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I take immense pleasure and satisfaction in presenting my report on Cost Sheet Analysis Of Britannia Bread This project was performed as part of the curriculum in the subject Cost and Management Accounting for the MMS Course at Bharati Vidyapeeth Institute of Management Studies & Research. I take this opportunity to acknowledge all the people who have contributed to this project's involvement. I acknowledge with deep sense of gratitude the support given by our Professor Mr. Shinde who encouraged us to take such a challenging endeavor. I express my sincere acknowledgement to the authority for providing me with good environment, library resources and facilities to complete this project. It gave me an opportunity to learn more about Cost & Management Accounting. This project was definitely a positive learning experience for me.


SR. NO 1.

TITLE Introduction

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2. Divisions Of Cost 3. Introduction To Britannia Industries 5. Importance Of Study 6. Objectives Of Study 8. Research Methodology 9. Cost Sheet Of Britannia Bread 10. Cost Sheet Analysis & Findings 11.. Conclusion 12. Bibliography & References

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Cost & Management Accounting In management accounting, cost accounting establishes budget and actual cost of operations, processes, departments or product and the analysis of variances, profitability or social use of funds. Managers use cost accounting to support decision-making to cut a company's costs and improve profitability. As a form of management accounting, cost accounting need not to follow standards such as GAAP, because its primary use is for internal managers, rather than outside users, and what to compute is instead decided pragmatically. Costs are measured in units of nominal currency by convention. Cost accounting can be viewed as translating the supply chain (the series of events in the production process that, in concert, result in a product) into financial values. Cost Sheet For determination of total cost of production a statement showing the various elements of cost is prepared. This statement is called as a statement of cost or cost sheet. Cost sheet is a statement, which provides for the assembly of the detailed cost of the total cost of job operation or order. It brings out the composition of total cost in a logical order, under proper classifications and sub-divisions. The period covered by the cost sheet may be a week, a month or so. Separate columns are provided to show the total cost and cost per unit. In case of multiple products a separate cost sheet may be prepared for each product. Alternatively, separate columns of total cost and unit cost may be provided for each product in the same cost sheet. A cost sheet is prepared under output or unit costing method. Purposes of cost sheet Cost sheet serves the following purposes: 1. It gives the break up of total cost under different elements. 2. It shows total cost as well as cost per unit 3. It helps comparison with previous years. 4. It facilitates preparation of tenders or quotations 5. It enables the management to fix up selling price 6. It controls cost.

DIVISIONS OF COST Prime Cost: It comprises of all direct materials, direct labour and direct expenses. It is also known as flat cost. 4

Prime Cost = Direct Materials + Direct Labour + Direct Expenses.

Works Cost: It is also known as factory cost or cost of manufacture. It is the cost of manufacturing an article. It includes prime cast and factory expenses. Works Cost = Prime Cost + Factory Overheads Cost of Production: It represents factory cost plus administrative expenses Cost of Production = Factory Cost + Administrative expenses Total Cost: It represents cost of production plus selling & distribution expenses Total Cost = Cost of production + Selling & distribution expenses Selling Price: It is the price, which includes total cost plus margin of profit or minus loss, if any. Selling Price = Total Cost + Profit (-Loss)


The story of one of India's favorite brands reads almost like a fairy tale. Once upon a time, in 1892 to be precise, a biscuit company was started in a nondescript house in Calcutta (now Kolkata) with an initial investment of Rs. 295. The company we all know 5

as Britannia today is one of Indias best known brands and also one of the most admired Food Brand in the country. Having succeeded in garnering the trust of almost one-third of India's one billion population and a strong management at the helm means Britannia will continue to dream big on its path of innovation and quality. And millions of consumers will savor the results, happily ever after. The company has four production facilities, 4367 employees, and sells its products in over 600,000 outlets across India. The Britannia Brand is all about eating healthy for leading a better life. It is the largest company in the food processing industry whose product range also includes breads and cakes. Britannia has a basketful of goodies with biscuits like Nice Time, Tiger, Marie Gold, 50 50 Maska Chaska, Milk Bikis, Pure Magic, Time Pass Nimkee, Treat, Good Day, Little Hearts, Nutri Choice, Nutrichoice Digestive, Daily Fresh Bread and Britannia Cakes.


Till 1958, there were no breads in the organized sector and bread consumption was a habit typified by the British. Then, a mechanised bread unit was set up in Delhi with the name "Delbis" which produced sliced bread and packed it under the Britannia name. Thus, Britannia was not only the pioneer, but also inculcated in the people of Delhi the habit of eating white sliced bread. The Mumbai unit came up in 1963, and there again Britannia was the first branded bread in the city. From a company offering 2 packs - the 400gm and the 800gm plain white sliced bread - Britannia has evolved into a company offering 22 packs, catering to a variety of taste and price segments in the bread consuming market. The last couple of years also saw the introduction of Whole Wheat Bread as a part of "Eat Healthy, Think Better" credo. Britannia Daily Fresh Bread, which finds its way to over 6 lakh households daily, is the mainstay of the companys non-biscuit business at present. Britannia hopes to drive this emerging business through the exploding modern trade and has already gained access to Reliance Retail, Trinethra and Fabmall for its breads. Britannia is widely recognized as an innovative marketer.


Managers rely on cost accounting to provide an idea of the actual expenses of processes, departments, operations or product which is the foundation of their budget, allowing them to analyze fluctuation and the way funds are used socially for profit. It is used in management accounting, where managers justify the ability to cut expenses for a company in order to increase that companys profit. As a tool for internal use, versus a tool for external users like financial accounting, cost accounting does not need to follow the GAAP standards (Generally Accepted Accounting Principles) because its use is more pragmatic. It creates a financial value out of the production of a product, measuring currency that is nominal into units that are measured by convention. By taking recorded historic costs a bit further, it allocates a companys fixed costs over a specific time period to what items are actually produced during that period of time, creating a total cost of product production. Products that were not sold during that period of time produced a "full cost" of those products, recording them in a complex inventory system that uses accounting methods of its own that are in compliance with the GAAP standards. Managers are then able to focus on each period's results as it relates to the "standard cost" of any product. Any distortions in expenses that were caused by calculating what the overhead of a product is versus what a unit cost is for companies that specialize in only one specific product are very minor in industries that mass produce that product with a low fixed one. Understanding why it varies compared to what was actually planned helps a manager to save a company money by taking actions that are appropriate to correct that variation in the future. Variance analysis is a very important part of cost accounting because it breaks down each variances into many different components of standard and actual one. Some of these components are material expenses variation, volume variation and labor expenses variation. It is a very important part of the management accounting process. In order for managers to determine the best methods to increase a company's profitability, as well as saving a company money in the future, cost accounting is a necessary system in the management of a company's budget, providing important data to analyze fluctuation in company production expense.


The Main Objective of the Project is to study and analyze the Cost incurred for production. The specific objectives include: Ascertainment Of Cost It enables the management to ascertain the cost of the product , job, contract, service or unit of production so as to develop cost standard. Costs may be ascertained, under different circumstances, using one or more types of costing principles-standard costing, marginal costing, uniform costing etc. Fixation Of Selling Price Cost data are useful in the determination of selling price or quotations. Apart from cost ascertainment, the cost accountant analyses the total cost into fixed and variable costs. This will help the management accountant to fix the selling price; sometimes below the total cost but above the variable cost. This will increase the volume of sales- more sales than previously, thus leading to maximum profit. Cost Control The objective is to minimize cost of manufacturing. Comparison of actual cost with standards reveals the discrepancies- variances. If the variances are adverse , the management enters into investigation so as to adopt corrective action immediately. Matching Cost With Revenue The determination of profitability of each product, process, department etc is the important objective of costing. Special Cost studies and Investigations It undertakes special cost studies and investigations and these are the basis for the management in decision making or policies. This will also include pricing of new products, contraction or expansion programmes, closing down or continuing a department, product mix, price reduction in depression etc. Preparation of Financial Statements, Profit and Loss Account, Balance Sheet To prepare these statements , the value of stock , work in progress , finished goods etc are essential ; in the absence of the costing department , when we have to close the accounts it rather takes too much time. But a good system of costing facilities the preparation of the statements, as the figures are easily available; they can be prepared monthly or even weekly.

Research methodology is, a way to systematically solve the research problem. It may be understood as a science of studying how research is done. In this we study the various

steps (the research process) that are generally adopted by a researcher in studying his research problem along with the logic behind them. The basic steps in this research are as following: Steps in planning a research study: Formulating a research problem. Conceptualizing a research design. Constructing an instrument for data collection. Selecting a design. Writing a research proposal.

Steps in conducting a study: Collecting data Processing data Writing a research report.

For my research I have used secondary data that includes material available from companys website. SECONDARY DATA: Secondary data has been used for completing the project. The brief history of company and how the company work and about its growth was collected from the respective websites and contacts. Also brochures were helpful in preparing the project. The sources of secondary data are: Balance Sheets Case Studies Annual Reports Reference Books Internet


PARTICULARS Cost sheet for every 1 lac units produced & sold. Quantity Manufactured Quantity Sold Direct Cost Raw Materials Consumed Opening Stock Of Raw Materials Raw material cost Flour Water Yeast Salt Purchase Of Raw Materials (-)closing stock of raw materials Materials Consumed Direct Labour/Wages Direct Cost/Expenses Prime Cost Indirect Cost Factory/works Overheads Indirect Labour Depreciation On Machinary Works Overheads Cost Of Maintenance Other Factory Expenses Supervisors Salary Power Of Fuel Total Overheads Factory Cost/Works Cost Office & Administrative Overheads Depreciation On Office Furniture @ 7% Office Rent Salary to Staff Office & General Expenses Telephone Expenses Electricity & lightings Printing & Stationary Total Office & Administrative Overheads Cost Of Goods Sold Selling & Administration Overheads Sales Commission 10

COST PER UNIT 1 1 Cost per Unit (Rs) 0 3.756 0.892 0.6789 0.4781 5.805 0 5.805 0.124 0.2415 6.1705 0.122 0.675 0.05204 0.0589 0.0282 0.0385 0.5678 1.54244 7.71294 0.0281 0.0585 0.089 0.0257 0.0219 0.03123 0.00294 0.25737 7.97031 0.705 1,00,000 1,00,000

Salary Of Salesman Carriage Outward Sales Expenses Total Sales & Administrative Overheads Cost Of Sales Profits Sales

0.1 0.12798 0.057 0.98998 8.96029 1.03971 10

Note: The Values are determined on the basis of apportionment as the company produces more than one product (including fixed cost), Cost sheet for every 1lac units produced and sold. Some of the above Values are estimated.

The above is the cost sheet of Britannia Bread. The following points must be noted: The values are determined on the basis of apportionment as the company produces more than one product including fixed cost. Cost sheet is prepared for every 1 lakh units produced and sold. Some Of the above values are estimated.


Direct Cost: Direct materials 11

To manufacture one unit of bread the following raw materials are required. Flour Water Yeast Salt Direct labor/wages: Direct labor/Wages amounts to Rs. 0.124 per unit which is approximately 2.009% of the PRIME COST. This percentage is low because a good amount of work is automated as a result of which Human resources are diverted to more productive areas such as SALES and MARKETING. Direct cost/expenses: Direct cost includes costs incurred in bringing the raw materials into the factory which is Carriage inward. It also includes the amount paid loading unloading charges and other petty expenses. Indirect Costs: Factory Overheads: The Factory Overheads includes the indirect labor, Depreciation on Machinery, Works Overheads, Cost of Maintenance, Other Factory Expenses, supervisors Salary and Power & Fuel. Indirect labor: The amount of indirect labor is Rs. 0.122 per unit. This value includes sweeper charges, support staff etc. Depreciation on machinery: The depreciation is calculated on the basis of WDV calculated @ 10% p.a. This value amounts to around 43.7% of the FACTORY OVERHEADS. The percentage is high because of the level automation and technology used for production. Power: Per unit power and fuel consumption is Rs. 0.5678. Other factory expenses: Other factory expenses include maintenance of factory and other miscellaneous expenses.

Office and Administration Overheads:Office and administration overheads include Depreciation on office furniture@7%, office rent, salary to staff, office and general expenses, Postage and Telegrams, telephone expenses, electricity and lightings


Salary to staff: The salary paid to staff comes up to around Rs. 0.089 per unit cost. Office and general expenses: This comprises of refreshments (tea and snacks), Postage and Telegrams and other petty expenses. Printing and stationary: This consists of photocopy charges, printouts and other stationary items. Telephone Expenses: Calls made by the staff members. Electricity and lightings: It consists of office lighting and air conditioning expenses. Sales and distribution overheads:Selling and distribution cost includes Sales Commission, Discount allowed, Salary of salesmen, Carriage outward and Sales expenses. Sales Commission : As a part of encouragement for sales people, they are given commission of 5 % of the total sales done by them. Discount allowed : To attract whole sellers to buy the product they are offered a discount of 5% on the selling price. Salary of salesmen : The average salary paid to the sales people is around Rs. 0.1 of the total per unit cost of the product. Carriage outward : To carry the finished goods to the whole sellers, the transportations charge per unit/product is set as RS 0.12798. Sales expenses : This includes expenses incurred on advertisements and promotional expenses such as newspaper advertisements, hoardings, TV commercials etc. Profit : The Profit arise out of selling per unit of the product is 11.603% of the total per unit cost price



As per the study, we would like to conclude that bread not being the staple food in India, has definitely evolved as a substitute for chapattis, rotis, rice, etc. It is easily available due to its excellent distribution channels. Britannia bread has acquired almost 50% stake in daily bread market. Today a variety of breads are available, such as brown bread, whole wheat bread, chutney bread, etc. Even after having many competitors around, Britannia bread has managed to capture a large market share not just in the urban but has also managed to penetrate the rural markets. Concluding, Cost accounting as a subject was born to fulfill the needs of management of manufacturing companies for a detailed information about the cost. Cost accounting is a mechanism of accounting by means of which costs of services or products are ascertained and controlled in a manufacturing firm for different purposes . The managerial skill and abilities can be improved .The objective of cost accounting is to ascertain the true cost of every operation, through a close watch- cost analysis and allocation. Thus 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.




BOOKS & SOURCES Cost & Management Accounting Ravi Kishore Cost Accounting R.S.N. Pillai & V. Bagavathi