This report is about the costing process , per unit pricing in order to estimate overall cost of goods available for sale.

1. CostAccounting
KIM’s Factory Hattar
Foundation University Rawalpindi Campus
Presented to : Sir. Talha Aziz
Presented by: Rehab Butt
Hassan Tariq
Osman Ahmed
Flahta Bin Rashid
Syeda Kanwal Noreen
Date : 29th December, 2014

2. 2
Contents
Dedication....................................................................................................................................... 3
Acknowledgement .......................................................................................................................... 4
Executive Summary........................................................................................................................ 5
Introduction..................................................................................................................................... 6
About the Project ............................................................................................................................ 7
Methodology for completion of study ............................................................................................ 7
Type of Business............................................................................................................................. 8
Follows job order cost..................................................................................................................... 8
Cost on Direct Material, Direct Labor and FOH ............................................................................ 8
Fixed Cost ................................................................................................................................... 9
Variable Cost............................................................................................................................... 9
Formula Used for Total Variable Costs .......................................................................................... 9
Usage of Scraped Goods................................................................................................................. 9
Payment of Taxes.......................................................................................................................... 10
Labor Facilities ............................................................................................................................. 10
Cost Volume Profits...................................................................................................................... 11
Break Even Analysis..................................................................................................................... 11
Conclusion .................................................................................................................................... 12
Recommendation .......................................................................................................................... 12
Reference ...................................................................................................................................... 12

3. 3
Dedication
I would like to dedicate this report to Sir Talha Aizaz, for giving us this wonderful project.
Previously we had not done any project like this. This was the first of its kind and we enjoyed it
so much that I can’t even explain it in words. Furthermore I would thank my Dear good friends
Kanwal Noreen, Osman Ahmed, Hassan Tariq for their necessary hard work and support. Rehab
butt was also present at the scene but not so much hard work was observed. Hands up to all you
people.

4. 4
Acknowledgement
We would like to thank Mister Qadir Mahmud for giving us the opportunity to visit the factory.
Giving us the permission to survey and allowing us the privilege of completing our project easily.
Usually the companies and factories don’t give or allow the use of video cameras and other utilities
in their premises, but through his reference we completed our work with ease. We would like to
thank Sir Talha Aizaz and the Foundation University for giving us this wonderful opportunity to
visit this amazing factory and many of its subsidiaries. Furthermore I would thank all my group
members for all their hard work and eagerness to complete this report/project as soon as possible.
It was a very good and helpful experience as it will also help us in our future when we go into the
professional life.

5. 5
Executive Summary
This report unfolds the study of different processes of KIMS Factory Hattar. Some of its food
manufacturing processes are discussed in detail and information is provided about them along with
the conclusion and recommendations.
Kim’s is no doubt doing a splendid job and hence, contributing in economy with a handsome hand.
Hattar is situated in the province of KPK which is enrich with respect to Man power and natural
resources. That counts a winning point for the business too but here, the fact of transportation
problems cannot ignored as KIM’s has to distribute its product country wide. Coping along with
such a situation and providing outstanding results are mark able not only for the industry but for
the nation as well.
Additionally, it is essential to quotes the study will reveals the internal process, financial indicators,
business types, breakeven analysis etc. that builds the foundation of any business success.
This report is written after getting sound facts and analysis are made about the manufacturing
business hence, the data is based on true facts.

6. 6
Introduction
Silver Lake foods was established in 1995 with the partnership of four people. It is located in
industrial sector Hattar, Plot number 50. Its growth rate was steady in start and gradually increased
with time. It had 2 subsidiaries from 2000, KIMS and DEER. Many of its initial sales were abroad.
It took orders from big companies and produced the designated quality under that brands name.
Cadbury and some other famous organizations were their main customers.
In 2008, due to increase price of many primary resources required for producing biscuits and
toffees, it almost went bankrupt like many other small industries. From 2009 onwards the
organizations continued sales at break-even point. In 2013 it was acquired by volca foods and
industries. The new owner invested heavily in the project and soon the sales boomed. One more
subsidiary was added which is known as Giggly in the local market of Pakistan. Now the company
only does sales in local market rather than exporting. The profit margin was 1.5 Crore in the month
of November 2014. The company sells products under 3 brands at the present, KIMS, Giggly and
DEER.
The company since 2013 has bought four more factories. Now its different products are:
 Biscuits
 Candies
 Wafers
 Chocolates
 Nimco
 Jelly
 Fruit cakes
 Chocolate cakes

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About the Project
The project is assigned to the Teams consist of five members, to visit, analyses and study a factory
that carries the whole supply chain management. Make a comprehensive video of the process and
collect necessary information for study.
Methodologyfor completion of study
For the completion of this report, verity of methods has been used for analysis, recommendations
and conclusions. Initially data was collected on quantitative interview, face to face meeting was
held in Silver Lake Foods. Email remain a mode of communication for further required
information. A handsome data for analysis and study was gathered on
Thursday, November 20, 2014, involved 6 people.
This document is prepared with the help of collected data and the subject under study. To the
degree of precision, this reports covers the required aspects at the extent of information available
till the date 1st January 2015.
Ultimately, writing this report with believe that the research is fully conducted via using
confidential information, precise analysis and effective discussion. The study bring the facts in the
site of reader about the benefits KIM’s Factory and its effective outcomes.
Further conclusion are made after evaluating and analyzing the collected information. Moreover,
recommendation are proposed further for updating software in order to make it more efficient and
error free.

8. 8
Type of Business
KIM’s Factory belongs to the manufacturing category. Its main production items are related to
snacks and eatables. Products that don’t require any baking or cooking. Main products being
currently manufactured by the company include
 Biscuits
 Candies
 Wafers
 Chocolates
 Nimco
 Jelly
 Fruit cakes
 Chocolate cake
Distribution has been all across Pakistan since January 2013. ISO certification 9000: 2008, ISO
14001: 2400 and HACCP certification has been awarded to the certified company. The following
certificates are awarded to factory in terms of Food, Health, Tax, labor rights, safety and
Working environment provided by the company.
Follows joborder cost
Kim’s follow job order costing by assigning a manufacturing cost to an individual product or
batches of products. Generally, it is used only when the products manufactured are sufficiently
different from each other.
Coston Direct Material, DirectLabor and FOH
Direct material cost PRs. 929 per carton
Raw materials PRs. 496 per carton

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FOH PRs. 111 per carton
Direct labor cost PRs. 55 per carton
Fixed Cost
Fixed costs are the cost that is independent of output.
Their fixed cost is Rs.11596000
Variable Cost
They are the costs that vary with output.
Their variable cost is Rs.6404000.
Formula Used for Total Variable Costs
=Total quantity of output* variable cost per unit of output/Inventory
According to them their inventory is not just in time because of the political conditions we are
facing in Pakistan. So to overcome this problem in future they have to store the raw materials and
inventory to be used further.
Usage of ScrapedGoods
They have a proper quality department where their manager supervises their quality and in case of
a scraped good they utilize it and selling it in different packaging with fewer prices. Some other
scrap materials that aren’t related to food are gathered in one place and later sold to the highest
bidder. This adds a considerable amount in the revenues.

10. 10
Payment of Taxes
Establishment of the factory and 1995, rules set by the top management clearly stated that the
factory will pay 100% taxes allotted to the company and were registered by FBR. Even the tax
authority counselor stated that in Pakistan, no other factory/company pays 100% taxes and make
huge revenues and profits simultaneously. He even argued against his better judgment that they
don’t pay more than 50% of the tax but the management refused and stated that they were going
to set new benchmark standards in the Pakistan business evnironment.The tax paid by Kims
Factory in the preceding year was 20, 25,708.
Labor Facilities
Facilities given to the labor are:
 Medical Facilities
 Transport facilities
 Distribution of payrolls and taxes
 Accommodation facilities
 Allowances / Bonuses / Rewards
The Allowances and rewards vary with the performance. The tax reduction also vary with the post
of the employees and different levels appointed to certain people. The distribution of payroll is
carried out according to the total profit or revenue generated by the company per year. Labors are
paid according to the hours they work and which is 80rs per hour. And payment of Sales tax 17%.

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CostVolume Profits
Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect
a company's operating income and net income. In performing this analysis, there are several
assumptions made, including:
 Sales price per unit is constant.
 Variable costs per unit are constant.
 Total fixed costs are constant.
 Everything produced is sold.
 Costs are only affected because activity changes.
 If a company sells more than one product, they are sold in the same mix.
CVP analysis requires that all the company's costs, including manufacturing, selling, and
administrative costs, be identified as variable or fixed.
Break Even Analysis
Break-even point is the point at which cost or expenses and revenue are equal. After they reach
break-even point they go for profit margin in the department where they have more return it does
not base on sales instead it’s based on the profit they are getting on different product and promote
it further.
Break-even point = fixed cost ÷ variable cost per unit

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Conclusion
There were many defects and flaws we observed during our trip. If the factory implements them
in the near future then its growth rate will increase significantly quicker than the present rate. The
points are being listed in the recommendation section.
First of all, there was a huge time wastage of employees moving from one place to another. The
environment in which labors were working would have made their hands sweaty and in turn
questions the healthiness of the products.
Recommendation
Workers should be wearing disposable gloves while working in then factory.
Communication between the labors should be kept to the minimum.
Elevators should be installed instead of stairs because the workers and labors waste a lot of time
going from one point to another.
Software being used to calculate the loss of each process is too outdated and should be swapped
with a newer version.
Overburden for labors should be avoided by setting specific time for work and break.
Warehouse/Safe houses should be constructed in each major point of the country so that the
distribution becomes easy.
Reference
Silver Lake Foods LTD.
Mr. Qadir Mehmud
Executive Director.