units) can be sold , the value for which it is sold it is called as scrap value.
?
PER UNIT COST OF FUNCTION :-
PARTICULARS UNITS
DIRECT MATERIAL
AMOUNT 400000 50000 1200000 54000 624000
PARTICUARS PROCESS 2 A/C
UNITS
AMOUNT 624000
10000
OTHER MATERIAL DIRECT LABOUR PRODUCTION OVERHEADS
TOTAL
6240000
CALCULATION
?
COST PER UNIT :-
TOTAL COST - VALUE OF NORMAL LOSS UNITS NTRODUCED – NORMAL LOSS UNITS
INDIAN INDUSTRIES
FOOD PROCESSING 1. ITC
? 2. 3. 4. 5. 6. 7.
PARLE PRODUCTS AMUL PERFETTI VANMELLE CADBURY INDIA PEPSI CO NESTLE INDIA PVT LTD
GUJRAT AMBUJA CEMENT LIMITED
?
GACL was established as Ambuja Cements Private Ltd. (ACPL) in 1981 It was started by Narotam Satyanarayan Sekhsaria (Sekhsaria) Sekhsaria liked the cement business because of its stable demand, lack of substitutes and limited competition.
?
?
PROCESS OF GACL
?
1.
RAW MATERIAL USED
LIME STONES CLAY SILICA & GYPSUM
2.
3.
ACTUAL PROCESS 1. QUARIYING & CRUSHING 2. GRINDING & BLENDING 3. CLINKER PRODUCTION 4. FINISHED GRINDING
TECHNIQUE USED BY GACL
?
HAS CUT COST THROUGH USAGE OF COAL THROUGH USE OF SUBTITUTES LIKE CRUSED SUGARCANE COMPANY OPERATED MORE THAN 100% UTILIZATION USED SHIP TRANSPORTATION TO CUT FRIEGHT COST. LOW COST FUND HELPED GACL TO CUT THE COST OF CAPITAL
?
?
?
?
BEST PRACTICES ADOPTED
doc_301177428.pptx
my group presentation on process costing
PROCESS COSTING
Presented By:
Bhagyashree Naik Mayura Shelatkar Nayantara Shirke Ankit thakur Abhay Yadav Chetan Gavande
1192 1206 1207 1214 1217 1178
Definition
? Process
costing is a costing system in which the product or service cost is obtained by assigning costs to masses of like units
Meaning
?
In manufacturing unit raw material has to pass through different stages of manufacturing of product .
?
Each stage through which the product passes is called as “PROCESS”
So for determination of cost complied with each process separate account is made
?
Where its being used
?
Its most widely used in the mass production industries of standard products For eg:- Textile mills , sugar industries, oil refining , paper , paint industry etc.
?
BASIC FEATURES
Each plant or factory is divided into a number of processes. ? Manufacturing activities are done continuously and simultaneously. ? The output of one process is the input of another. ? End product is not distinguishable each other ? Any unit of end product cannot be lined to any lot of input. ? Materials are generally issued from stores. ? Overheads are generally absorbed on predetermined ratios.
?
Process Costing
Direct Materials, Direct Labor Indirect Manufacturing Costs
Department A
Department B
Finished Goods
Cost of Goods Sold
A common example wherein process costing may be applied is “ sugar manufacturing industry “
The process in the industry are :?
CANE SHREDDING
?
MILLING
HETING AND ADDING LIME
?
?
CLARIFICATION
EVAPORTION
?
?
CRYSTALIZATION AND SEPERATION
SPINNING AND DRYING
?
The procedures of process costing are designed to:
? ? ? ? ?
Accumulate materials, labour, and factory overhead costs by departments. Determine a unit cost for each department. Transfer costs from one department to the next and to finished goods. Assign costs to the inventory of work in process (WIP) If accurate units and inventory costs are to be established by process costing procedures, costs of a period must be identified with units produced in the same period
Elements/Components Of Costs Involved In The Manufacturing Process
Direct Materials: Two types of material come in process costing.
? ? ? ?
Primary Material / Secondary Material Direct Labour.
Direct Expenses
Production Overheads
?
NORMAL LOSS: An expected decline in efficient production that is unavoidable and inevitable.
ABNORMAL LOSS: Abnormal loss is that loss which could have been avoided. It occurs because of negligence, carelessness, theft, mischief, fraud of employees or inefficiency.
?
?
ABNORMAL GAIN: More output over the expected or normal output realized is called an abnormal gain. SCRAP VALUE : Loss generated ( in physical units) can be sold , the value for which it is sold it is called as scrap value.
?
PER UNIT COST OF FUNCTION :-
PARTICULARS UNITS
DIRECT MATERIAL
AMOUNT 400000 50000 1200000 54000 624000
PARTICUARS PROCESS 2 A/C
UNITS
AMOUNT 624000
10000
OTHER MATERIAL DIRECT LABOUR PRODUCTION OVERHEADS
TOTAL
6240000
CALCULATION
?
COST PER UNIT :-
TOTAL COST - VALUE OF NORMAL LOSS UNITS NTRODUCED – NORMAL LOSS UNITS
INDIAN INDUSTRIES
FOOD PROCESSING 1. ITC
? 2. 3. 4. 5. 6. 7.
PARLE PRODUCTS AMUL PERFETTI VANMELLE CADBURY INDIA PEPSI CO NESTLE INDIA PVT LTD
GUJRAT AMBUJA CEMENT LIMITED
?
GACL was established as Ambuja Cements Private Ltd. (ACPL) in 1981 It was started by Narotam Satyanarayan Sekhsaria (Sekhsaria) Sekhsaria liked the cement business because of its stable demand, lack of substitutes and limited competition.
?
?
PROCESS OF GACL
?
1.
RAW MATERIAL USED
LIME STONES CLAY SILICA & GYPSUM
2.
3.
ACTUAL PROCESS 1. QUARIYING & CRUSHING 2. GRINDING & BLENDING 3. CLINKER PRODUCTION 4. FINISHED GRINDING
TECHNIQUE USED BY GACL
?
HAS CUT COST THROUGH USAGE OF COAL THROUGH USE OF SUBTITUTES LIKE CRUSED SUGARCANE COMPANY OPERATED MORE THAN 100% UTILIZATION USED SHIP TRANSPORTATION TO CUT FRIEGHT COST. LOW COST FUND HELPED GACL TO CUT THE COST OF CAPITAL
?
?
?
?
BEST PRACTICES ADOPTED
doc_301177428.pptx