A Study On Cost and Cost Techniques at Reid Braids India - Hassan

COST AND COST TECHNIQUES
1. INDUSTRY PROFILE
TEXTILE INDUSTRY INTRODUCTION
The textile industry is undergoing a major reorientation towards non-clothing
applications of textiles, known as technical textiles, which are growing roughly at twice
rate of textiles for clothing applications and now account for more than half of total textile
production. The processes involved in producing technical textiles require expensive
equipment and skilled workers and are, for the moment, concentrated in developed
countries. Technical textiles have many applications including bed sheets; filtration and
abrasive materials; furniture and healthcare upholstery; thermal protection and bloodabsorbing materials; seatbelts; adhesive tape, and multiple other specialized products and
applications. The Indian Textile industry has been undergoing a rapid transformation and is
in the process of integrating with the world textile trade and industry. This change is being
driven by the progressive dismantling of the MFA and the imperative of the recently signed
General Agreement Trade & Tariff. In this bold, new scenario, India has to move beyond its
role of being a mere quota satisfying country.
HISTORY
The term 'Textile' is aLatin word originating from the word 'texere' which means 'to
weave The history of textile is almost as old as that of human civilization. In India the
culture of silk was introduced in 400AD. Modern textile industry took birth in India in the
early nineteenth century the first cotton textile mill of Bombay was established in1854
during the year 1900 the cotton textile industry was in bad stateafter independence, the
cotton textile industry made rapid strides under the plans.
VVIMS- MBA Department, Mysore
GLOBAL SCENARIO
According to statistics, the global textile market is worth of more than $400 billion
at present. In more liberalized environment, the industry is facing competition as well as
opportunities. It is predicted that Global textile production will grow up to 25% by the year
2010 and 50% by 2014. The world industry has gone into a phase of transformation since
the elimination of quota in the year 2005. Many new competitors as well as consumers have
entered the global market with their immense capabilities and the desire to grow.
It is expected that China will represent around 45% of global trade by 2010. In spite
of its significant growth trend, China's rising costs and perceived risks are creating more
opportunities for other low cost countries.
It is also expected that India will represent around 20% of global trade by 2010.
India is rapidly expanding its role with new capacity build-up in management control
of textile trades through vertical integration. Vertically integrated companies are organized
in a hierarchy and share a common owner. Usually each member of the hierarchy produces
a different product or service. The products are combined to achieve a common goal. The
advantage of vertical integration is that it avoids the hold-up problem.
Pakistan, Vietnam, Cambodia and Bangladesh are relying on their low
manufacturing costs due to cheap labor available there. Thus, they are building up more
capacity in textile manufacturing
THE INDUSTRY PROFILE IN INDIA

The Textile industry in India traditionally, after agriculture, is the only industry that
has generated huge employment for both skilled and unskilled labor in textiles. The textile
industry continues to be the second largest employment generating sector in India. It offers
direct employment to over 35 million in the country. India is the second producer but India
will lead in all. According to the Ministry of Textiles, the sector contributes about 14% to
industrial production, 4% to the country's gross domestic product (GDP) and 17% to the
country's export earnings. The share of textiles in total exports was 11.04% during April
July 2010, as per the Ministry of Textiles. It is estimated that India would increase its textile
and apparel share in the world trade to 8% from the current level of 4.5% and reach US$80
billion by 2020. During 2009-2010, Indian textiles industry was pegged at US$55 billion,
64% of which services domestic demand.
India textile industry is one of the leading in the world. Currently it is estimated to
be around US$52 billion and is also projected to be around US$115 billion by the year
2012. The current domestic market of textile in India is expected to be increased to US$60
billion by 2012 from the current US$ 34.6 billion. The textile export of the country was
around US$19.14 billion in 2006-07, which saw a stiff rise to reach US$22.13 in 2007-08.
The share of exports is also expected to increase from 4% to 7% within 2012. Following
are area, production and productivity of cotton in India during the last six decades.
Indian Textile Industry has Some Inherent Strength:
1. Tradition in Textiles and long operating experience
2. Large and growing domestic market
3. Strong raw material base
4. Production across entire textile value chain
5. Stable, low-risk economy, safe for business growth
6. Easy availability of abundant raw materials like cotton, wool, silk, jute
7. Widely prevalent social customs
8. Variety of distinct local culture
9. Constructive geographic and climatic conditions
CURRENT FACTS OF INDIAN TEXTILE INDUSTRY

1. Indian Textile sector grew by more than 5% in the last two fiscal years and is
projected to grow at 16% by 2012.
2. Being the second largest employer of Indians after agriculture, it currently employs
88 million people and is expected to generate another 17 million jobs by 2012.
3. The gross value is the third largest of textile to both USA and Europe and exports
grow by 24% in last fiscal year.
4. They are likely to grow by 25% in the next 5 years increasing the Indian Textile
Industrys share in world textile market from 3% to 7%.
5. Thus, the facts and figures speak for the prospects and potentials of Textile Industry.
However the textile sector is still in a nascent stage for the world market.
6. India retained its position as worlds second highest cotton producer.
MAJOR PLAYERS IN INDIA

1.
2.
3.
4.
5.
6.
7.
8.
9.
Bombay Dyeing
Fabindia
Grasim Industries
JCT Limited
Lakshmi Mills
Mysore Silk Factory
Arvind Mills
Raymonds
Reliance Textiles
CURRENT SCENARIO
India earns about 27% of its total foreign exchange through textile exports, which
plays major role in the economy of the country. Indian textile industry largely depends upon
the textile manufacturing and export. India is the world's 2nd largest cotton producing
country, after China.
The prices of Cotton Hank Yarn decreased by 26.1% and Cone yarn by 20.9% in
Jan.2012 in comparison to the prices of January.2011.The current prices of PSF decreased
by 2.6% and PFY (126 D) increased by 1.3% as compared to the prices of
January.2011.The prices of Textures yarn decreased by 3.1% as compared to January.2011.
The prices of imported merino wool are increased by 63.1 % during the same period.
There is no limit on foreign direct investment in the textile industry and hence 100%
direct investment can be done by the foreign capitalists in the Indian textile industry.
Foreign Investments done in the Indian Textile Industry through the automatic route offers
a hassle-free way of investing. These investments are not required to be approved by the
government or the apex bank of India, RBI. Still the sector is not attracting much and the
FDI has seen almost remained constant, but the future still looks bright as India has good
scope of becoming the global textile and apparel sourcing center in future.
FUTURE SCENARIO
The textile industry in India is substantial, and largely diversified. The Indian textile
industry roots thousands of years back. After, the European industry insurrection, Indian
textile sector also witnessed considerable development in industrial aspects. Textile
industry plays an important role in the terms of revenue generation in Indian economy. The
significance of the textile industry is also due to its contribution in the industrial
production, employment. Currently, it is the second largest employment provider after
agriculture and provides employment to more than 30mn people.
Considering the continual capital investments in the textile industry, the Govt. of
India may extend the Technology Upgradation Fund Scheme (TUFS) by the end of the 11th
Five Year Plan (till 2011-2012), in order to support the industry. Indian textile industry is
massively investing to meet the targeted output of $85bn by the end of 2010, aiming
exports of $50bn. There is huge development foreseen in Indian textile exports from the
$17bn attained in 2005-06 to $50bn by 2009-10. The estimation for the exports in the
current financial year is about $19bn. There is substantial potential in Indian exports of
technical textiles and home-textiles, as most European companies want to set up facilities
near-by the emerging markets, such as China and India.
The global demand for apparel and woven textiles is likely to grow by 25 percent by
year 2010 to over 35mn tons, and Asia will be responsible for 85 percent output of this
growth. The woven products output will also rise in Central and Southern American
countries, however, at a reasonable speed. On the other hand, in major developed countries,
the output of woven products will remain stable. Weaving process is conducted to make
fabrics for a broad range of clothing assortment, including shirts, jeans, sportswear, skirts,
dresses, protective clothing etc., and also used in non-apparel uses like technical,
automotive, medical, etc...
It is been forecasted that the woven textile and apparel markets will sustain their
growth from current till 2010. The imports of apparel and textiles will rise from developed
Economies like the USA and the western countries of Europe and Japan, along with
some newly emerged economies, such as South Korea and Taiwan. Certainly, import
growth has been witnessed vertical rise in the previous year.
Apparel is the most preferred and important of all the other applications. Woven
fabrics are widely used in apparel assortments, including innerwear, outerwear, nightwear
and underwear, as well as in specialized apparels like protective clothing and sportswear.
Home textile also contributes considerably in woven fabric in products assortments like
curtains, furnishing fabrics, carpets, table cloths etc.
Special kind of woven fabrics are utilized in medical as well as industrial
applications. The medical applications include adhesives, dressing bandages, plasters etc.
Non-woven sector has great future in terms of global demand, thus major facilities
of cotton yarn are currently concentrating just on home textiles. It is mandatory, that the
peak management of the cotton yarn manufacturers analyze the future prospect and
growing graph of demand for non-woven products.
Anticipating massive growth in medical and automobile sectors, these sectors
assures substantial demand for non-woven facilities in India. Albeit, home textiles also will
lure higher demand, there are specific demands for home textile facilities also.
2. COMPANY PROFILE
2(a)BACKGROUND AND INCEPTION OF THE COMPANY
Reid Braids India (RBI) was incorporated in the year 2007. It is headed by Mr.
Rahul Sankhla Managing Director of Reid Braids India. The promoter of the company is
Mr. Rahul Sankhla. The unit is located at prime location in SEZ Textile Zone, H N Pura
Road, and Hassan. It is a medium scale industry carried out by two partners Rahul Sankhla
and Nitu Sankhla.
The founder Mr. Rahul Sankhla is a Director of four other companies namely. KTG
stores, KTG Enterprises Pvt Ltd, Sankhla Polymers and Shree Ji. These companies cater to
the Reid Braids India.
The management is having decades of experience in fabric production and quality
line which makes the company more reliable in terms of quality and delivery It has good
fabric source in strength to satisfy customer requirements as management as a working
experience of industry from end to end of retailing .
2(b)NATURE OF BUSINESS CARRIED

Reid Braids India (RBI) is the biggest Narrow Fabric manufacturing company in
India. It manufactures Trims for Garment industries, Shoelaces for Shoe Industries & Retail
products for its clients. Its products cater the requirements of households as well as
individual needs and ensure high quality.
2(c)VISION MISSION AND QUALITY POLICY

VISION
1. Our vision is to be the best Narrow Fabric Company in the world and we are
willing to work hard to achieve our goals.
2. We believe in creating new products, updating our technology and keep working
with positive attitude.
3. RBI is working hard as a Team to become a World Class Company with Innovative
Products
MISSION
1. To conduct our business activities in a professional and ethical manner at all times,
abiding with allapplicable safety, environmental and government legislated
regulations.
2. To share in the success of our customers by providing them with quality products
with economic advantages, while providing a fair return on the investment of our
shareholders.
3. To continually innovate within our company in order to improve operational
procedures, our products, and the working environment for our employees.
QUALITY POLICY
1. Supplying fabrics sand services which conform to all relevant performance and
certification requirements.
2. Delivering on-time and keeping promising lead-times.
3. Providing robust and professional customer support systems - responding
quickly and accurately to issues through our Technical Helpdesk Service.
4. Demonstrating class-leading innovation and Continuous Improvement in
products and services.
5. Compliance with all regulatory requirements of the ISO 9001 quality system
6. Developing and review our quality objective in line with the company Business
Plan and our Customer requirements - our target is to achieve zero defects.
We inspect our products for:

1.
2.
3.
4.
5.
6.
7.
Denier
Linear density
Breaking strength
Weight
Length
UV testing
Color shade
2(d) PRODUCT PROFILE

1. Wax coated shoe laces
2. Sports shoe laces
3. Round shoe laces
4. Draw cords
5. Nylon ropes
6. Kevlar ropes
7. Polypropylene ropes
8. Bungee cords
9. Knitted elastics
10. Ribbed elastics
11. Woven elastics
12. Cotton twill tapes
13. Satin ribbons
14. Nylon webbing
15. Polyester webbing
16. Covered rubber
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2(e) AREA OF OPERATION GLOBAL/NATIONAL/REGIONAL

Reid braids India (RBI) has entered into global market. It exports finished product
to Australia, USA, and Sri Lanka.
2(f) OWNERSHIP PATTERN

Type: Partnership Firm
Nature of the industrial undertaking: Medium Scale
Partners/ Directors: Rahul Sankhla
Nitu Sankhla
Managing Director: Rahul Sankhla
2(g) COMPETITORS INFORMATION

1. M/S Balaji elastic Bangalore
2. M/S Jain narrow fabric New Delhi
3. M/S Modilal fabrics Kanpur
CUSTOMERS
1.
2.
3.
4.
5.
6.
7.
Birch Haberdashery and craft Australia

IX International USA
Himatsingka seide ltd India
Gokaldas Exports Ltd India
Karthik Exports Sri Lanka
Pony Needle India
Karle International India
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2(h) INFRASTRUCTURAL FACILITY

SITTING FACILITIES
In the production department, workers have to stand for long hours while working.
Therefore the company provides sitting facilities. Reid braids India (RBI) have set up rest
rooms for employees. The working hours are fixed inReid braids India (RBI).
DRINKING WATER
The Factory Act, 1948 lies down that there should be drinking water near the place
of work. Reid braids India (RBI) has its,own water wells for drinking purposes. The company
provides fresh, healthy drinking water near the place so that the workers may feel fresh and
need not go to the canteen for drinking water. Company also provides cold water facilities
within the factory itself.
SAFETY
The important factor while handling the machinery, tools and
equipments is the
safety of workers. The company provides the worker, proper training program regarding the
use of safety apartments. The accidents problems are low in Reid braids India (RBI) because
of this training program of handling machines. If any accidents occur, the company bears
the hospital expenses.
CANTEEN FACILITY
It provides canteen facility within the factory itself. Contractor
Runs a canteen and charges half rate for food stuffs provided by them. The coupons are
supplied to all workers.
2(i)ACHEIVMENTS AND AWARDS

1. Best supplier award- 2009
2. Best entrepreneur- 2011
3. India manufacturing show 2010
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2(j)WORKFLOW MODEL
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2(k)FUTURE GROWTH AND PROSPECTUS
1. Establishing new unit
2. To expand the unit to a large unit
3. To install new technology to accept the global challenges.
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3. MCKINSEYS 7SFRAMEWORK
Origin of the 7s framework:
The 7s framework of McKinsey's is a management model that describes 7 factors to
organize a company in a holistic and effective way. Together these factors determine the
way in which a corporation operates. Management should take into account all 7 of these
factors to be sure of successful implementation of a strategy for large or small organization.
Benefits of McKinseys 7sModel:

1.
2.
3.
4.
Diagnostic tool for understanding organizations that is ineffective.

Guides organizational change
Combines rational and hard elements with emotional and soft elements..
Managers must act as all S's in parallel and all S's are interrelated.
MC KINSEY'S 7s MODEL
}
}
Hard S
Soft S
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3.1 STRUCTURE
The way in which the organizations units relate to each other is called as structure.
Organization structure and authority and responsibility relationship are included in the
structure. There are many functional departments in RBI headed by department of general
manager. Organization structure mainly explains how the authority and responsibility flows
from the top to the bottom.
SMAF ai d na l m rna k ua i negf tai isn c n t tg r

geuanD s,trc i ier o n e n gc t o r
3.2 STRATEGY
Strategy is the plan of action an organization prepares in response to, or anticipation of,
changes in its external environment. Strategy is differentiated by tactics or operational
actions by its nature of being premeditated, well thought through and often practically
rehearsed.
1. The maximum expansion to untapped geographical areas
2. Improvement in the existing products.
3. Attain utmost customer satisfaction in order to attain a respectable position
4. Introduction of cost effective substitutes
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16
3.3 SYSTEM
Every organization has some systems or internal processes to support and
implement the strategy and run day-to-day affairs. Traditionally the organizations have
been following a bureaucratic-style process model where most decisions are taken at the
higher management level and there are various and sometimes unnecessary requirements
for a specific decision to be taken.
The company uses the Management information system in order to maintain
accounts.
3.4 SKILL
Skill refers to the fact that employees have the skills needed to carry out companys
strategy, training and development - ensuring people know how to do their jobs and stay
up-to date with the latest techniques and technology.
Basic/General skills:
1. Knowledge about quality, environmental policies and occupational health and
safety.
2. Knowledge of housekeeping practices.
3. Knowledge of first aid and fire emergency plan.
Behavioral skills:
1. Planning ability and execution efficiency
2. Creativity, innovation and initiative
3. Discipline and commitment.
3.5 STYLE
All organizations have their own distinct culture and management style. It includes
the dominant values, beliefs and norms which develop over time and become relatively
enduring features of the organizational life. It also entails the way managers interact with
the employees and the way they spend their time.
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Top Down:
1. General Managers address all executives at least twice a year to Share Companys
vision, mission, values, policy and strategies, business scenario, performance and
companys overall perspective.
2. Divisional/Department heads meet all employees at least once in a month to share
common issues of interest and concern.
Authoritarian:
The company follows Benevolent Authoritative style of leadership. There is usually down
flow of communication and the BOD alone determines policies and makes plans.
Thus, this style of functioning increases the efficiency, saves time and gives quick result in
emergency situation.
3.6 STAFF
Organizations are made up of humans and it's the people who make the real
difference to the success of the organization in the increasingly knowledge-based society.
The importance of human resources has thus got the central position in the strategy of the
organization, away from the traditional model of capital and land.
Managing director:
He manages all the company's administration activities and gives all types of
information regarding product, price, promotion and sales. He makes decisions regarding
avoidance of wastage and losses arising in the company.
General Manager of finance and administration:
They look after financial and administration issues of the company and place
control over activities of the senior finance manager and administration staff.
Senior Manager of finance:
He looks after the accounts of the company and maintains books of accounts
containing profit and losses, balance sheet etc.
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19
The staffs of the company are:

Category
Men
Women
Total
No. Of employees
100
200
300
There are Skilled as well as unskilled employees:

Skilled
Unskilled
Total
120
180
300
3.7 SHARED VALUES

Shared Values of an organization refers to a set of values and aspiration that goes
beyond the conventional, formal statement of corporate observes. Shared values are the
fundamental ideas around which business is built, in RBI employees share the same guiding
values and responsibilities for particular tasks provided to them.
Customer focus
1. Delivering customer satisfaction by listening to and exceeding customer
expectations
2. Adding value for our customers through our services
3. Seeking innovative solutions to help our customers achieve their goals.
4. Competences and Team Spirit
5. Employing a team of talented and competent staff
6. Investing in training and creating good career opportunities
7. Recognizing and encouraging outstanding performance.
8. Integrity
9. Behaving ethically in all our business and financial activities
10. Demonstrating respect towards our customers and our staff
11. Operating responsible environmental policies.
4. SWOT ANALYSIS
INTRODUCTION
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The SWOT analysis tool is great for developing an understanding of an organization

or situation and decision-making for all sorts of situations in business, organizations and for
individuals.
The SWOT analysis headings provide a good framework for reviewing strategy,
position and direction of a company, product, project or person (career).
Doing a SWOT analysis can be very simple, however its strengths lie in its flexibility and
experienced application.
Aim of a SWOT Analysis:
1. Reveal your competitive advantages
2. Analyze your prospects for sales, profitability and product development
3. Prepare your company for problems
4. Allow for the development of contingency plans
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STRENGTHS
1.
2.
3.
4.
5.
6.
7.
8.
Continuous production and continuous process in all departments.

Availability of labor at low cost
Automated quality control and production units
Support and encouragement by the management
Competitive and enough supplier base - raw materials
Recent government efforts to promote the industry
High quality products with lower cost
High motivated work force
9. Better time management
WEAKNESSES
1. Company not having promotional measure.
2. Slow in decision making
3. Lack of flexibility in the system
4. Cost of production is high
5. The machineries in the Production Department are outdated. Therefore, it leads to
low and poor production
6. Training and development programs for employees cost high and implementation
of the programs takes more time
7. Labor turnover rate is high.
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OPPORTUNITIES
1. Integrated computerization will result in better systems management/ efficiency
level and better customer satisfaction
2. Huge demand for value added goods in all major countries.
3. Large and relatively untapped domestic market
4. An opportunity to deal with international clients and handle high end projects
5. An opportunity to take up new venture in other fields
THREATS
1. Resistance to change
2. The export-import policy of India changes too frequently due to which it becomes
very difficult for importers to import goods
3. Availability of duplicate products
4. High competition in domestic market
5. Fast changing market condition.
6. High competition by capital rich MNCs
7. Frequent changes of global competitors
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5. ANALYSIS OF FINANCIAL STATEMENT

The focus of financial analysis is on key figures in the financial statements and the
significant relationship that exists between them. The analysis of financial statements is a
process of evaluating the relationship between component parts of financial statements to
obtain a better understanding of the firm's position and performance.
Finance is the foundation stone of every business firm in the present day setup. No
business can be started without adequate finance nor can it be developed. The success of
every business depends upon adequate source of finance.
The methodology adopted for the Analysis of financial statement may vary from
one situation to another. However, the following are some of the common techniques of the
Analysis of financial statement:
1. Comparative financial statements
2. Common-size financial statements
3. Trend percentage analysis, and
4. Ratio analysis.
The last technique, i.e., Ratio analysis is the most common, comprehensive and
powerful tool of the Analysis of financial statement. An attempt has been made here to
know the financial performance on the basis of Ratio Analysis. The analysis of financial
statements is, thus, an important aid to financial analysis.
RATIO ANALYSIS
The ratio analysis is one of the tools of financial analysis. It is the process of
establishing and interpreting various ratios quantitative relationship between figure and
group of figures. It is with the help of ratios that the financial statements can be analyzed
more clearly and decision can be made from such analysis.
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Liquidity Ratio:
The term liquidity refers to the ability of a firm to pay its short term obligation of as
and when they become due. Liquidity ratio measures the ability of the firm to meet its
current obligations (liabilities). It is extremely essential for a firm to be able to meet its
obligations as they become due. Short term creditor's main interest is in the liquidity
position or the short term solvency of the firm.
The most common ratios which indicate the extent of liquidity are:
1. Current Ratio
2. Quick Ratio
1. Current Ratio:
Current ratio is the ratio which explains the relationship between current assets. and
current liabilities. Current ratio can be expressed as follows
Current Ratio =
Current Assets
Current Liabilities
Table 5.1: Current ratio:

Year
Current Assets
Current Liabilities
Current Ratio
2011
1945682
2251097
1.010
2012
2261648
2211872
1.022
Interpretation:
The current ratio should be at least 2:1.This is a good position for the firm to be in.
It can meet its short-term debt obligations without difficulties. If the current ratio is less
than 2 then the firm will have a problem meeting its expenses. So, usually, a higher current
ratio is better than a lower current ratio with regard to maintaining liquidity. The liquidity
ratio of both years is less than 2 it depicts the poor position of the company.
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2. Debt equity ratio:

The debt equity ratio is the measure of contribution of owners to the long term
finances of the concern as compared to the contribution of the long term creditors on an
enterprise. Further it indicates the stake of the long term creditors as against the owners. It
is the test of long term solvency of the concern.
Debt equity ratio=
Totaldebt
Share holders equity ( paid up capital +reserve fund)
Table 5.2: Debt equity ratio:

Year
Total Debt
Shareholders Equity
Debt Equity Ratio
2011
131803
7147672
0.84
2012
860182
4189060
0.12
Interpretation:
The debt equity ratio should be1:2.Lower values of debt-to-equity ratio are
favorable indicating less risk. Higher debt-to-equity ratio is unfavorable because it implies
the businessdependency more on external lenders thus it is at higher risk, especially at
higher interest rates. In this the debt equity ratio is less than 1 that is 0.84 and 0.12 and it
indicates less risk to the company
3. Net profit ratio:

This ratio is also known as net margin. This measures the relationship between net
profits and sales of a firm. It is calculated as follows:
Net profit ratio=
Profit after tax

Net sales
Table 5.3: Net profit ratio:

Year
Profit after tax
Net Sales
N/P Ratio (%)
2011
6132567
524757
1.16
2012
1634786
395629
1.43
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Interpretation:
The net profit of Reid Braids India is 1.43% for 2012 when compared to 2011
which was 1.16% so this depicts a very good profitability position.
4. Stock turnover ratio:
Stocks turnover ratio and inventory turnover ratio are the same. This ratio is a
relationship between the cost of goods sold during a particular period of time and the cost
of average inventory during a particular period. It is expressed in number of times. Stock
turnover ratio/Inventory turnover ratio indicates the number of time the stock has been
turned over during the period and evaluates the efficiency with which a firm is able to
manage its inventory. This ratio indicates whether investment in stock is within proper limit
or not.
Stock
turn Net sales

=
ratio Inventory
Table No. 5.4: Stock turnover ratio:

Year
2011
2012
Net sales
4676122
5080867
Inventory
2625745
3068852
Stock turnover Ratio

8.5
9.5
Interpretation:
The stock turnover ratio should be around 8 10 times. It means that the company
is efficiently managing and selling its finished products. The faster the inventory sells the
fewer funds the company has tied up. Companies have to be careful if they have a high
inventory turnover as they are subject to stock outs. The stock turnover ratio in 2011 is 8.5
and in 2012 are 9.5 which indicate that the company is efficiently managing and selling its
finished products.
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6. LEARNING EXPERIENCE
I had the honor to work in Reid Braids India to do my project work. Everyone was
very friendly and cooperative. They taught me lots of knowledge including sourcing goods
through the Internet, contacting the suppliers. I learned time management in the
organization and also the functioning of various departments. This gave me an opportunity
to have a better understanding of the whole purchasing cycle.
I gained a lot through participating in the Project work. I realized the importance of
flexibility while working under the real business environment. It was really a valuable
learning experience.
As soon as I entered, I was asked to register my name as well as details about the
college and project in a book in which they keep a record of each and every person who
enters and exits the company.
I went to the administrative block they asked for the permission letter and asked me
to meet my internal guide Mr.Jagananth. He spoke very gently and with a smiling face he
gave me a lot of information regarding the company and guided me how to undergo a
project work.
This project work has enhanced my knowledge regarding the working of the
different areas of management. I experienced a great pleasure in visiting the company,
manufacturing plant and communicating with the people working in the company. It has
given me both theoretical and practical knowledge regarding the administration of the
company.
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1. GENERAL INTRODUCTION
COSTING TECHNIQUES
Costing is defined as the application of costing and cost accounting principles,
methods and techniques to the science art and practice of cost control and the ascertainment
of profitability. It includes the presentation of information derived there from the purpose of
managerial decision making.
Costing system helps in:
Proper classification, allocation and utilization of cost.

Estimating selling price
Estimating profitability
The organization can increase its margin of profit either by decreasing the cost of
manufacturing of products or by increasing the benefits in the product or services to the

customers. This approach called as cost-benefit approach. According to this approach, the
company can earn high return either by achieving low cost or adding high customer value
in the products. Every company cannot have both cost and customer value depending upon
the products.
In industries like steel, aluminum, were scope for innovation and new development
in products are very less. In such industries, cost reduction is the only way to achieve high
rate of profits.
COST
Cost is the amount of expenditure, actual or notional, relating to a specific thing or
activity. The specific thing or activity may be a product, job, service, process or any other
activity.
Cost is defined as the value of the sacrifice made to acquire goods/services,
measured in monetary terms by the acquisition of assets or incurrence of liabilities at the
time the benefits are acquired.
29
COSTING
Cost accounting and costing have distinctly different meanings. The institute of cost
and management accountants, London, has defined costing as the ascertainment of costs.
Costing includes the techniques and process of ascertaining costs. The technique refers
to principles and rules which are applied for ascertaining costs of products manufactured
and services rendered. There are mainly two methods of costing known as job costing and
process costing. The process includes the day to day routine of determining costs within
the method of costing (either job or process) adopted by a business enterprise. Within such
a process, there could be historical costing, marginal costing absorption costing standard
costing etc.
COST ACCOUNTING
Cost accounting, as a tool of management, provides management with detailed
records of the costs relating to products, operations or functions. Cost accounting refers to
the process of determining and accumulating the cost of some particular product or activity.
It also covers classification, analysis and Interpretation: of costs. The costs so determined
and accumulated may be the estimated future costs for planning purposes, or actual
(historical) costs for evaluating performance. cost accounting as the process of accounting
for Cost from the point at which expenditure is incurred or committed to the establishment
of its ultimate relationship with cost centers and cost units. In its widest usage it embraces
the preparation of statistical data, the application of cost control methods and the
ascertainment of the profitability of activities carried out or planned.
COST ACCOUNTANCY
Cost accounting has been differentiated from cost accountancy. The institute of cost
and management accountants, London, has defined cost accountancy as the application of
costing and cost accounting principles, methods and techniques to the science, art and
practice of cost control and ascertainment of profitability as well as presentation of
information for the purpose of managerial decision-making. According to this definition
the term cost accountancy includes costing, cost accounting, budgetary control, cost
control and cost audit.
30
ELEMENTS OF COST:
1. Direct material:
All materials which becomes an integral part of the finished products and which can
be conveniently assigned to specific physical units is termed as Direct Material.
2. Direct labor:
Human effort, both physical and mental, used for conversion of materials into
finished products is labor. Labor which takes an active and direct part in the production of a
particular commodity is called as direct labor.
3. Overheads:
The term overhead includes indirect material, indirect labor and indirect expenses.
Thus all indirect costs are overheads. Overhead also includes all indirect expenses i.e.
miscellaneous expenses which cannot be directly or wholly allocated to cost centre of cost
units. Example: expenses like rent, lights, and insurance charges etc. overheads can
beclassified depending on the convenience of the organization like factory overhead, stores
overhead etc.
4. Indirect material:
All materials which are used for purpose ancillary to the business and which cannot
be conveniently assigned to specific physical units is termed as Indirect Materials.
Example: consumable stores, oils etc.
5. Indirect labor:
Labor employed for the purpose of carrying out tasks incidental to goods produced
or service provided is indirect labor. Such labor does not alter the construction, composition
or condition of the product. It cannot be practically traced to specific unit of output.
Example: wages of storekeeper, foreman etc.
6. Indirect expenses:
The expenses which cannot be directly, conveniently and wholly allocated to
specific cost units/ centers are treated as indirect expenses.
1. Manufacturing production expenses.
2. Office and administrative expenses.
3. Selling and distribution expenses.
31
7. Indirect manufacturing expenses:

These are incurred in the factory. Included in these are expenses relating to
production management, such as rent, rates and insurance of factory premises, power used
in factory depreciation of plant, machinery, and so on.
8. Office and administrative expenses:
These pertain to management of business and include office rent, lighting and
heating, posting, telephone, fax and other charges, depreciation of office furnitures and
equipments, legal charges, audit fee, and so on.
9. Selling and distribution charges:
These are incurred for marketing of products, dispatching goods solid, and Etc.
METHODS OF COSTING
There are two methods of costing:
Job costing
Job costing is used in those business concerns where production is carried out as per
specific order and customers specifications. Each job is separate and distinct from the other
jobs or products. The method is popular in enterprises engaged in house-building, shipbuilding, machinery production and repair. Job costing has the following variants:
1. Batch costing
2. Contract or terminal costing
3. Multiple or composite costing
Process costing
This costing method is used in those industries where production is done
continuously, such as motor cars, aero planes, etc. it is difficult to trace the costs to specific
units and the total cost is averaged for the number of units manufactured. Sometimes, total
cost and per unit cost is calculated at each stage of production for control purposes. Process
costing has the following variants:
1. Unit or single output costing
2. Operating (service)costing
3. Operation costing
TECHNIQUES OF COSTING
32
1. Historical costing
Historical costing is system of costing under which costs are determined after they
have been incurred.
2. Standard costing
Under standard costing, standard costs are determined and used, and then compared
with the actual costs to determine the extent of variances so that remedial action can be
taken. Standard costs are the predetermined costs in conformity with the most efficient
operation and use of the resources within the film.
3. Absorption or Full costing
Under this costing method, all manufacturing cost, fixed and variable, are charged
to products, jobs, process, etc. and are included in total cost.
4. Variable or Marginal costing
Variable costing method charges only variable production costs to products or jobs,
and thus the cost of the products or jobs consists of only variable production and not fixed
production costs. The fixed production, administration, selling and distribution costs are
written off against profits in the periods in which they arise.
5. Uniform costing
Truly speaking, uniform costing is not a technique of costing, but is an attempt by
several undertakings and organizations to use similar costing principles and /or practices.
33
1.1
STATEMENT OF THE PROBLEM
A study on Cost and Cost Techniques at Reid Braids (India), Hassan

Costing techniques and cost sheet is essential to ascertain cost of various projects in
detail in order to evaluate whether the project under taken is profitable to the organization
or it will lead to loss in future.
This study is conducted therefore to create awareness in the organization for
optimum utilization of costs.
Hence the study helps the management to closely examine the utilization of cost and
eliminate the waste full expenditure, which is directly involved in the production and also
help in proper control over the cost as expenditure incurred is identified against each
department and recorded in cost sheet.
1.2
SCOPE OF THE STUDY

This study helps in knowing, identifying, classifying and ascertaining cost for each
department and how effectively and the management can control cost and fix selling price.
This study also helps us to know the present status and the cost accounting technique
methods, system followed by the company, which leads to better utilization of cost.
1.3
OBJECTIVES
The objectives of the study are to:
1. Find out what type of costing method is being followed in Reid braids India.
2. Identify requirement of cost for each department for producing a product.
3. Classify and ascertain the costs which are directly involved in production and to
closely examine the utilization of cost and elimination of wasteful expenditure.
4. Know the proper control over the cost as expenditure is identified against
Departments.
34
1.4
METHODOLOGY
RESEARCH DESIGN: DESCRIPTIVE RESEARCH

It is a type of research, which depicts the presentation of facts as it is. It is an Exfacto research. There is no chance of manipulation from the researcher point of view.
Descriptive research involves gathering data that describe events and then organizes,
tabulates, depicts, and describes the data collection. It often uses visual aids such as graphs
and charts to aid the reader in understanding the data distribution.
COLLECTION OF DATA
In this study secondary data were collected through the costing section in Reid
Braids India, cost sheets, costing manuals, annual reports, and company website.
1.5
LIMITATIONS OF THE STUDY:

1. The study being a research project of the descriptive and analytical nature, maybe
limited in scope and nature in understanding the different dimensions of production
and manufacturing.
2. It was not possible to formulate a hypothesis.
3. Limited coverage of the data, as the company was reluctant to disclose confidential
data.
4. The study is restricted to the available information from the statements and records
5. The study is confined only to research in Reid Braids India and not applicable to
other companies.
6. The recommendations and suggestions given is based only on the findings of this
study and limited in scope and application
35
2. DATA ANALYSIS &INTERPRETRATION

Table No 2.1 Cost Sheet for Shoe Laces for 2008-2010
2008-2009
2009-2010
Particulars
Units
Amount (Rs)
Units
Amount (Rs)
Direct material
991.62
110802.896
930.23
111114.69
Direct Labor
105.34
11770.831
101.59
12135.13
1096.9
Prime cost
122573.73
1031.83 123249.82
Factory overhead
96.99
10837.32
81.57
9743.01
Work cost
1193.95 133411.05
1113.40
132992.83
Administrative overhead
21.96
2453.82
26.40
3153.88
135864.87
1139.80 136146.71
135864.87
111739
1139.80 136146.71
119448
1215.9
Cost of production
1215.9
Total
Quantity
36
Table No 2.2 Cost Sheet for Shoe Laces for 2010-2012

2010-2011
2011-2012
Particulars
Units
Amount (Rs)
Units
Amount (Rs)
Direct material
Direct Labor
1010.75
90.70
116577.443
10460.75
922.78
123.89
140899.46
18916.98
Prime cost
1101.45
127038.19
1046.67
159816.44
Factory overhead
94.49
10897.77
63.54
9701.88
Works cost
1195.94
137935.96
1110.21
169518.32
37.10
4278.680
31.19
4762.31
Cost of production
1233.04
142214.64
1141.39
174280.63
Total
1233.04
142214.64
1141.39
174280.63
Quantity
115337
37
152691
Table 2. 3 Direct Material Cost

Years
Direct Material Cost
2008-09
110802.896
2009-10
111114.69
2010-11
116577.443
2011-12
140899.46
Graph 2.3 Direct Material Costs of Shoe Laces
DIRECT MATERIAL COST

160000
140000
120000
100000
AMOUNT(Rs.)
80000
60000
40000
20000
0
2008-09
2009-10
YEAR
38
2010-11
2011-12
Interpretation:
Direct Material is which becomes an integral part of the product which can be
conventionally assigned to specific physical unit is termed as direct material.
In Reid Braids India direct material are the raw material used by cost centers within
the geographical areas of manufacturing work order shops.
The above graph shows a comparative picture of direct material cost for 4 years
from 2008-09 to 2011-12. In the year 2008-09, direct materials cost are Rs.110803 and
here the direct material is 78.25% of total cost. In the year 2009-10 the direct material cost
is Rs.111115, which is increased compared to previous year. And the direct material cost is
about 78.67% of total cost. In the year 2010- 11 the direct material cost is Rs.116577, and
the direct material is 79.37% of total cost. Similarly in the year 2011-12 follows the upward
movement the cost of direct material increased because of the fluctuations in cost of raw
material. The direct material is Rs.140899. And the direct material cost is about 80.48% of
total cost.
The increase in direct material is due to changes in purchase price of materials.
Price variance can be attributed to the non-availability of cash discounts which was
originally anticipated at the time of setting the price standards. Changes in transportation
costs and storekeeping costs contributing to material price variance.
39
Table: 2.4 Direct Labor

Years
Direct Labor Cost
2008-09
11770.8
2009-10
12135.13
2010-11
10460.75
2011-12
18916.98
Graph 2.4 Direct Labor Costs of Shoe Laces

DIRECT LABOUR COST
20000
15000
AMOUNT(Rs.)
10000
5000
0
2008-09
2009-10
YEAR
40
2010-11
2011-12
Interpretation:
Labor that is used actively and as raw materials in the primary production process of
a particular commodity is called as direct labor. Direct labor costs are therefore specifically
and conventionally traceable to specific products.
Direct labor is captured through the biometric and manually attendance system.
The time office captures the names of direct labor hours. Usually direct labor cost is above
8% of unit cost. The product processes is having state of the art of technology with high
level of automation and learn man power strength.
The above graph shows a compared analysis of direct labor cost for 4 years from
2008-09 to 2011-12. In the year 2008-09, direct labor cost is Rs.11771 here the direct
material is 8.3% of total cost. In the year 2009-10 the direct labor cost is Rs.12135, which
is increased by 364 as compared to previous year. And the direct labor cost is about 8.59%
of total cost.
In the year 2010-11 the direct labor cost is Rs.10461, which is decreased by Rs.1674 as
compared to the previous year. And the direct material cost is about 7.11% of total cost.
Similarly in the year 2011-12 the cost of direct labor follows the upward movement it is
increased to an extent because of the fluctuations in cost. The direct labor is Rs.18917. And
the direct material cost is about 10.80% of total cost.
The labour cost is increased due to increasing labour turnover, increasing idle time
Forgery names in wage sheet. To provide training to employees new as well as existing
employees to upgrade themselves to changing technologies.
41
Table 2.5 Factory Overhead

Years
Factory Overhead Cost
2008-09
10837.32
2009-10
9743.01
2010-11
10897.77
2011-12
9701.89
Graph 2.5 Factory Overhead of Shoe Laces
FACTORY OVERHEAD COST

11000
10800
10600
10400
10200
AMOUNT(Rs.)
10000
9800
9600
9400
9200
9000
2008-09
2009-10
YEAR
42
2010-11
2011-12
Interpretation:
The above graph shows the comparative analysis of factory overhead cost for 4
years from 2008-09 to 2011-12. In the year 2008-09 the factory overhead cost is Rs.10837
and it is 7.65% of total cost. In the year 2009-10 the factory overhead cost reduced to a
certain extent. The Factory overhead cost is Rs.9743 and is 6.89% of the total cost .During
the year 2010-11 the factory overhead cost further increased to a certain extent compared to
the previous year. Here the factory overhead cost is Rs.10898 is 7.42% of the total cost.
During the year 2011-12 the factory overhead cost is reduced to certain extent. Here the
factory overhead cost is Rs.9702 and is 5.54% of the total cost.
The factory overhead cost is high in 2008-09 and 2010-11 compared to other years. This is
due increased production in these years. This may be due to lack of training to employees
which result in more wastages and which incur extra expenses to the company. Increase in
electricity charges, increase in wages rising by the year.
43
Table 2.6 Administration Overhead

Years
Administration Overhead Cost
2008-09
2453.82
2009-10
3153.88
2010-11
4278.680
20011-12
4762.31
Graph 2.6 Administrative Overhead of Shoe Laces
ADMINISTRATION OVERHEAD
6000
5000
4000
AMOUNT(Rs.)
3000
2000
1000
0
2008-09
2009-10
YEAR
44
2010-11
2011-12
Interpretation::
Administrative overhead pertains to management of business and include office
rent, lighting and heating, posting, telephone, fax and other charges, depreciation of office
furnitures and equipments, legal charges, audit fee, and so on. The administration cost is
increased from year to year. It has increased from 1.73% to 2.72%.The above graph shows
the comparative analysis of administration overhead cost for 4 years from 2008-09 to 201112. In the year 2008-09 the administration overhead cost is Rs.2454. The Administration
overhead cost is 1.73%of total cost.
In the year 2009-10 the administration overhead cost has increased by Rs.700 when
compared to previous year. The administration overhead cost is Rs.3154. The
Administration overhead cost is 2.23% of total cost.In the year 2010-11 the administration
overhead cost has increased by Rs.1125 when compared to the previous year. The
administration overhead cost is Rs.4279. The administration overhead cost is 2.91% of total
cost.
Similarly in the year 2011-12 the administration overhead cost follow upward
movement, the cost has increased by Rs.483 compared to the previous year. The
administration overhead cost is Rs.4762. The administration overhead cost is 2.72% of total
cost.
There is rise in administrative overhead year by year due to increase in rent of
building, increase in cost of raw materials, increase in cost of living lead to increase in
salary.
45
Table 2.7 Cost Sheet of Elastics from 2008-2012

2008-2009
2009-2010
Particulars
Units
Amount (Rs)
Units
Amount (Rs)
Direct material
1100.00
4620.000
1170.00
6786.000
Direct Labor
142.00
596.400
126.00
730.800
Prime cost
1242.00
5216.40000
1296.00
7516.80000
Factory overhead
96.99
407.349
81.57
473.088
1338.99
5623.74878
1377.57
7989.88822
21.96
92.233
26.40
153.142
Cost of production
1360.95
5715.98210
1403.97
8143.03027
Total
1360.95
5715.98210
1403.97
8143.03027
Work cost
Quantity
4200
46
5800
Table 2.8 Cost Sheet of Elastics from 2010-2012

2010-2011
2011-2012
Particulars
Units
Amount(Rs)
Units
Amount(Rs)
Direct material
1190.00
7854.000
1200.00
9360.000
Direct Labor
130.00
858.000
132.00
1029.600
Prime cost
1320.00
8712.00000
1332.00
10389.60000
Factory overhead
94.49
623.610
63.54
495.606
Work cost
1414.49
9335.60984
1395.54
10885.20640
37.10
244.842
31.19
243.276
Cost of production
1451.58
9580.45138
1426.73
11128.48217
Total
1451.58
9580.45138
1426.73
11128.48217
Quantity
6600
47
7800
Table 2.9 Direct Material

Years
Direct Materials Cost
2008-09
4620.00
2009-10
6786.00
2010-11
7854.00
2011-12
9360.00
Graph-2.9 Direct Material Cost of Elastics
DIRECT MATERIAL
10000
9000
8000
7000
6000
AMOUNT(Rs.)
5000
4000
3000
2000
1000
0
2008-09
2009-10
YEAR
48
2010-11
2011-12
Interpretation::
Direct Material is which becomes an integral part of the product which can be
conventionally assigned to specific physical unit is termed as direct material. In Reid Braids
India direct material are the raw material used by cost centers within the geographical areas
of manufacturing work order shops.
The above graph shows the comparative analysis of direct material cost for 4 years
from 2008-09 to 2011-12 in the year 2008-09 the direct material cost is Rs. 4620. The direct
material is about 77.90% of total cost. In the year 2009-10 there is an increase in the direct
material cost of about Rs. 2166 compared to the previous year. The direct material cost is
Rs.6786 and is 80.88% of total cost. In the year 2010-11 there is an increase in the direct
material cost of about Rs.1068 compared to the previous year. The direct material cost is
Rs.7854 and is 79.76% of total cost. Similarly in the year 2011-12 there is an upward
movement in the direct material cost of about Rs.1506 compared to the previous year. Here
the direct material cost is Rs.9360 and is 83.80% of total cost.
The increase in direct material is due to changes in purchase price of materials.
Price variance can be attributed to the non-availability of cash discounts which was
originally anticipated at the time of setting the price standards. Changes in transportation
costs and storekeeping costs contributing to material price variance.
49
Table 2.10Direct Labor

Years
Direct Labor Cost
2008-09
596.400
2009-10
2010-11
730.800
858.000
2011-12
1029.600
Graph-2.10Direct Labor Cost Of Elastics

LABOUR COST
1200
1000
800
AMOUNT(Rs.)
600
400
200
0
2008-09
2009-10
YEAR
50
2010-11
2011-12
Interpretation:
The labor takes an active and direct part in production of a particular commodity is
called as direct labor. Direct labor costs are therefore specifically and conventionally
traceable to specific products. Direct labor is captured through the biometric and manually
attendance system. The time office captures the names of direct labor hours. Usually direct
labor cost is above 8% of unit cost. The product processes is having state of the art of
technology with high level of automation and learn man power strength.
The above graph is showing a compared analysis of direct labor cost for 4 years
from 2008-09 to 2011-12. In the year 2008-09 the direct labor cost is Rs.596 here the direct
material is 10.05% of total cost. In the year 2009-10 direct labor is increased by Rs.135 as
compared to previous year. And the direct labor cost is Rs.731 and is about 8.70 % of total
cost. In the year 2010-11 the direct labor is increased by Rs.127 as compared to the
previous years. And the direct material cost is 858 and is about 8.71% of total cost.
Similarly in the year 2011-12 follows the upward movement the cost of direct labor
increased by Rs172 to an extent because of the fluctuations in cost. The direct labor is
Rs.1030 and is about 9.22% of total cost.
The labour cost is increased due to increasing labour turnover, increasing idle time
Forgery names in wage sheet. To provide training to employees new as well as existing
employees to upgrade themselves to changing technologies.
51
Table 2.11 Factory Overhead

Years
Factory Overhead Cost
2008-09
407.349
2009-10
2010-11
473.088
623.610
2011-12
495.606
Graph-2.11 Factory Overhead Cost Of Elastics

FACTORY OVERHEAD
700
600
500
400
AMOUNT(Rs.) 300
200
100
0
2008-09
2009-10
YEAR
52
2010-11
2011-12
Interpretation:
The above graph shows the comparative analysis of factory overhead cost from
2008-09 to 2011-12.In the year 2008-09 the factory overhead cost is Rs.407 and is 6.86%
of total cost.In the year 2009-10 there is an increase in the factory overhead cost by Rs.66
compared to the previous year. The factory overhead cost is Rs.473 and is 5.64% of total
cost. In the year 2010- 11 there is an increase in the factory overhead cost of about 471
compared to the previous year. The factory overhead cost is Rs. 623 and is 6.34% of total
cost.In the year 2011-12 the factory overhead cost is Rs.495 and is 4.43% of total cost.
The factory overhead cost is high in 2008-09 and 2010-11 compared to other years.
This is due increased production in these years. This may be due to lack of training to
employees which result in more wastages and which incur extra expenses to the company.
Increase in electricity charges, increase in wages rising year by year. s
53
Table 2.12 Administration Overhead

Years
Administration Overhead Cost
2008-09
92.233
2009-10
153.142
2010-11
2011-12
244.842
243.276
Graph-2.12 Administration Overhead Cost Of Elastics

ADMINISTRATION OVERHEAD
300
250
200
AMOUNT(Rs.)
150
100
50
0
2008-09
2009-10
YEAR
54
2010-11
2011-12
Interpretation:
These pertain to management of business and include office rent, lighting and
heating, posting, telephone, fax and other charges, depreciation of office furnitures and
equipments, legal charges, audit fee, and so on. The administration cost is increased from
year to year. It has increased from 1.55% to 2.17%.The above graph shows the comparative
analysis of administration overhead cost for 4 years from 2008-09 to 2011-12.In the year
2008-09 Administration overhead cost is Rs.92 and it is 1.55 % of total cost. In the year
2009-10 the administration overhead cost has increased by Rs.61 when compared to
previous year. The administration overhead cost is Rs 153 and it is 1.82% of total cost. In
the year 2010-11 the administration overhead cost has increased by Rs.92 when compared
to the previous year. The administration overhead cost is Rs.245 and it is 2.49% of total
cost. Similarly in the year 2011-12 the administration overhead cost is Rs.243 and it is
2.17% of total cost.
There is rise in administrative overhead year by year due to increase in rent of
building, increase in cost of raw materials, increase in cost of living lead to increase in
salary.
55
3. FINDINGS
1. From the analysis it was clear to know that most of the expenses have been
mounting when compared to the previous year.
2. It is found that, the company is not following certain cost control techniques.
3. It is found that direct material cost of both the products has risen proportionately in
4 years.
4. It is found that direct labor cost of shoe laces has increased in all the years but with
slight decrease in 2010-11. Where as in elastics the labor cost is high in 2011-12
compared to previous years.
5. It is found that factory overhead costs of both the products are fluctuating.
6. From the analysis it was understood that, the company is not preparing and
following costing principles and cost statements as per absorption costing. Instead
they are following principles and statement as per historical costing and standard
costing.
7. It is found that there is an upward movement in administration overhead cost of
both the products.
56
4. RECOMMENDATIONS AND CONCLUSIONS

RECOMMENDATIONS
1. It is better to follow costing principles and cost statements as per absorption costing
as all manufacturing costs are fully absorbed into finished goods.
2. The company should conduct an effective cost audit which helps on adding
reliability to cost statement and cost data. It helps in detection of errors, Frauds and
irregularities, so management can make sound decisions on the basis of correct and
reliable cost data.
3. The company should follow certain cost control techniques which helps in
formulation of standards and budgets that incorporate objectives and goals to be
achieved and also helps in formulation of corrective measured to eliminate and
reduce unfavorable variable.
4. It is suggested that cost center could be more clearly distinguish into productive,
unproductive and mixed. This helps in allocating of direct and indirect pools.
5. Utilize the on-line facilities more to reduce paper work and to save time in other
work.
6. Effective training to be given to all unskilled operators at all the stages. (Based on
their competency records)
7. If the company maintains appropriate level of inventory, the chances of disruption
in the process can be reduced
57
CONCLUSIONS
Reid Braids India (RBI) is the biggest Narrow Fabric manufacturing company in
India. It manufactures Trims for Garment industries, Shoelaces for Shoe Industries & Retail
products for its clients.RBI has entered into global market. It exports finished product to
Australia, USA, and Sri Lanka
Costing techniques and cost sheet is essential to ascertain cost of various projects in
detail in order to evaluate whether the project under taken is profitable to the organization
or it will lead to loss in future.This study is conducted therefore to create awareness in the
organization for optimum utilization of costs.
The objective of the study is to prepare to classify and ascertain the costs which are
directly involved in production and to closely examine the utilization of cost and
elimination of wasteful expenditure. Find out what type of costing method is being
followed in Reid braids India.Identify requirement of cost for each department for
producing a product.
The methodology followed to collect the data is primary and secondary that is direct
interview with finance manager and data from the company financial records and websites.
From the analysis it was came to know that most of the expenses have been
mounting when compared to the previous year. From the analysis it was understood that,
the company is not preparing and following costing principles and cost statements as per
absorption costing. Instead they are following principles and statement as per historical
costing and standard costing.
It is better to follow costing principles and cost statements as per absorption costing
as all manufacturing costs are fully absorbed into finished goods. They should conduct an
effective cost audit which helps on adding reliability to cost statement and cost data. It
helps in detection of errors, Frauds and irregularities, so management can make sound
decisions on the basis of correct and reliable cost data
The experience in project work at Reid Braids India will surely enrich knowledge
on industrial practicalities.
58

A Study On Cost and Cost Techniques at Reid Braids India - Hassan

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COST AND COST TECHNIQUES

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

THE INDUSTRY PROFILE IN INDIA

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

CURRENT FACTS OF INDIAN TEXTILE INDUSTRY

MAJOR PLAYERS IN INDIA

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

2(b)NATURE OF BUSINESS CARRIED

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

2(c)VISION MISSION AND QUALITY POLICY

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

We inspect our products for:

2(d) PRODUCT PROFILE

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

2(e) AREA OF OPERATION GLOBAL/NATIONAL/REGIONAL

2(f) OWNERSHIP PATTERN

2(g) COMPETITORS INFORMATION

Birch Haberdashery and craft Australia

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

2(h) INFRASTRUCTURAL FACILITY

2(i)ACHEIVMENTS AND AWARDS

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

Benefits of McKinseys 7sModel:

Diagnostic tool for understanding organizations that is ineffective.

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

SMAF ai d na l m rna k ua i negf tai isn c n t tg r

4. Introduction of cost effective substitutes

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES

The staffs of the company are:

There are Skilled as well as unskilled employees:

3.7 SHARED VALUES

COST AND COST TECHNIQUES

The SWOT analysis tool is great for developing an understanding of an organization

VVIMS- MBA Department, Mysore

COST AND COST TECHNIQUES