It is the report representing the managerial accounting of a business firm for one month which includes Cost Sheet Preparation, Marginal Costing, PV Ratio Calculation, Break even Analysis etc.
3. Introduction
Gram Tarang, the social enterprise of Centurion University, skill University of Odisha
provides hands on vocational training to youth in live production environment, with a special
focus on Vocational Training in Energy sector. It has established a state of the art
Transformer Manufacturing and Repair Workshop which undertakes order from many
discoms and private clients.Their process and products have been certified as meeting and
exceeding national and international quality standards including BIS Level-II approval for 16
/ 25 / 63 / 100 / 250 and 500 KVA Distribution Transformer and ISO 9001:2015.
Manufacturing Facilities
They have the most modern and high-tech machines like power sheering machines, Hydraulic
press brake, automatic HT and LT coil winding machines, Single/double head DPC machines,
oil Conditioning machines, Thermostat controlled heating chamber, spray booth and 27KL
Lube storage tank.
Testing Facilities
They also have high precision testing equipment like 3-phase M-G set with DVDF Test set,
Transformer Oil Insulation Test set, Turns Ratio Tester, Digital Insulation Resistance Tester,
Motorised Insulation Tester, Power Analyser, Winding Resistance Meter, High precision
micro OHM meter, Turns ratio tester and CT & PT for best monitoring of quality output of
their transformers.
Advantages
Their transformers are produced, tested, deployed and continually improved with a focus of
delivering reliable and customer focused performance and a relentless commitment to quality
along with one year Guarantee Period with full replacement and no questions asked.
4. Product Variety and Price
Mainly there are two types of transformers,i.e. Power Transformer (PTR) and Distribution
Transformer ( DTR).
Power Transformer
A power transformer is a static machine used for transforming power from one circuit to
another without changing the frequency.
Distribution Transformer
A distribution transformer or service transformer is a transformer that provides the final
voltage transformation in the electric power distribution system, stepping down the voltage
used in the distribution lines to the level used by the customer.
Power Transformer ( PTR)
Product Price
1 MVA 17,00,000
3.15 MVA 50,00,000
5 MVA 65,00,000
8 MVA 1,00,00,000
10 MVA 1,30,00,000
15 MVA 1,70,00,000
Distribution Transformer ( DTR)
16 KVA 49,000
25 KVA 65,000
63 KVA 1,10,000
5. Place
Gram Tarang transformer delivers its product all over Odisha & some parts of the country.
They do their inventory management at their own Godown at Jatani Campus near factory
premises. They use different electrical companies and private contractors, builder to reach
their customer. And they have their own transport facility to delivery their product and
sometimes they use logistics partner for successful delivery of their product.
Promotion
Mainly they use direct marketing or traditional way of marketing to promote their product.
Other than that they do industrial visit, organize camps, advertising, and word of mouth or
references for the promotion of their product.
Although they have a wide variety of product as per customer’s requirement for size and
convenience we have considered the standard size of transformer,I.e 100 KVA for the
making of Cost sheet, Marginal Costing and Break even Analysis.
Process Flow Chart
As there are certain processes ascertained with the production of a complete transformer .
Those process are as follows :
100 KVA 1,50,000
250 KVA 3,50,000
500 KVA 7,50,000
7. Cost Sheet
It is a document which provides the assembly of the estimated detail cost in cost center in a
logical order. It is prepared to show detail cost of the total output for a certain period.
Advantages
It discloses the total cost & cost per unit of the unit produced.
It indicates the breakup of the total cost by element i.e. materials, labor & overheads.
It helps management in fixing the selling price.
It helps to control overproduction.
Cost Sheet of 100 KVA Transformer for 1 month
Particulars Cost per Unit Total Cost
Direct Materials 1,02,79 61,67,400
Direct Wages 5,833.33 3,50,000
Direct Expenses 500 30,000
Prime Cost 1,09,123.33 65,47,400
Add : Administration Overhead Cost per Unit Total Cost
Manager Salary 1,333.33 80,000
Director Fees 1,666.66 1,00,000
Office Stationary 50 3,000
Telephone bill 16.66 1,000
Bank Charges 200 12,000
Audit 83.33 5,000
Legal Expenses 200 12,000
2,13,000
Cost of Production 1,15,106.66 69,06,400
8. Add : Selling and Distribution Overhead Cost per Unit Total Cost
Advertising 50 3,000
Salesmen Commission 7,500 4,50,000
Carriage Outwards 1,166.66 70,000
Travelling Expenses 500 30,000
Sample and Free Gifts 300 18,000
Debt Collection Expenses 416.66 25,000
Depreciation of Delivery Van 166.66 10,000
6,06,000
Cost of Sales 1,25,206.64 75,12,400
Sales 1,50,000 90,00,000
Profit = Sales - Cost of Sales
= 90,00,000 - 75,12,400
= 14,87,600
Contribution = Sales - Variable Cost
= 90,00,000 - 72,06,400
= 17,93,600
P/ V Ratio = Contribution * 100
Sales
= 17,93,600 *100
90,00,000
= 19.93 %
9. Fixed Cost And Variable Cost
Electricity 70,000
Direct Labor 3,50,000
Raw Materials 61,67,400
Direct Expenses 30,000
Printing & Stationary 3,000
Travelling Expenses 30,000
Salesman Commission 4,50,000
Carriage Outward 70,000
Repair & Maintenance 18,000
Sample & Free Gifts 18,000
Factory Rent 30,000
Consumable Material 10,000
Telephone and Postage 1,000
Advertisement 3,000
Indirect Labor 1,80,000
Insurance 18,000
Bank Charges 12,000
Audit 5,000
Legal Expenses 12,000
Debt Collection Expenses 25,000
Depreciation of delivery Van 10,000
Total Fixed Cost 3,06,000
10. Total Variable Cost 72,06,400
Marginal Cost
Marginal Cost is the additional cost of producing an additional unit of product.
It is the total of all variable cost.
It is the cost of one unit of product which would be avoided if that unit were not
produced.
Marginal cost per unit remains unchanged irrespective of the level of the level of activity.
Cost per Unit = 1,25,207
Fixed Cost per Unit = 5,100
Variable Cost per Unit = 1,20,107
Marginal Cost of 100 KVA transformer
Total cost of Producing 60 Units = 75,12,400
Total Cost of Producing 61 Units = 76,32,507
Marginal cost of Producing one unit = 1,20,107
Break Even Analysis
The term ‘Break-Even Analysis’ refers to a system of determination of that level of
activity where total cost equals total selling price.
The relationship between cost of production,volume of production,profit and sales value
is established by break-even analysis.This analysis is also known as ‘Cost-Volume-
Profit’analysis.
Break-Even-Point
It refers to that level of activity where the income of the business exactly equals its
expenditure.
11. Break Even Point ( in Units)
B.E.P. (in Units) = Total Fixed Cost / Contribution per Unit
= 3,06,000 / 29,893.3
= 10.23
Break Even Point ( in Rs.)
B.E.P. ( in Rs.) = Fixed Cost / PV Ratio
= 3,06,000/19.93 * 100
= 15,35,373.8