2. SUBJECT: BASICS OF MANAGEMENT
ACCOUNTING (FIN-1705)
COMPANY: TATA MOTORS
AIM: COST SHEET ANALYSIS
GROUP MEMBERS:
•MAYYANK SIINGH
•SUKHMANI SINGH
•YASH MAKEN
•MOKSH JAIN
•SABRITA YADAV
DATE: 19th MARCH 2023
GD GOENKA UNIVERSITY, SOHNA,
GURUGRAM
3. About TATA MOTORS
• Tata Motors Group (Tata Motors) is a $37 billion organisation. It is a
leading global automobile manufacturing company. Its diverse portfolio
includes an extensive range of cars, sports utility vehicles, trucks, buses
and defence vehicles.
• Tata Motors is one of India's largest OEMs offering an extensive range of
integrated, smart and e-mobility solutions.
• Part of the USD128 billion Tata group founded by Jamsetji Tata in 1868,
Tata Motors is among the world’s leading manufacturers of automobiles.
We believe in ‘Connecting aspirations’, by offering innovative mobility
solutions that are in line with customers' aspirations.
4. TATA Motors are India's largest automobile manufacturer, and we continue
to take the lead in shaping the Indian commercial vehicle landscape, with
the introduction of leading-edge powertrains and electric solutions
packaged for power performances and user comfort at the lowest life-cycle
costs.
• Their new passenger cars and utility vehicles are based on Impact
Design and offer a superior blend of performance, drive ability and
connectivity.
5.
6. Classification of Cost
Fixed cost is the cost that does not change with the level of activity. Cost under fixed cost :-
• Direct Purchases
• Direct Material
• Direct Labour
• Salary / Wages
• Printing & Stationary
• Other Administrative Cost
• Sales Promotion
• Other Selling Expenses
7. Variable cost is the cost that keeps on changing with the level of activity. The Costs
under variable cost are :-
• Workmen / Staff Welfare Expense
• Contribution to EPE & Pension Funds
• Direct Expense
Costs considered under Semi Variable & Semi Fixed are :-
• Salary – Semi Fixed
• Electricity – Semi Variable
8. Break Event Sales in Rupees, PV ratio & Margin of safety.
Sales = Rs 2379560 cr (All Values in Crore Rupees)
(-) Variable Cost = 272550 cr
Contribution = 210710 cr
(-)Fixed Cost = 2229290 cr
= Profit ( Loss ) = Rs 122280 cr
Break Even Sales (in amount) = Fixed Cost/PV Ratio
PV Ratio = Contribution/sales X 100 = 210710/2229290 X 100 = 88.5%
Break Even Sales ( In Amount ) = Rs 2518971 cr
9. • Margin Of Safety = Profit / PV Ratio
= 122280/88.5%
= 138169
10. What is CVP Analysis and It’s Importance
• Cost volume profit analysis is a systematic method of examining the relationship
between selling price, sales revenue, volume of production and profits.
• Such an analysis provides management with data regarding sales, price, product
mix, so as to enable the management to select products for better profitability of
business.
• Importance of CVP Analysis :-
1) CVP analysis helps managers make informed decisions about pricing, cost,
control, and revenue optimizations.
2) It predicts profitability of a business by examining the relationships between
sales volume , price and cost.
11. 3) CVP analysis facilitates budgeting and helps managers determine the
resources needed to achieve sales target.
4) It aids in product pricing by identifying the price that will maximize profit.
5) CVP analysis helps in identifying the cost structure of a business and areas
where costs can be reduced, which improves profitability.
12. Conclusion & Learnings From The
Project
Learning:
One key learning from such a project is the importance of understanding the company's breakeven point - the
point at which the company's total revenue equals its total costs. By calculating the breakeven point, the project
can determine the minimum amount of sales required for the company to cover its costs and avoid losses.
This information can help the company to set sales targets, price its products more effectively, and make
decisions about cost-cutting measures if necessary.
A CVP (Cost-Volume-Profit) analysis and cost sheet analysis project can provide valuable insights into the
financial performance of a company.
By analyzing the relationships between the company's costs, volume of sales, and pricing strategy, it is possible
to identify areas for improvement and make informed decisions about the company's future.
13. Conclusion :
• In conclusion, a CVP and cost sheet analysis project can provide valuable insights
into the financial performance of a company and help it to make informed decisions
about its future.
• By focusing on increasing sales volume while also carefully managing costs, the
company can achieve profitability and sustainable growth over the long term.
• it is clear that the company should focus on increasing its sales volume in order to
improve its financial performance.
• By doing so, the company can reduce its breakeven point and achieve profitability
more quickly.
