Costing Assignment 3 On Laxmi Soap Factory
Submitted to Prof. Govind Shinde
Submitted by Name: Sanket Deepak Aiya MMS- 1st year Sem II Division: B Roll No: 60
Index
S. R. No
Topic
1
Objective of Study
2
Company Profile
3
Products
4
Data Analysis & Cost Sheet
5
Findings
6
Suggestions
7
Conclusion
Objective of Study
The following are the main objectives to be that are assessed and brought into consideration in assessing the cost structure of the company. 1. To assess the cost structure of the company. 2. To know how the company is performing in the long run. 3. To determine the exact profit structure of the company and know how it maintains the stock and other working capital requirements.
Company Profile:
Laxmi Soap Factory was established in the year 1959. But for the Ranglani family, the roots of soap manufacturing are traceable to the year 1921. Sheth Thakurdas Ranglani was based in Karachi when he initially started a soap-manufacturing unit . After partition, Thakurdas migrated to India and started a manufacturing unit in the year 1948.
Having worked hard, Sheth Thakurdas looked around and fixed his site in Pune and as a result Laxmi Soap Factory was setup in the year 1959. Sheth Thakurdas passed away in 1981 but the company still continues to flourish. To establish themselves in the competitive local market, it was necessary to introduce a product which would speak for its own quality. A number of experiments were conducted by Shri Ramchand Thakurdas Ranglani and the fruitful outcome was "Foaran". This brand was introduced to the consumers in 1973.
This partnership firm under the guidance of Mr. Girish Ranglani, Mrs.K. Ranglani and Shri Ramchand T. Ranglani have managed to conquer a segment of the market in Maharashtra, Gujarat and Karnataka and exports to 42 Countries namely Malaysia, Dubai, Somalia, Angola, Tunisia, Abidjan, Burkina Faso, Panama, United Kingdom, New york(USA), Fiji, Ecuador (Latin America), Loma, Congo. Laxmi Soap Factory operates on the principle of appointing stockists agents in all towns and cities. The policy is to aim at smaller profit and larger turnover. Retail outlets and Door to Door selling methods are not used. Though sales staff is employed to supervise, book orders and conduct promotion campaigns.
The company manufactures Laundry Detergent, Detergent Cake, Detergent Powder / Dish Scouring bar and Toilet Soap / Laundry Soap / Multipurpose Soap and Essance Sticks (Agarbatti) also have their own Sulfonation plant. The company intends to go in for the manufacture of toilet soaps. As Mr.Girish puts it, "Ambitious plans are on the anvil inspite of stiff competition from all types of manufacturers, big and small."
Products
To cater to the high demanding market we have worked towards producing a number chemicals for cleaning. The chemicals are specially formulated to give the most effective results. Following are the products: -
Detergent Powder
-
Toilet Soap
-
Detergent Cake
-
Laundry Soap
-
Multi Purpose Soap
-
Dish Scouring
-
Bar Ramas Detergent Cake
-
Abhirup Essence Stick (Agarbatti)
Infrastructure We have been a renowned industry and from the start have aimed at producing better products everyday. The success to our dynamic specialized team who put in all the effort to achieve a better quality. Our technical lab provides proper work facilities, to make the products of world class standards. The latest science techniques are utilized to formulate our products for effective use. Different blending machines are used for the betterment of our products. Team Our industry has its own specialized team of lab technicians to manufacture all our products. The quality procedure involved in formulating various compositions are effective. The team has knowledge in all kinds to help produce products which are environmental friendly.
Quality We produce good quality products. The products have been specially formulated to give the desired results. Our quality is tested by special technicians to avoid any shortcomings, and the product can be used to maximum efficiency. Not only this all products are eco-friendly and biodegradable and pose no threat to environment.
Packaging For packed convenience of clients we have packaging facilities for easy transport and delivery of products. The products are sealed properly to avoid any leakage thus ensuring the safety of products. Research Development Our team of research associates is continuously involved in improving and developing the products. They are continuously researching to formulate all our products. Latest researchers are used to improve the products. Organized testing of the chemicals is conducted before the final product reaches the cleaning agents. The chemicals are tested for its biodegradability to avoid hazards. Clientele We aim at giving our customers the satisfaction of associating with the best in the industry. We supply a wide range of clients with our products. Our clients lists include various houses, industries, hotels and motels. Why Us? Our company has been a reliable source producing different household products. The reason for us being appreciated in the market are: -
Innovative and quality products
-
International standards quality
-
Relevant industry experience to produce good quality products
Cost Sheet of Laxmi Soap Factory with Assumptions Units
FY 10
FY 11
FY 12
Cost Assumptions Raw Material Volume Req 10
10
Acid
Ml
5
Speciality chemicals
Ml
0
0
10
Ordinary chemicals
Ml
5
5
5
Perfumes
Ml
0
paise/ ml
7
5 1
105 1
1
1 0
10
Raw Material Price 7. Acid
8. 8 14.3% 4.
Inflation %
3. Speciality chemicals
paise/ ml
7
7
8
2.8 47.1% 6.
5. paise/ ml
11.1%
5
Inflation %
Perfumes
5.0 21.6% 2.
1. paise/ ml
4.5%
5
Inflation %
Ordinary chemicals
9.2
12.0%
5
7.0 12.1%
Inflation %
7.7%
Packaging Cost 1. Soaps
INR/ unit
0
1. 1
1.2
10%
Inflation %
9%
Headcount 1 Manufacturing
#
9
0
12
Marketing professionals
#
2
2
3
Corporate employees
#
1
1
1
Average Monthly Salary INR/ month INR/ month INR/ month
Manufacturing Marketing professionals Corporate employees
10,00 0
10,00 0
15,00 0 16,00
16,00
10.0% 65,00 INR
Power Cost
0
0.00%
5.00%
12.0% 80,00
12.0% 100,00
0
0 23.1% 1.
1. INR/ unit
16,80 0
0
% Inflation
Packaging Cost
15,75 0
0
% Hike
Bonus (% of Salary)
0 15,00
0
0
10,50
1
25.0% 1.2
% Inflation
Ads as % of Sales
%
5.0%
8.4%
7.2%
298,36 Ads Cost
INR
Commissions as % of Sales
%
Commisions
INR
Maintenance as % of Sales
%
Maintenance Cost
INR
8
655,36 7
5.0% 300,00 0
5.0% 388,12 5
0.2% 14,91 8
INR
0
3
0
5.0% 480,00
0.2% 17,58
65,00 Insurance Premium
689,35 5
0.2% 18,27 2
65,00 0
65,00 0
Revenue Assumptions INR/ packet
Sales Price
3 2
3 6 12.5% 215,62
Inflation %
187,50
Sales Volume
packets Growth %
0
40
5
11.1% 240,00 0
15.0%
11.3%
Revenue & Cost Build-up of Laxmi Soap Factory Soap:Units
FY 10
Fy 11
FY 12
INR/ packet
32
36
40
Revenue Build-UP Sales Price
187
215
240
Sales Volume
packets
,500
,625
,000
Sales Revenue
INR lakhs
60
78
96
Total
Cost Build-Up Raw Material Prices paise/ ml paise/ ml paise/ ml paise/ ml
Acid Speciality chemicals Ordinary chemicals Perfumes
8
9
9
4
5
5
2
3
3
6
7
7
19688 694 319 1088
22641 970 539 1402
25200 1200 672 1680
15.16
19.92
23.18
0.26
0.44
0.60
0.05
0.13
0.19
0.63
0.91
1.18
16.10
21.41
25.15
9 2 1
10 2 1
12 3 1
10000
10000
10500
15000
15000
15750
16000
16000
16800
Raw Material Volumes Acid
litres
Speciality chemicals
litres
Ordinary chemicals
litres
Perfumes
litres
Raw Material Cost Acid Speciality chemicals Ordinary chemicals Perfumes Total
INR Lakh INR Lakh INR Lakh INR Lakh INR Lakh
Headcount Manufacturing Marketing professionals Corporate employees Average Monthly Salary Manufacturing Marketing professionals Corporate employees
INR/ month INR/ month INR/ month
Bonus on Salary (% of Salary)
10%
12%
12%
11.9 4.0 2.1 18.0
13.4 4.0 2.2 19.6
16.9 6.4 2.3 25.5
0.65
0.8
1
1.875
2.371875
2.88
2.98
6.55
6.89
3
3.88
4.80
0.149
0.176
0.183
0.65 43.361
0.65 55.461
0.65 67.097
Employee Cost Manufacturing Marketing professionals Corporate employees Total
Power Cost
INR Lakh
Packaging Cost
Advertising Costs Commissions Maintenance Costs Insurance Premium Total Costs Cost Sheet of Laxmi Soap Factory:Particulars Direct Material Acid Speciality chemicals Ordinary chemicals Perfumes
Total Direct Labor Direct Expenses (Packaging) Prime Cost Production Overheads Power Maintenance Factory Cost
FY 10
FY 11
FY 12
15.16 0.26 0.05 0.63 16.10 11.88
19.92 0.44 0.13 0.91 21.41 13.44
23.18 0.60 0.19 1.18 25.15 16.93
1.88 29.86
2.37 37.22
2.88 44.96
0.65 0.149 30.66
0.8 0.176 38.19
1 0.183 46.15
Findings -
The company is maintaining an optimum price level i.e. Rs. 32 and which is feasible for a local customer to afford the soap.
-
Also the sales volume that is generated 240,000 by the company is meeting the demands of the customer and there is no too much WIP, as maintaining optimum stock levels.
-
The company is adding an adequate expenditure on the packaging as well as on the maintenance of the machinery, though that is adding up the cost but at the same time it is bringing out the quality product in the long run with generating returns of 15%.
-
The packaging cost of the company is low so as to keep the customers with the company and generate high profit as it is generating profit of 15% on each unit.
-
The company is expecting increase in selling price of 12.5% on its product as to sustain in the long run.
Suggestions
The expenditure incurred by company on the research and development should be improvised and used at the maximum point to bring in more quality in the product. As the company is performing well on the all the levels be it employee incentives or the benefits for the customer, it is doing good justice to all the factors of production.
Conclusion
The firm since a very long period is in this business and hence is very well aware of its competitors pricing and thus maintains optimum cost and selling price to sustain in the business. Thus we can say that the company is performing better and can sustain in the long run, by meeting its objectives as well as serving better to society.
