Chapter-1: A Study On Cost Elements and Its Effects On Cost of Production

A STUDY ON COST ELEMENTS AND ITS EFFECTS ON COST OF PRODUCTION
CHAPTER-1
INTRODUCTION
In a highly competitive market cost control is the only way to maximize

earning this is because in a competitive economy a firm will have very little control
over the prices of its products so when the market fixes the prices of its products
the firm has to Control its costs of keep them below the price in order to earn profit
here cost control plays key role
When one talk about cost control it means controlling different components
of Cost inventory is one among them in most of the manufacturing firm inventory
cost is the highest one so naturally inventory management assumes greater
importance? Inventory management encompasses a whole range an activities
starting from purchase of materials to products and storing goods at every level of
inventory strict control are to be applied so that cost is kept under a specific limit
The management of every modern enterprise requires a lot of cost

information .it requires periodical information, not only about the total cost of
producing and selling its products but also about the cost of its products at different
process or stages of production.
It requires information about the various elements of cost as material cost,

labor cost and overheads, which constitutes the cost of production & sales. It
should have information to know whether losses whatever occur in any line of
activity so that corrective step may be taken to minimize them. It should also have
necessary cost data for planning and decision-making. It should have even prior
estimate of cost for ascertaining whether the actual costs are within what should
have been. The above cost information should be available to the management as
frequently as possible, while the work is in progress cost accounting information
provides knowledge to take effective& efficient decision for control, ascertainment
of profitability &internal &external reporting. In the present era of at competition,
management are facing problem of survival & only those organizations can meet
KLE’s S. NIJALINGAPPA COLLEGE 1

competition effectively & have a hold on market, which are in a position to keep
their minimum cost accounting can be instrumental in this regards by eliminating
all inefficiencies & wastage by exercising cost control
AN OVERVIEW OF COST ACCOUNTING:
Cost accounting is a very important ever growing, and universal discipline.

This subject is largely a development of twentieth century. Sumerians in
Mesopotamia practiced it in B.C. but it was development into independent areas of
study only in past10years or so. Cost accounting came into existence due to the
limit actions of Financial accounting and also because manager of manufactures
enterprises felt the need for detailed information about actual cost and their
estimates, thus cost accounting series as an information guide to the management
for proper planning, decision making & also as an effective instruments for
managerial control.
COST ACCOUNTING CONCEPTS:
COST: It refers to the amt of expenditure (actual or notional) increased on or

attributable to a specified thing or activity born cost unit.
COSTING: It refers to technique and process of ascertaining cost the technique

in costing consists of principles and rules, which governed the procedure of
ascertained cost of products & services. The techniques changes with the time. The
process of costing is the day-to-day routine of the ascertaining cost, which related
to allocating apportionment & absorption of costs besides presenting statement of
cost.
COST ACCOUNING: Cost accounting is accounting for the cost which

begins with recording of income and expenditure & ends with preparation of
statistical data.
COST UNIT: A cost unit is a unit of production, service or time in relation to

which, 6 costs may be ascertained or expressed.

COST CENTRE: A cost centre is a location or person or item of equipment in

respect of which, cost may be ascertained & related to cost unit for control
purpose.
COST ALLOCATION: It is the allotment of whole items of cost-to-cost

centers or cost unit.
COST APPORTIONMENT: Cost apportionment is defined as the

allotment to or more cost centers of proportions common items of cost on an
estimated basis of benefit received.
ABC ANALYSIS: It is the exercising rule control over inventory

items.
The techniques is based on this assumptions that there should not exercise
same degree of control of items which are not more costly as compared to those
items which are less costly according to this approach, the inventory items are
divided into 3 categories A B & C.
COST:
Cost plays an important role in determining the survival or failure of any

organization cost includes cost of production, cost of distribution & administration.
Therefore to secure control in overall cost aspect of cost be looked into & correct
action should be Taken therefore one cannot ignore any signal sphere of cost
aspects.
Cost is the amt of expenditure (actual or notional) incurred on or attributable

to a given thing. The given may be a product, a service or an activity. In cost the
actual cost indicate factors such as material, labour & expenses, notional cost
signifies the cost land, labour & capital owned by the proprietor of a business &
supplied free of charge for Carrying on business.

CLASSIFICATION OF COST:
 On the Basis of Time:
Historical cost: These costs are ascertained. Only after they are incurred, such
after they are incurred, such cost are available when the production of the
particulars
Pre-determined cost: Costs are calculated before they are incurred.
 On the Basis of Natural of Elements:

It refers to the substance from which in made from.
a) Material
b) Labor
c) Expenses
The entire above can direct or indirect
 On the Basis of Trace Ability of a Product:

 Direct Cost: Cost which can be easily defined with the final product or some
specific activity is called direct cost.
 Indirect Cost: These costs are difficult to trace with the single product or it is
uneconomic to do so. They are common to several products, example: salary of a
manager.
 On the basis of with the product:
 Product Cost: Product costs are those, which are traceable with the product &
include in inventory values. Product costs are fully factory cost.
 Period Cost: Period costs are incurred on the basis of time such as rent salary.
 On the Basis of Functions:
 Manufacture or production cost
 Administration cost
 Selling & distribution cost

 On the Basis of Controllability:

 Controllable cost: A cost, which can be influenced by action of a specified
member of an undertaking.
 Uncontrollable cost: a cost which cannot be influenced by action of a specified
member of an undertaking.
 On the basis of changes in activity or volume:
 Fixed cost: The chartered institute of managements accountants, London defines
fixed cost as “the cost which tends to be unaffected by variations in volume of
output. Fixed cost depends on the affliction of time & do no vary directly with
volume or rate output”.
 Variable cost: These are the cost that varies directly & proportionately with
output.
 Semi fixed or semi variable cost: These costs contain fixed variable elements.
 On the basis of cost for analytical and decision making purpose:
 Opportunity cost: It is the cost of selecting one course of action and looking of
other opportunity to carry out that course of action. It is the amount that can be
received if the asset is utilized in its next but alternative.
 Sunk cost: A sunk cost is one that has been already incurred & cannot be avoided
by decision taken in furthers as it refers to part, cost is called unavoidable cost.
 Common cost: These are the cost, which are incurred for more than one product.
 Imputed cost: Some costs are not incurred and are useful while taking decisions.
 Others
 Conversion cost: It is the cost of finished product or work in progress comprising
a labour & manufacturing overhead.
 Tracing cost: It is the cost, which can be easily associated with the product,
progress or department.
 Normal cost: This is the cost, which is normally incurred at a given level of output
in the conditioning which that level of output is achieved.
 Avoidable cost: These are the costs which under present conditions need not have
been incurred.
 Unavoidable cost: These are the cost, which under the present condition must be
incurred.

 Total cost: This is the sum of all the costs associated to particular unit of process,
department, batch or entire concern. It may also mean sum total of material,
labour & overheads.
 Value added cost: Strictly speaking it is not one of the types of costs. It means
selling prices of a product of or service cost of material used in product or service
after depreciation is deducted to ascertain value added cost.
FUNDAMENTAL PRINCIPLES OF COSTING:
 Cost is related to its cause.

 Cost is changed after it is incurred.
 Abnormal costs are excluded for costing.
 Part costs are not charged to future period.
 Concepts of conservation have no place in costing
 Accounting of cost is based on double entry principle.
COST CONTROL:
DEFINITION AND MEANING OF COST CONTROL:
Cost control is defined as “the guidance & regulation by executive action of

the costs operating and undertaking”. The ultimate aim of cost accounting is cost
controls.
The chartered institute of management’s accountants London, defines cost

control as “Regulation by executive action of the cost of operating an undertaking
particularly where such action is guided by cost accounting” thus, cost control
aims at reducing inefficiencies & setting up predetermined costs and in achieving
goal.
In cost control, the first step is to setup is to setup the large to be achieved i.e.,
goals to be reached. The cost control system guides the organization to reach that
goal. At any stage it notices that the expenses are showing a trend away from the

goal. Thereby resulting in a variation from the target, the cost control system helps
to regulate this Trend & to eliminate the variations.
Following are the Important Characteristics of Cost Control:
 Delineation of centers of responsibility: Overlapping of operations and

responsibilities destroy the very essence of cost control.
 Delegation of authority: Cost control will be ineffective if persons charged with
responsibility are denied with the authority to discharge this responsibility.
 Measurement of performance: There should be exist reasonable criteria for
measurement of performance. For this purpose, standard costing can be used. The
person whose performance is being should participate in setting standards.
 Relevance of controllable costs: All costs are not controllable. At the same time,
different costs are controllable. At the same time, different costs are controllable at
different levels of management. When performance of an individual is being
evaluated, only the costs, which are directly by him, should be considered.
 Cost reporting: Effective cost control requires timely & meaningful cost report. If
report has not been made in time, it may be too late to take corrective action and
hence very purpose of action will be lost.
 Constant report: For cost control, efforts should be constantly made for analysis of
cost, functions and performance. The constant efforts of this type stimulate cost
consciousness and lead to cost control.
 Policies and general objectives: Objectives should be clearly communicated. The
assumptions, on which general objectives are based, should be communicated.
ESSENTIAL FEATURES OF COST CONTROL:
 Cost accounting: The Company should have an effective cost accounting system,
which will instruct the necessary information to control the costs in organization.
 Cost planning: The Company should aim to achieve cost targets. That is, the
company should have the proper planning and budgetary system. The targets are
set after taking into consideration relevant factors.

 Cost reporting: No company can function unless there is a perfect monitoring.

Costs can be controlled only when there is proper management reporting system.
 Corrective actions: On the basis of reported variances, the management takes
corrective action. This will involve identifying the cause of variances and reasons.
It is necessary the management may review the standard of company.
FIVE STEPS OF COST CONTROL:
Organizing a system of cost control and making it works successfully requires

the following 5 steps:
 Setup the targets

 Measure the actual
 Compare the actual with the targets
 Localize the cause for the variation between the targets and the actual
 Take such actions as necessary to eliminate these variations.
Cost control primarily requires fixing the targets for all expenses for a given
period. This target should necessary relate to the production targets, particularly in
respect of variable expenses. Having decided upon the targets, the next step is to
measure the actual. The actual should be measured on the basis of the targets and
as frequently as possible. If the target is setup as a monthly amount for each
department, then it should be possible to measure to actual also, as a monthly
amount for each department.
It is obvious that a straight comparison cannot otherwise be made. Unless the

actual are measured frequently, it is likely that the time lag might make it difficult
for any effective action to be taken.
The third step in the cost control is the comparison of actual with the targets.
The object of this comparison is to bring out the differences between these two sets
of figures. It is not enough if just the arithmetical differences are worked out and
the variations are expressed as a positive or negative.

The cost accountant should be able to analyze these differences into sufficient
details and should pin point the exact cause for higher cost is localized, it will not
be possible to direct any executive action. Since it is the nature of the cause, which
indicates he particular executive to whose attention matter must be brought ups.
Hence an intelligent comparison of the actual with the target is a vital stage in cost
control.
Having done this, the next step is for the cost accountants to keep a watch on
whether or not necessary action is being taken to eliminate the variations. He
should pursue the matters till the actual are brought close to the targets. When this
is done cost control is complete.
MAKING COST CONTROL A SUCCESS:
If cost control system is to be a success, these are certain basic factors, which
should be taken care of.
Proper fixation of targets

Periodical review of results
Timely presentation of comparison
 PROPER FIXATION OF TARGETS:
The target should always be setup in consultation with the individual

responsible for achieving the targets, taking into consideration all practical aspects,
governing the production expenses. Further the targets should be attainable and not
IDEAL. If the targets are not attainable, it will create frustration in minds of person
concerned and the whole object of cost control will thereby get defeated. Hence
whatever be the targets fixed, care should be taken to ensure that it would be
attainable under normal Circumstances.

 PERIODICAL REVIEW OF TARGETS:
The targets once fixed should not be revised just because they are not attained.
It should however, be noted that targets by themselves should not be considered
permanent, whenever necessary, they should be revised and reviewed particularly
for changes in factors governing these targets.
 TIMELY PRESENTATION OF COMPARISON:
The comparison between the targets and the actual should be presented
sufficiently in time for necessary action to be taken. Belated presentation will only
be statistical information and cannot be helpful in taking any action. If the cost of
material is inquiring in a department, due to the defective setting up of the machine
causing a higher wastage, the earlier is brought to the notice of department
concerned, the quicker will be the rectification done. Presenting this inform action
say after a month will only result in the increased cost to continue unnoticed. In
formulating the natures of variation to be presented, an important point to be
noticed is that, the details executive must make a clear distinction between the
variations, which can be controlled, and which he cannot control. There is no use in
informing the departmental foreman that the material cost has gone up
Because the purchases prices of material is increased, in presenting the

analysis of the actual & targets the data. Presented should give more details of
those items which are under hi direct control, so that he could take a positive
action.
SYSTEM OF COST CONTROL:
 Marginal costing system

 Budgetary control system
 Standard costing system

1. Marginal Costing System:
Marginal costing in the accounting system in which variable costs are

charged to cost units and fixed costs of period are written off in full against the
aggregate contribution.
Its special value is in decision making. Under this difference between sales
and marginal cost of sales is found out, which is technically called as contribution.
Excess of contribution over fixed cost is profit. Fixed cost remains same whatever
may be the number of units manufactured by the organization. It is only the
variable costs; the executives will be able to control, as it varies with the number of
units manufactured. Thus it is the only system, which differentiates between the
fixed cost and variable cost.
Main features of marginal costing:
Costs are divided into two categories
 Fixed cost
 Variable cost
Fixed cost is considered period cost & remains out of considerations for
determination of product cost and value of inventories prices are determined with
reference to marginal cost and contribution margin profitability of departments and
products is determined with reference to their contribution Margins. In presentation
of cost data, display of contribution, assume dominant role. Closing stock is valued
on marginal cost.
CRITICISM OF MARGINAL COSTING:
 It is not proper to disregarded fixed cost for product cost determination and
inventory valuation.

 Marginal costing is especially useful short run profit planning and decision
making. For decision of for reaching importance, one is interested in special
purpose cost rather the variability of cost.
 marginal costing technique disregards the use of recovering the fixed cost through
product pricing for long run continuity of business it is not good, assets have to be
recovered in long run.
 Establishing variability of costs is not easy talk, in real life situations, variable, and
rarely completely, variable, and fixed costs are rarely & completely fixed.
 Exclusion of fixed cost from inventory valuation does not confirm to accept
Accounting- Practices.
2. Budgetary Control System:
The costing technique issued by institute of cost & works accounts, London
defines a budgetary control as “The establishment of budgets relating the
responsibilities of executives to the requirement of a policy and the continuous
comparison of actual with budgeted results whether to secure by an individual
actions the objective of that policy or to provide a basis for its revision.”
Budgetary control implies the use of a comprehensive system of budgeting to

aid management in carrying out its functions like planning, co-ordination &
control. It is a system, which uses budgets for planning and controlling different
activities of business. Budgets set up under a budgetary control system have the
following features.
 Budgets are expressed in total amounts and not as per unit.

 Budget set up a “ceiling”, action is necessary only when the ceiling is exceeded.
 Budgets are both for items of expenditure & incomes.
 Budgets are related to a period of time.
 Budgeted figures are not accounting figures, they are merely figures shown in
reports for comparison and control purpose.

Advantages of budgets control system
 It ensures centralized controls of the various functions of business

 It probes into the reasons for the deviations from standards tapes corrective actions
where necessary.
 It helps in reviewing current policy and in determining futures policy.
 It promotes a feeling of cost consciousness and restricts expenditure to the
minimum.
 It encourages a healthy competition between department and between units to unit.
 The use of budgets promotes understanding of the problems of co-workers.
 It demands most economical use of labor, material, facilities & capital.
 A budget programmed forces the manager to plan ahead.
Limitations of Budgets Control System:
 The estimates are used as basic for budget plan and estimates are based mostly on
available facts & best managerial judgment. Budgeting based on in accurate facts is
useless as a yardstick for measuring actual performance.
 Execution of budgetary controls will not immediately occur. A continuous budget
consciousness throughout the organization is needed for achievement of this
objective.
 Budgetary controls cannot reduce the managerial function to a formula; it is only a
managerial tool, which increases effectiveness of managerial control.
 The use of budget may lead to limited use of resources. Budgets are often taken as
limits. Efforts may therefore not be made to exceed the performance beyond the
budgeted targets even through it may be physically possible.
 Circumstances are constantly changing & therefore budgets & budgetary controls
techniques will not be useful till they are continuously adopted.

3. Standard Costing System:
CIMA defines standard costing system as “a control technique, which

compares standard costs and revenues with actual results to obtain variances which
are used to stimulate improved performance”.
“Standard cost is the pre-determined cost based on technical estimates for

material, labor & overheads for a selected period of time & for a prescribed set of
working conditions”.
Standard costing is a system of cost control. The control is exercised through

setting up standards both for production performances and production expenses,
related to these standards, actual costs are worked out the standard costs are
compared with the actual costs, to throw out the cost various, an analysis of these
variables by the factors causing them, aids in the control of costs. Thus standard
costs inform what cost should be and actual costs inform what costs are been.
Variance constitutes a connecting link between standard cost & actual cost. Since
managements goal is operation of factory at standard cost, significant deviations
from standard cost signal the need for managerial attention to factors which are the
source of variances, what has caused them to arise what effect is had no product
etc., while costs control must be exercised before the fact and variance are
ascertained after the fact. Prompt review of variance history can bring to light
conditions needing attentions & it can also provide management with information
which contributes to the making of sounder decisions with respect to the futures,
for cost controlling.
ITEMS FOR WHICH STANDARDS ARE FIXED:
1. Direct material:
Quantity per unit of output

Price per unit of output
Wastage per unit of output
Value of salable waste if any

2. Direct labor:
Number of man per machine
Grade of men employed
Wastage rate for each grade
Machine\ man hours required per unit of output
3. Indirect material: Cost per machine / production hour
4. Indirect labor: Cost per machine/ production, hour/percentage of direct labor
5. Variable expenses: Cost per unit of output/ cost per production hour
The standards set up under standard costing systems have the

following features:
 The standard is based on the technical details of manufactures.

 Standards are set up for production performance and production hour.
 Standards are set for expenses only and not for income items.
 Standards emphasize in comparison, only the variation from the targets, these
variations are built up stage by stages and are accumulated to give the total
variations.
 Standards are accounting figures and are recorded in the cost ledger.
Advantages of Standard Costing System:
 The use of standard costing ledger to optimum utilization of men, material &
resources.
 Its uses provide a yardstick for comparison of actual cost of performances.

 Only distant deviations are reported to management. Thus, it helps to applications

of “management by exceptions”.
 It is very useful to management in discharging functions like, planning, controlling
& decision-making & prices fixation.
 It creates an atmosphere of cost consciousness.
 It motivates workers to strive for accomplishment of defined targets.
Specification Advantages are:
1. Accounting Department is Benefited by:

 Results, Planning & budgeting
 Valuation of inventories
 Cost control
 Pricing, sales & cost estimates
 Developing monthly operating
2. Production Department is Benefited by:
 Production planning
 Matching scheduled production with machine capacity
 Prepare reports of business logs in terms of time
3. Sales Department is Benefited by:

 Determining and checking selling prices
 Preparation quotation on special product

CHAPTER-2
RESEARCH DESIGN
INTRODUCTION:
Cost accounting has primarily developed to meet the needs of management. It

provides detailed cost information to various levels of management for efficient
performance of their functions. The information supplied by the cost accounting
acts as a tool of management for making optimum use of scarce resources and
ultimately adds to the profitability of the business.
So for the purpose of analyzing cost elements and its effects on cost of
production, a study is conducted in S.C.FAB ENGINEERING.
RESEARCH DESIGN:
Research design is the conceptual structure with in which research is

conducted. It constitutes the blue print for the collection, measurement and analysis
of data.
According to Kerlinger, “Research design is the plan, structure and strategy of

investigation conceived so as to obtain answers to research questions and to control
variances”.
TITLE OF THE STUDY:
“A STUDY ON COST ELEMENTS AND ITS EFFECTS ON COST OF

PRODUCTION” AT S.C.FAB ENGINEERING.

STATEMENT OF THE PROBLEM:
The change is the order of the day. If there is no thoughtfore the industries
might not face the changes of environment, which will affect the performance,
therefore to visualize and to have forethought effective guidelines on the basis of
control technique are very much essential. On this line the standard or budgetary
control technique is one of the effective tools for strategic planning cost control. It
is possible to translate the plan into reality by simple preparing budget. The
objective of executive is to prepare analytical, functional budget at different levels
as a basis for planning, control and decision making, to save costs and to assess the
performance of the company.
Scope of the study:
 The scope of the study covers the cost elements (only).

 The study is applicable only S.C.FAB ENGINEERING., Bangalore.
 The study is limited only to the cost details, which applicable to manufacture of
Fabrications and Engineering equipment.
 The study is descriptive & analytical in nature.
 The study is based on the cost information available at S.C.FAB
ENGINEERING., as applicable to costing of Fabrications and Engineering
equipment.
Objectives of the study:
1. To know the cost control systems adopted in S.C.FAB ENGINEERING.

2. To study the existing means of control of materials.
3. To analyze the existing means of control of overheads.
4. To ascertain the actual cost per component of Fabrications and Engineering
products manufactured by the concern.
5. To suggest a suitable and desirable system of better control of direct and indirect
cost.

Source of Data:
 Secondary data- secondary data was collected by referring to journals and

magazines as S.C.FAB ENGINEERING. and costing text books.
Tools for Data Collection:
A through and detailed verbal discussion was conducted with the officers of
the costing and accounts deportments in order to find out the cost control system
adopted by the company.
Analytical Tools:
Percentages are used to analyze the collected information
Review of the Previous Study:
It was found from the available sources that few attempts have been made in
S.C.FAB ENGINEERING. regarding its cost control system but no study has been
made on cost control system adopted in, so far. To study on cost control system
adopted in S.C.FAB ENGINEERING.
METHODOLOGY:
1. Data collection method:
This study is non-experimental but analytical in nature. The study requires

both primary data and secondary data was collected through verbal discussion held
with the officers of costing deportments, S.C.FAB ENGINEERING., where as the
secondary data was collected through various sources like periodicals, annual
reports, magazines and books of S.C.FAB ENGINEERING. Which were found
correct for the purpose of this study.

2. Accuracy:
Accuracy of the report depends upon the accuracy of the responses given by
the respondents and accuracy of the secondary sources.
Reference Period:
For the study five years data has been collected and tabulated. The period
covered is 31/3/2011 to 31/3/2015.
Plan of analysis:
The plan of analysis was made through consulting staff members of accounts
departments of S.C.FAB ENGINEERING. The cost statements of 4 years have
been collected. The analysis has been done with the help of break up average
unit of Fabrications and engineering equipment. The cost sheets of 4 years i.e.
from 2011-12 to 2014-15 are analyzed and interpreted with the help of tables and
graphs charts to come out with effective findings, conclusions and
suggestions/recommendation.
Limitations of the Study:
The study suffers from certain limitations they are:-
 Cost control systems used by S.C.FAB ENGINEERING. are studied.

 The present study concentrates only on S.C.FAB ENGINEERING., since it is
a case study.
 The major limitation of this study is practical difficulty.
 Time was one of the major limitations.
 This study cannot be generalized.

OVERVIEW OF CHAPTER SCHEME
CHAPTER 1: INTRODUCTION:
This chapter contains an introducing to the topic under study, which covers the
sub-topics like cost accounting, cost its classification, cost control definition,
characteristics, features, 5 steps of cost control and finally systems of cost control
in detail.
CHAPTER 2: RESEARCH DESIGN:
This describes how the actual study was conducted by covering the topics like
title of the study, objectives, statement of the problem, research methodology,
sources of data, hypothesis, limitations of the study, review of the previous study
and finally chapter scheme.
CHAPTER 3: COMPANY PROFILE:
This gives an introduction to S.C.FAB ENGINEERING., its expansion and

growth. Its products, objectives of the company and lastly S.C.FAB
ENGINEERING. at a glance and its costing department in detail.
CHAPTER 4: DATA ANALYSIS AND INTERPRETATION:
This chapter understands the costing elements and analysis and interprets the
cost elements in S.C.FAB ENGINEERING.
CHAPTER 5:SUMMARY OF FINDINGS, SUGGESTIONS &

CONCLUSIONS:
This chapter concludes the project report & comprises summary of findings
and suggestions.
BIBLIOGRAPHY
ANNEXURE

CHAPTER-3
COMPANY PROFILE:
HISTORY:
JCR Drillsol Pvt. Ltd. is a leading Manufacturing and Exporting Company

offering a wide array of solutions including a customized range of drilling
activities from Water Well Drilling right through Mining and Construction. JCR
straddles the entire DTH. Mining and Construction Industry. It has excellent
performance competence in Water Well and Mineral Exploration Drilling Rigs as
well as Rig spares. DTH hammers.Buttons and Bits.
The JCR network is spread across the globe, with dedicated and skilled
engineers who develop the design and quality along with skilled employees who
work on the machines round the clock. JCR Drillsol is spread over an area of
130.680 sq. ft. in Peenya Industrial Town (Largest Industrial Area of Asia) suburbs
of Bangalore. It has its own in-house ultramodern facilities for all manufacturing
operations. JCR has strategic technology and marketing alliances with top notch
drilling companies. Our unique right on time delivery and on-site service allows to
leverage local competencies and to offer global service to our customers.
Incorporated in 1995, JCR Drillsol Private Limited (JDPL) is engaged in

manufacturing and trading activities. It offers an array of customized products
within the Drilling industry, from water well drilling right through mining and
construction. JCR seeks to encompass the entire Down the Hole (DTH), Mining &
Construction Industry. The company’s manufacturing facility is spread over an
area of 130,680 Sq. Ft. in Peenya Industrial Town, Bangalore in the state of
Karnataka
VISION:
JCR Drillsol Private Limited will be a platform incorporating effective and

safe technology for the driller community, to facilitate efficient drilling at low cost.

MISSION:
 Create and Sustain a Drilling, Mining, Water Exploration and Construction

Community.
 Pursue Research and Disseminate Research Findings.
 Provide drilling based products and technological services to satisfy the need of the
Customers and the Industry.
OUR OBJECTIVE:
To provide unique and unprecedented solutions in every arena of the

Drilling, Mining and Construction Industry with an unbending dedication is what
defines us best. Our variety of specialized RIGs finds its application in every
possible arena of the drilling industry, making us one of the most competitive
services in the business.
JCR Drillsol, provides highly efficient and heavy-duty RIGs for a wide
range of drilling applications ranging from RC, DTH, Tractor mounted and Wagon
Drills, Pumping and Testing Units to Drag Bits, Mud Pumps and Mini Truck
Mounted Drills. Our technology also designs other drilling solutions such as DTH
Hammers, RC Hammers, RC Drill Rods, Tricone and O-Dex Bits
OUR PRESENCE:
JCR Drillsol Pvt. Ltd. manufacturing facility is situated in Peenya (suburbs

of Bangalore), one of the largest industrial areas in the Asian continent. Spread
over almost 130,680 sq.ft., the manufacturing facility is one of the most modern
and well-equipped facilities in the country in the drilling and mining industry.
Additionally, the company controls global operations from its offices

located in Accra, Ghana and NSW, Australia, Nigeria, Kenya.
In India alone, JCR customers spread across 11 different states including

West Bengal, Orissa, Rajasthan and Tamil Nadu. Global business is spread out on

almost all continents including Australia, Africa and North America along with
Europe. Our prime clientele overseas is situated in the industrial hubs such as
Nairobi, Congo, Mexico, Russia and Madagascar to name a few.
QUALITY:
At JCR, as a team our prime objective is to provide the highest grade of

quality in terms of our products and our services. Our commitment towards besting
our work is unrelenting and dedicated.
Over the years, we have grown from a small unit of engineers with a dream
to excel into a name that is synonymous to consistence and quality in the Drilling
and Mining Industry. Our products exceed the highest quality standards and our
services are one of the best in the industry with various credits to name. At JCR
Drillsol, we believe in providing the most efficient engineering services to our
clients around the globe, along with making the best use of locally available
workforce to yield maximum results.
LEADERSHIP TEAM:
Mr.Jayachandra Reddy: JC Reddy

became JCR DRILLSOL's Founder -
Chairman and Managing Director in
January 2000, culminating a twenty-
year rise through the company in which
he successfully led each of its major
businesses. Upon his Leadership, Smith
outlined three priorities for JCR
DRILLSOL's continued growth:
rigorous portfolio management,
unleashing the power of company's
product diversification, and
globalexpansion.

In this vision, it includes continuing

JCR DRILLSOL's relentless pursuit of
customer-driven innovation, expanding
its array of small business products and
services, and accelerating Company's
core growth products.
Mrs. Gayathri Reddy:Gayathri Reddy

co-Founder of JCR DRILLSOL also
wife of Founder Mr. Jayachandra
Reddy is now positioned as the
Executive Director of JCR DRILLSOL.
She often directs administration,
including reception, and also
responsible for facility security and
upkeep in addition to space planning.
She leads Human Resources practices
and objectives that will provide an
employee-oriented, high performance
culture that emphasizes empowerment,
quality, productivity and standards,
goal attainment, and the recruitment
and ongoing development of a superior
workforce.
Mr. Vinod Kumar:Vinod Kumar, who

hails from Bangalore, holds Bachelor
Degree in Information Technology. He
oversee all marketing, advertising and
promotional staff and activities. He

establish marketing strategies to meet

organizational objectives. Evaluate
customer research, market conditions,
competitor data and implement
marketing plan changes as needed.
AWARDS:
JCR Drillsol has captured numerous milestones in its journey towards

excellence and distinction. Apart from being a constant emerging leader in the
Manufacturing and Trading Industry, JCR Drillsol has exceeded expectations at
various levels of performances that led to the company’s incredibly prestigious
recognition as the Best Exporter Award in 2008.
The same year, our Executive Director, Mrs. Gaayathri Reddy received
accolades and was recognized as the International Achiever for Women
Entrepreneur for her outstanding achievements in Business and Quality Excellence
at the 17th International Achievers Summit on Emerging India at Bangkok,
Thailand.
Prior to this, we received a Certificate of Participation at the Engineering

Export Promotion Council’s INDEE-MEXICO held at Mexico City in 2005.
Consequently, JCR Drillsol was honoured with a Certificate of Appreciation for
our participation at the EECP held at Hannover, Germany in 2006.
ISO 9001:2000 added another accomplishment to our credits with their

recognition of our product and services in the year 2009-2010.

BEST EXPORT AWARD:
STAR PERFORM AWARD:

CERTIFICATE OF ENGINERING EXPORT PROMOTION COUNCIL:
CERTIFICATE

CERTIFICATE OF PARTICIPATION INDEE-MEXICO-2005
INFRASTRUCTURE:
The manufacturing unit of JCR Drillsol is a perfect blend of most modern

machines and expert staff of 130 engineers, designers, metallurgists, chemical
analysts, marketing experts, amongst others. The CNC machine shop is equipped
with the most modern Ecano CNC Lathe and Stallin CNC Turning Center. Besides
that, the conventional machine shop also has honing machine, bandsaw cutting
machine, cylindrical grinding machine, centerless grinding machine, surface
grinding machine, milling machine, radial drilling machine, various lathe
machines, slotting machine, etc.
The large warehouse of our company helps us to store the bulk orders of
various sizes. We are proud of our logistics and transport department that enable
our brand to have a prompt and safe delivery anywhere around the world.

COMPANY PICTURE:

CNC MACHINE SHOP

HEAT TREATMENT PLANT
FORGING UNIT MACHINERY
Heat Treatment
Honning
Machine Shop

GES
CBM Lab
CNC MACHINE SHOP:
A strong business is based on a well built infrastructure. It also in turn

equips the manpower to work with their full efficiency. At JCR Drillsol, a
significant portion of the total area of our factor spread is apportioned to
establishing the best of the infrastructure facilities. By believing in authenticity and
not fabrication, quality at its best is the motto followed for all the infrastructure
facilities. To mention the facilities, our business is completely equipped with the
best of CNC machine shop, heat treatment equipment along with a separate design

department and an in-house testing lab as well. In one sentence, infrastructure is a

strong arm of the business here.
SERVICE PROFILE:
AFTER SALES SERVICES:
The JCR Team's common Goal is to provide Customer Satisfaction by

ensuring Quality Assurance and After Sales Service.
We also provide Experience Drillers to our Customers whenever &

wherever required. Our service Engineers are so dedicated that they have not
hesitate to visit the site at Afghanistan to service the rigs even when situation was
not safe there due military unrest.
Excellent Service Support:

Service Network:
Prompt and efficient after-sales service will be provided by a nationwide

network of fully equipped main and associate dealers. The main dealers are
strategically located along the golden quadrilateral. In addition to the above, each
dealer is equipped with a mobile service van that will provide round the clock
service.
These dealers would be in a position to provide customized "Onsite

Support" for large operations.
Service Helpline:
We have dedicated ACTION SERVICE TEAM, manned by highly trained

service engineers who are always ready to provide assistance in the unlikely event
of a breakdown.
Parts Availability:
Utmost care has been taken to equip all service centers with adequate stock of
parts at affordable prices to minimize downtime
GOVERNMENT PROJECTS:
JCR Drillsol Pvt. Ltd. Is an active participant in all relevant Government

Tenders & successfully supplied to Govt. of Maharashtra & Kerala

PRODUCT PROFILE:
DTH Water Well Rigs 500:
DESCRIPTION:
JCR – 500 DTH / Rotary combination Drill Rig mounted on 6 X 4 carrier
truck with top head drive, Hydraulics driven by Deck Engine, capable of drilling
500 Meters to 1650 Feet.
CAPACITY:
The rig is capable of drilling 300mm dia hole in overburden by Air
Rotary/DTH drilling to a depth of 120 meters in soft/unconsolidated formation and
150mm–200mm dia hole to a depth of 500 mtrs by DTH method in hard rock and
abrasive formation.

JCR REFURBISHED RIGS:
DESCRIPTION:
JCR – 300 DTH / Rotary combination Drill Rig mounted on Refurbished

Ashok Leyland model Taurus 6x4 chassis with top head drive, Hydraulics driven
by Deck Engine, capable of drilling 300 Mtrs.
CAPACITY:
The rig is capable of drilling 300mm dia hole in overburden by Air Rotary/DTH
drilling to a depth of 120 mtrs in soft/unconsolidated formation and 150mm –
165mm dia hole to a depth of 300 mtrs by DTH method in hard rock and abrasive
formation.

TRACTOR MOUNTED RIGS:
DESCRIPTION:
MODE - JCR TM 150, DTHR is a Tractor drilling rig mounted on a tractor

model New Holland 7500 4WD (75HP) with Top Drive all Hydraulically Operated
Drilling Rig extracting main power from Tractor Engine, is capable of drilling
using DTH method to Depth of 150 Mtrs.
CAPACITY:
a) 4 ½” (115mm) dia holes upto a depth of 150 mtrs in Rock Formation.

b) 6 ½” (165mm) dia holes upto a depth of 20 mtrs in Rock Formation.
c) 14” Dia holes upto depth of 15 Mtrs in Rock Formation.

JCR PUMPING TESTING:
Description Specification
Maximum Capacity 11000lbs / 5000kgs
Maximum single line speed 37m / min
Mast Supporting Cylinder 2nos.
Standard Mast Height 20feet
Cable length 100 meters

HYDRO FRACTURING UNIT:
JCR DRILLSOL Hydro-Fracturing Unit also consists of yield test pumping

unit with necessary instruments and tools.
FEATURES AVAILABLE ONLY IN FRAC-TECH MODEL MAXFT-1:
JCR HFU is Hydraulically driven Hydro-Fracturing Unit operated through a

transfer gearbox assembly thus eliminating an additional prime mover, space,
weight and cost.
Availability of Down Hole TV Camera to identify visually the fracture zones

of best result and to prevent blind entry into the unknown bore-well and dangerous
setting of packer. Also, exact depth & distortion of casing pipe, static water level
and bore-well depth are visualized thus eliminating any erroneous drillers log and
geo-physical logging.

RC HAMMER & BITS:
The RC Hammers are designed for use for drilling exploratory wells in
quarries, open pit mines, coal pit mines, coal where faster exploration is required.
The RC Hammers can be operated on high pressure air. Its drill cycle is
designed to make this drill extremely effective. At high pressures like 350 PSI and
above, the RCD performs well in applications where high water yields/back
pressure is encountered.

JCR DTH Water Well Rigs:
JCR Series Hydraulic Powered Drill Rigs are specially designed for cost
effective drilling by using down the hole hammers & bits. Hydraulic System
Powered by Carrier Engine is operated by fixed displacement pump which controls
Top Head Drive speed and feed. Centralized control panel located close to the
drilling position ensures easy operation. JCR latest technology Rigs are low in
maintenance & high in productivity.

DIRECT CIRCULATION ROTARY DRILLING RIGS 300:
Rated a) Drill Pipe Dia-mm. 60 73 89

Capacity b) Minimum Hole Dia-mm 145 152 203
c) Depth-Meters 460 305 185
Casing Load- 10,000Kgs. Using single sheave Travelling block Dead

Kgs. end at top
Construction Tubular steel, Electrically Welded

CBM Analysis Lab:
The methane gas in a coal seam is a potential source of additional revenue for
a mining operation if it can be recovered economically. At JCR CBM LAB, we
have the technical and laboratory capabilities to define the quantity of coal bed
methane (CBM) in coal seams.
OUR CBM lab services include:
 Field collection of core

 Analysis of the coal
 Measurement of desorbed gas volume, residual gas volume and estimation of the
lost gas volume from core samples
 Determination of total gas in situ content or total gas volume desorbed per unit
weight of coal
 Collection of CBM gas samples and gas quality monitoring at producing wells
 Water and noise sampling as required by CBM permits at producing wells

COMPANY STATISTICS:
We are an ISO 9001:2000 certified manufacturer, exporter and supplier having

proven expertise in offering world class line of products and services that meets
multiple needs of construction, mining, quarry and allied industries. Fully
equipped workshops and a highly qualified workforce lends us the competitive
edge to bring forth DTH Button Bits & Hammers, DTH Drilling Rigs, Back
Hoe Loaders, Mest with Mud Pumps, etc., that are in perfect congruence with
latest technology. As a renowned service provider, we also offer professional
service support and assistance that ensures your equipment are up and running at
all times. Our factory trained technicians can undertake and expertly execute a
complete suite of Heat Treatment & Services related to Induction Hardening,
Shot Peening/Sand Blasting, Carburizing, Tempering, Annealing, Stabilizing,
and more.
Business Type: Exporter , Manufacturer , Service Provider ,

Supplier
Capital in Dollars: USD 7,98,298

Export 80-85%
Percentage:
PrimaryCompetitive  In-house designing and manufacturing

Advantages:  Ultra modern manufacturing facility and
equipments
 In-house heat treatment and induction
hardening
Sales Volume: Rs. 15 Crores
No of Staff: 130
Year of 1994
Establishment:

No of Production
Lines: 1
Export Markets: Australia, Africa, Middle East, USA, Maxico,

& European Market
Investment on Rs. 2,45,16,152
Manufacturing
Equipment:
OEM Service Yes

Provided:
No of Engineers: 50
No of Designers: 20
Product Range:  DTH Button Bits & DTH Hammers: Valve

and Valve Less Type, Clusters and DTH
Hammers, U-dex Sets, Rock Roller Bits, Pole
Erection Machines
 Drilling Rigs: Economy Pack Rigs, DTH Drill
Rigs, Direct Rotary Drill Rigs, DTH/Rotary
Drill Rigs, Core cum DTH cum Rotary Drill
Rigs, Wagon Drill Rigs, Inwell Drill Rigs, Self
Propelled Skid Mounted Rigs (Core cum DTH),
Trailer Mounted Drill Rigs, Crawler Mounted
Blast Hole Drill Rigs, Tractor Mounted
Hydraulic Rigs, Refurbished Drilling Machines
 Material Handling Equipments: Back Hole
Loaders, Mest with Mud Pumps, Mobile
Workshops, Compressor Support Vehicles,
CNC Machined Components
Services Offered: Heat Treatment & Services

 Induction Hardening
 Shot Peening/Sand Blasting
 Carburizing
 Tempering
 Annealing
 Stabilizing
Standard ISO 9001:2008.

Certification:
Services & Support:  Sample Availability & Policy: Yes

 Payment Terms and Conditions: Payment
against delivery 35% in advance along with
P/O
 Customer Service Centers: Sydney, Kenya,
Sri Lanka.
OUR RANGE:
JCR Drillsol Pvt. Ltd. is a leading manufacturer, supplier, exporter and service
provider for water well & mineral exploration Drilling Rigs. We offer the
following products and services:
MINING & DRILLING EQUIPMENTS:
1. DTH Button Bits & Hammers: Valve and Valve Less Type, Clusters and
Hammers, U-dex Sets, Rock Roller Bits, Pole Erection Machines
2. Core Drill Rigs up to 3000 meters,
3. Blast Hole Drill of 4- 6"• class for Mining applications,
4. Reverse Circulation (RC) up to 500 meters,
5. Water Well Drill Rigs up to 600 meters,
6. Rotary Drill Rigs for up to 500 meters,

7. Crawler Drill for 4" class, Refurbished Water Well Drill Rigs up to 300
meters,
8. Pump Testing Unit/Yield Testing Unit for up to 300 meters,
9. Hydro Fracturing Equipment for revitalization of dry bore wells,
10. Drill Rods, Down the Hole Hammers & Bits for the above Rigs, Rotary Rock
Roller Bits, Special Tools like Fishing Taps, Lifting Bails, Subs, Collars,
Stabilizers etc.
Special mention is our heavy duty range of Backhoe Loader designed as

per international standard to meet various challenging industrial requirements.
Whether you require a Backhoe Loader for loading big trucks, or for moving
materials, our range exhibits impressive performance under all circumstances.
These Loaders apart from being functionally unmatched are also easy to operate,
offering hassle-free and smooth shifting, as well as a very high acceleration &
transport speed. Our range of Backhoe Loader, both standard as well as custom-
designed, also has excellent hill climbing capabilities.
SWOT ANALYSIS:
Strengths:
o Communication system is very advanced. The information between different

departments can be easily transferred by highly computerized systems.
o JCR has good industrial relationship.
o JCR has very good and conducive working environment or the environment in JCR
is very conducive to all workers.
o JCR has well trained highly skilled and experienced employees.
o Availability of standard quality raw materials by suppliers.
o High technical machines can be easily operated by the highly educated and well
trained staff.

Weakness:
o Scope for diversification is less.

o The raw material sources are far from plant and the transportation cost incurred on
its procurement is relatively very high.
o Government policies.
o Lot of paper work is involved.
o There is more power requirement and JCR has to depend upon KPTCL for power
supply.
Opportunities:
o Introduction of new machines to update new technology.

o JCR has an opportunity to take more orders to increase its profit.
o JCR also has an opportunity to increase plant capacity as per the future
requirements.
o The highly trained work force at JCR is able to cope up with the technological
changes /dynamism.
Threats:
o Scope for new entrants to enter the market.

o At international level, the cost of JCR equipments is very high than that of other
manufacturers.
o JCR has very tough competition in the international market with products from
other countries in current economic scenario.

CHAPTER-4
DATA ANALYSIS AND INTERPRETATION:
TABLE 1: RAW MATERIALS COST TO SALES
% OF RAW
RAW MATERIALS COST SALES (in
YEAR MATERIALS COST TO
PER COMPONENT (in Rs.) Rs.)
SALES
2011-12 8773 15440 56.82
2012-13 9160 16108 56.87
2013-14 9760 17050 57.24
2014-15 10945 18780 58.28
ANALYSIS:
From the above table it can be observed that the percentage of Raw
materials cost to the Sales was 56.82% during 2011-12, it has been increased to
56.87% during 2012-13, during 2013-14 it has been slightly increased to 57.24%,
during 2014-15 it has been again increased to 58.28%.

GRAPH 1: RAW MATERIALS COST TO SALES
% OF RAW MATERIALS COST TO SALES

58.50
58.28
58.00
57.50
57.24
% OF RAW MATERIALS COST
TO SALES
57.00 56.82 56.87
56.50
56.00
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage of Raw materials cost to Sales is being

fluctuating from year to year but at increasing rate so that the company need to take
some measures to control or to reduce the Raw material cost.

TABLE 2: ROUGH TURNING COST TO SALES
% OF ROUGH
ROUGH TURNING COST PER SALES (in
YEAR TURNING COST TO
COMPONENT (in Rs.) Rs.)
SALES
2011-12 140 15440 0.91
2012-13 146 16108 0.91
2013-14 154 17050 0.90
2014-15 160 18780 0.85
ANALYSIS:
From the above table it can be observed that the percentage of Rough turning
cost to the Sales was 0.91% during 2011-12, during 2012-13 it was 0.91%, during
2013-14 it has been reduced to 0.90%, during 2014-15 it has been again reduced to
0.85%.

GRAPH 2: ROUGH TURNING COST TO SALES
% OF ROUGH TURNING COST TO SALES

0.92
0.90
0.88
0.91 0.91
0.90 % OF ROUGH TURNING
0.86 COST TO SALES
0.85
0.84
0.82
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage of Rough turning cost to Sales is being

fluctuating from year to year but at decreasing rate it is good from company’s point of
view.

TABLE 3: CUTTING COST TO SALES
CUTTING COST PER % OF CUTTING

YEAR SALES (in Rs.)
COMPONENT (in Rs.) COST TO SALES
2011-12 148 15440 0.96
2012-13 153 16108 0.95
2013-14 164 17050 0.96
2014-15 168 18780 0.89
ANALYSIS:
From the above table it can be observed that the percentage of Cutting cost to
the Sales was 0.96% during 2011-12, it has been reduced to 0.95% during 2012-13,
during 2013-14 it has been increased to 0.96%, during 2014-15 it has been reduced
to0.89%.

GRAPH 3: CUTTING COST TO SALES
% OF CUTTING COST TO SALES

0.98
0.96
0.94
0.92
0.96 0.96 % OF CUTTING COST TO
0.95
0.90 SALES
0.88
0.89
0.86
0.84
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage cutting cost to Sales is being fluctuating

from year to year but at decreasing rate it is good from company’s point of view.

TABLE 4: HEAT TREATMENT COST TO SALES
% OF HEAT
HEAT TREATMENT COST SALES (in
YEAR TREATMENT COST
PER COMPONENT (in Rs.) Rs.)
TO SALES
2011-12 743 15440 4.81
2012-13 770 16108 4.78
2013-14 791 17050 4.64
2014-15 832 18780 4.43
ANALYSIS:
From the above table it can be observed that the percentage of Heat treatment
cost to the Sales was 4.81% during 2011-12, it has been decreased to 4.78% during
2012-13, during 2013-14 it has been slightly decreased to 4.64%, during 2014-15
it has been again decreased to 4.43%.

GRAPH 4: HEAT TREATMENT COST TO SALES
% OF HEAT TREATMENT COST TO SALES
4.90
4.80
4.70
% OF HEAT TREATMENT
4.60
4.81 4.78 COST TO SALES
4.50 4.64
4.40
4.43
4.30
4.20
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage Heat treatment cost to Sales is being

view.

TABLE 5: GRINDING COST TO SALES
GRINDING COST PER SALES (in % OF GRINDING COST

YEAR
COMPONENT (in Rs.) Rs.) TO SALES
2011-12 641 15440 4.15
2012-13 651 16108 4.04
2013-14 659 17050 3.87
2014-15 665 18780 3.54
ANALYSIS:
From the above table it can be observed that the percentage of Grinding cost to
the Sales was 4.15% during 2011-12, it has been decreased to 4.04% during 2012-
13, during 2013-14 it has been slightly decreased to 3.87%, during 2014-15 it has
been again decreased to 3.54%.

GRAPH 5: GRINDING COST TO SALES
% OF GRINDING COST TO SALES

4.20
4.10
4.00
3.90
3.80
3.70 4.15
% OF GRINDING COST TO
3.60 4.04 SALES
3.50 3.87
3.40 3.54
3.30
3.20
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage Grinding cost to Sales is being fluctuating


TABLE 6: MACHINING COST TO SALES
MACHINING COST PER SALES (in % OF MACHINING

YEAR
COMPONENT (in Rs.) Rs.) COST TO SALES
2011-12 200 15440 1.29
2012-13 206 16108 1.28
2013-14 211 17050 1.24
2014-15 225 18780 1.20
ANALYSIS:
From the above table it can be observed that the percentage of Machining cost
to the Sales was 1.29% during 2011-12, it has been decreased to 1.28% during
2012-13, during 2013-14 it has been slightly decreased to 1.24%, during 2014-15 it
has been again decreased to 1.20%.

GRAPH 6: MACHINING COST TO SALES
% OF MACHINING COST TO SALES

1.30
1.28
1.26
1.24
1.29
1.22 1.28
% OF MACHINING COST
1.20 1.24 TO SALES
1.18 1.20
1.16
1.14
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage Machining cost to Sales is being

view.

TABLE 7: HONING COST TO SALES
HONING COST PER % OF HONING COST TO

YEAR SALES (in Rs.)
COMPONENT (in Rs.) SALES
2011-12 178 1.15

15440
2012-13 186 1.15

16108
2013-14 190 1.11

17050
2014-15 200 1.06

18780
ANALYSIS:
From the above table it can be observed that the percentage of Honing cost to
the Sales was 1.15% during 2011-12, during 2012-13 it was 1.15%, during 2013-2014
it has been decreased to 1.11%, during 2014-15 it has been again decreased to 1.06%.

GRAPH 7: HONING COST TO SALES
% OF HONING COST TO SALES
1.16
1.14
1.12
1.10
1.15 1.15
1.08 % OF HONING COST TO
1.11 SALES
1.06
1.04 1.06
1.02
1.00
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage Honing cost to Sales is being

view.

TABLE 8: CNC TURNING COST TO SALES
CNC TURNING COST

SALES (in % OF CNC TURNING
YEAR PER COMPONENT (in
Rs.) COST TO SALES
Rs.)
2011-12 343 15440 2.22
2012-13 354 16108 2.20
2013-14 367 17050 2.15
2014-15 385 18780 2.05
ANALYSIS:
From the above table it can be observed that the percentage of CNC turning
cost to the Sales was 2.22% during 2011-12, it has been decreased to 2.20% during

GRAPH 8: CNC TURNING COST TO SALES
% OF CNC TURNING COST TO SALES

2.25
2.20
2.15
2.10 2.22
2.20 % OF CNC TURNING COST TO
2.15 SALES
2.05
2.05
2.00
1.95 2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage CNC turning cost to Sales is being

view.

TABLE 9: POLISHING COST TO SALES
POLISHING COST PER SALES (in % OF POLISHING COST

YEAR
2011-12 34 15440 0.22
2012-13 36 16108 0.22
2013-14 44 17050 0.26
2014-15 50 18780 0.27
ANALYSIS:
From the above table it can be observed that the percentage of Polishing cost
to the Sales was 0.22% during 2011-12, during 2012-13 it was 0.22%, during
2013-14 it has been increased to 2.26%, during 2014-15 it has been again
increased to 2.27%.

GRAPH 9: POLISHING COST TO SALES
% OF POLISHING COST TO SALES
0.30
0.25
0.20
0.15 0.26 0.27

% OF POLISHING COST TO
0.22 0.22 SALES
0.10
0.05
0.00
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage of Polishing cost to Sales is being

fluctuating from year to year but at increasing rate so that the company need to take
some measures to control or to reduce the Polishing cost.

TABLE 10: NITRATING COST TO SALES
NITRATING COST PER SALES (in % OF NITRATING

YEAR
2011-12 173 1.12

15440
2012-13 184 1.14

16108
2013-14 193 1.13

17050
2014-15 200 1.06

18780
ANALYSIS:
From the above table it can be observed that the percentage of Nitrating cost to
the Sales was 1.12% during 2011-12, it has been increased to 1.14% during 2012-
13, during 2013-14 it has been decreased to 1.13%, during 2014-15 it has been
again decreased to 1.06%.

GRAPH 10: NITRATING COST TO SALES
% OF NITRATING COST TO SALES

1.16
1.14
1.12
1.10
1.14 % OF NITRATING COST TO
1.13
1.08 1.12 SALES
1.06
1.04 1.06
1.02
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage Nitrating cost to Sales is being fluctuating


TABLE 11: MILLING COST TO SALES
MILLING COST PER SALES (in % OF MILLING COST

YEAR
2011-12 150 15440 0.97
2012-13 160 16108 0.99
2013-14 177 17050 1.04
2014-15 188 18780 1.00
ANALYSIS:
From the above table it can be observed that the percentage of Milling cost to
13, during 2013-14 it has been again increased to 1.04%, during 2014-15 it has
been decreased to 1.00%.

GRAPH 11: MILLING COST TO SALES
% OF MILLING COST TO SALES

1.06
1.04
1.02
1.00
0.98 1.04
% OF MILLING COST TO SALES
0.96 1.00
0.99
0.97
0.94
0.92
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage of Milling cost to Sales is being

view.

TABLE 12: FINISHED TURNING COST TO SALES
FINISHED TURNING % OF FINISHED

SALES (in
YEAR COST PER TURNING COST
Rs.)
COMPONENT (in Rs.) TO SALES
2011-12 92 0.60
15440
2012-13 100 0.62

16108
2013-14 103 0.60

17050
2014-15 113 18780 0.60
ANALYSIS:
From the above table it can be observed that the percentage of Finished
turning cost to the Sales was 0.60% during 2011-12, it has been increased to 0.62%
during 2012-13, during 2013-14 it has been decreased to 0.60%, during 2014-15 it was
0.60%.

GRAPH 12: FINISHED TURNING COST TO SALES
% OF FINISHED TURNING COST TO SALES

0.63
0.62
0.62
0.61
0.61 0.62 % OF FINISHED TURNING

COST TO SALES
0.60
0.60
0.60 0.60 0.60
0.59
0.59
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage Finished turning cost to Sales is being

view.

TABLE 13: THREADING COST TO SALES
THREADING COST PER % OF THREADING

YEAR SALES (in Rs.)
COMPONENT (in Rs.) COST TO SALES
2011-12 100 15440 0.65
2012-13 103 16108 0.64
2013-14 105 17050 0.62
2014-15 112 18780 0.60
ANALYSIS:
From the above table it can be observed that the percentage of Threading cost
to the Sales was 0.65% during 2011-12, it has been decreased to 0.64% during

GRAPH 13: THREADING COST TO SALES
% OF THREADING COST TO SALES

0.66
0.65
0.64
0.63
0.62
0.65 % OF THREADING COST TO
0.61 0.64 SALES
0.60 0.62
0.59 0.60
0.58
0.57
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage Threading cost to Sales is being

view.

TABLE 14: DRILLING COST TO SALES
DRILLING COST PER SALES (in % OF DRILLING

YEAR
2011-12 162 15440 1.05
2012-13 182 16108 1.13
2013-14 190 17050 1.11
2014-15 200 18780 1.06
ANALYSIS:
From the above table it can be observed that the percentage of Drilling cost to
13, during 2013-14 it has been decreased to 1.11%, during 2014-15 it has been
again decreased to 1.06%.

GRAPH 14: DRILLING COST TO SALES
% OF DRILLING COST TO SALES

1.14
1.12
1.10
1.08
1.13
% OF DRILLING COST TO
1.11
1.06 SALES
1.04 1.06
1.05
1.02
1.00
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage Drilling cost to Sales is being

view.

TABLE 15: FORGING COST, UNDER CUT & SLOTTING

COST TO SALES
FORGING COST, % OF FORGING,

UNDER CUT & SALES (in UNDER CUT &
YEAR SLOTTING COST PER SLOTTING COST
Rs.)
COMPONENT (in Rs.) TO SALES
2011-12 233 15440 1.51
2012-13 240 16108 1.49
2013-14 265 17050 1.55
2014-15 287 18780 1.53
ANALYSIS:
From the above table it can be observed that the percentage of Forging cost,
under cut & slotting cost to the Sales was 1.51% during 2011-12, it has been
decreased to 1.49% during 2012-13, during 2013-14 it has been increased to
1.55%, during 2014-15 it has been decreased to 1.53%.

GRAPH 15: FORGING COST, UNDER CUT & SLOTTING

COST TO SALES
% OF FORGING, UNDER CUT & SLOTTING COST TO SALES

1.56
1.55
1.54
1.53
1.52
1.51 % OF FORGING, UNDER CUT
1.55
1.50 & SLOTTING COST TO SALES
1.53
1.49
1.51
1.48
1.49
1.47
1.46
2011-12 2012-13 2013-14 2014-15
INTERPRETATION:
So it is interpreted that the percentage Forging cost, under cut & slotting cost to Sales
is being fluctuating from year to year but at decreasing rate it is good from company’s point of
view.

TABLE 16: TOTAL COST OF PRODUCTION TO SALES
TOTAL COST OF % OF TOTAL COST

SALES (in
YEAR PRODUCTION PER OF PRODUCTION TO
Rs.)
COMPONENT (in Rs.) SALES
2011-12 12110 15440 78.43
2012-13 12631 16108 78.41
2013-14 13373 17050 78.43
2014-15 14730 18780 78.43
ANALYSIS:
From the above table it can be observed that the percentage of Total cost of
production to the Sales was 78.43% during 2011-12, it has been decreased to
78.41% during 2012-13, during 2013-14 it has been increased to 78.43%, during
2014-15 it is 78.43%.

GRAPH 16: TOTAL COST OF PRODUCTION TO SALES
% OF TOTAL COST OF PRODUCTION TO

SALES
78.43 78.43
2011-12
2012-13
2013-14
2014-15
78.43 78.41
INTERPRETATION:
So it is interpreted that the percentage Total cost of production to Sales is

being constant in most of the years so that if possible the company need to
take some measures to control or to reduce the Total cost of production.

CHAPTER-5
SUMMARY OF FINDINGS, SUGGESTIONS &
CONCLUSIONS:
SUMMARY OF FINDINGS:
1. It is found that the percent of Raw materials cost to sales is being increased by 1.46
% between 2011-12 and 2014-15, for which the company needs to take some
measures to avoid it or to reduce it.
2. It is found that the percent of Rough turning cost to sales is being decreased by
0.06% between 2011-12 and 2014-15, which is good from company’s point of
view.
3. It is observed that the percent of Cutting cost to sales is being decreased by 0.07
% between 2011-12 and 2014-15, which is good from company’s point of view.
4. It is observed that the percent of Heat treatment cost to sales is being decreased by
0.38% between 2011-12 and 2014-15, which is good from company’s point of
view.
5. It is found that the percent of Grinding cost to sales is being decreased by 0.61%
between 2011-12 and 2014-15, which is good from company’s point of view.
6. It is observed that the percent of Machining cost to sales is being decreased by 0.09
7. It is found that the percent of Honing cost to sales is being decreased by 0.09%
between 2011-12 and 2014-15, which is good from company’s point of view.
8. It is found that the percent of CNC turning cost to sales is being decreased by
0.17% between 2011-12 and 2014-15, which is good from company’s point of view.

9. It is observed that the percent of Polishing cost to sales is being increased by 0.05
% between 2011-12 and 2014-15, for which the company needs to take
some measures to avoid it or to reduce it.
10. It is found that the percent of Nitrating cost to sales is being decreased by 0.06
11. It is observed that the percent of Milling cost to sales is being fluctuating from year
to year & during 2013-14 it is suddenly increased by 0.05% & again during 2014-
15 it is being reduced which is the indication of controlling Milling cost which is
good from company’s point of view.
12. It is found that the percent of Finished turning cost to sales is being constant in
most of the years which is good from company’s point of view. If possible they can
try to reduce it.
13. It is observed that the percent of Threading cost to sales is being decreased by 0.05
14. It is observed that the percent of Drilling cost to sales is being fluctuating from
year to year & during 2012-13 it is suddenly increased by 0.08% & during 2013-14
it is being reduced, during 2014-15 again it is being reduced which is the indication
of controlling Drilling cost which is good from company’s point of view.
15. It is found that the percent of Forging cost, under cut & slotting cost to sales is
being increased by 0.02% between 2011-12 and 2014-15,for which the company
need to take some measures to avoid it or to reduce it.

16. It is found that the percent of Total cost of production to sales is being constant in
most of the years which is good from company’s point of view. If possible they can
try to reduce it.
SUGGETIONS:
After summarizing the above findings regarding “Cost elements and its effects on
cost of production” at S.C.FAB ENGINEERING., the following
recommendations can be dawn with direct reference to the objectives of the study.
 The factory has to compare the various elements of cost for a particular period with
the similar items of the previous periods, so that the greater fluctuations in the cost
year after year can be analyzed and the efforts can be made to reduce the
fluctuations.
 The factory can also utilize “online facility” more in each and every department
especially in accounts department to the maximum extent so as to save the time in
office works and to reduce the paper work.
 Through the factory has divided the different functional departments into different
cost centers, the factory can make efforts to distinguish these cost centers into
“productive, unproductive and mixed” which helps in allocating direct and indirect
pools.
 The factory can adopt “STANDARD COSTING” technique, so that actual can be
compared with the standards for each type of major head of cost periodically and
the variance analysis can be made to determine the adverse and unfavorable
variations and deviations.
So finally it is recommended that, apart from the above the factory can also
make use of various cost control and cost reduction techniques such as budgetary

control and the efforts can be made to reduce cost by optimally utilizing the plant
to the maximum extent and the transparency in accounting process is to be
increased so as to make the information flow quickly and accurately.
CONCLUSION:
The project work is carried on engineering equipments manufacturing unit

i.e., S.C.FAB ENGINEERING. which is based on cost effectiveness and cost
cutting. The important factors considered as an influencing variables are the
costs like: all indirect costs. The profit also considered for analyzing the present
scenario of the firm. For better understanding of these, the costs are divided as per
the whole firm wise and product wise.
The method of costing system implementing in the company plays an

important role in the cost of the product, in increasing sales volume and also in the
profitability of the organization. The company needs to adopt structured policies
and procedures in costing system in order to avoid over absorption or under
absorption of overheads for the products.
After the study in S.C.FAB ENGINEERING., my knowledge and thinking has

been transformed from theoretical approach to practical approach. It was good
experience and I am sure that this project will prove to be an asset in my career.

Chapter-1: A Study On Cost Elements and Its Effects On Cost of Production

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Chapter-1: A Study On Cost Elements and Its Effects On Cost of Production

Hochgeladen von

Copyright:

Verfügbare Formate

A STUDY ON COST ELEMENTS AND ITS EFFECTS ON COST OF PRODUCTION

In a highly competitive market cost control is the only way to maximize

The management of every modern enterprise requires a lot of cost

It requires information about the various elements of cost as material cost,

KLE’s S. NIJALINGAPPA COLLEGE 1

AN OVERVIEW OF COST ACCOUNTING:

Cost accounting is a very important ever growing, and universal discipline.

COST ACCOUNTING CONCEPTS:

COST: It refers to the amt of expenditure (actual or notional) increased on or

COSTING: It refers to technique and process of ascertaining cost the technique

COST ACCOUNING: Cost accounting is accounting for the cost which

COST UNIT: A cost unit is a unit of production, service or time in relation to

KLE’s S. NIJALINGAPPA COLLEGE 2

COST CENTRE: A cost centre is a location or person or item of equipment in

COST ALLOCATION: It is the allotment of whole items of cost-to-cost

COST APPORTIONMENT: Cost apportionment is defined as the

ABC ANALYSIS: It is the exercising rule control over inventory

Cost plays an important role in determining the survival or failure of any

Cost is the amt of expenditure (actual or notional) incurred on or attributable

KLE’s S. NIJALINGAPPA COLLEGE 3

 On the Basis of Time:

Pre-determined cost: Costs are calculated before they are incurred.

 On the Basis of Natural of Elements:

The entire above can direct or indirect

 On the Basis of Trace Ability of a Product:

KLE’s S. NIJALINGAPPA COLLEGE 4

 On the Basis of Controllability:

KLE’s S. NIJALINGAPPA COLLEGE 5

FUNDAMENTAL PRINCIPLES OF COSTING:

 Cost is related to its cause.

DEFINITION AND MEANING OF COST CONTROL:

Cost control is defined as “the guidance & regulation by executive action of

The chartered institute of management’s accountants London, defines cost

KLE’s S. NIJALINGAPPA COLLEGE 6

Following are the Important Characteristics of Cost Control:

 Delineation of centers of responsibility: Overlapping of operations and

ESSENTIAL FEATURES OF COST CONTROL:

KLE’s S. NIJALINGAPPA COLLEGE 7

 Cost reporting: No company can function unless there is a perfect monitoring.

FIVE STEPS OF COST CONTROL:

Organizing a system of cost control and making it works successfully requires

 Setup the targets

It is obvious that a straight comparison cannot otherwise be made. Unless the

KLE’s S. NIJALINGAPPA COLLEGE 8

MAKING COST CONTROL A SUCCESS:

Proper fixation of targets

 PROPER FIXATION OF TARGETS:

The target should always be setup in consultation with the individual

KLE’s S. NIJALINGAPPA COLLEGE 9

 PERIODICAL REVIEW OF TARGETS:

 TIMELY PRESENTATION OF COMPARISON:

Because the purchases prices of material is increased, in presenting the

SYSTEM OF COST CONTROL:

 Marginal costing system

KLE’s S. NIJALINGAPPA COLLEGE 10

1. Marginal Costing System:

Marginal costing in the accounting system in which variable costs are

Main features of marginal costing:

Costs are divided into two categories

CRITICISM OF MARGINAL COSTING:

KLE’s S. NIJALINGAPPA COLLEGE 11

2. Budgetary Control System:

Budgetary control implies the use of a comprehensive system of budgeting to