Activity based costing provides more accurate product costs than traditional costing. The document analyzes Vikash Industries' costing system and compares it to activity based costing for one of its products. It identifies the activities involved in manufacturing the product, calculates the costs of each activity, and allocates costs using appropriate drivers. Implementing activity based costing would provide Vikash Industries a better understanding of true product costs and help identify areas to reduce costs and increase efficiencies.
At present Industrial Engineering (IE) is one of the important department for each garments or textile factory. Today’s maximum factory is run by industrial engineers, where they have to follow a process flow chart. By which they can easily control the whole garments production processes....
Design and Analysis of Chute System to obtain World Class OEEijsrd.com
A large investment in a piece of capital machinery and, in theory, it could run 24 hour a day for seven days a week at its optimum Speed. If it did this you gain the maximum value from the investment. In reality there is number of element that can affect the value gained from the investment. So that fully utilization of equipment can be done. Hence for fully utilization of any equipment any firm must have to calculate OEE. This paper represents the methodology applied in increasing the OEE of an Organization by exchanging the feed mechanism from a conveyor to a Chute system.
At present Industrial Engineering (IE) is one of the important department for each garments or textile factory. Today’s maximum factory is run by industrial engineers, where they have to follow a process flow chart. By which they can easily control the whole garments production processes....
Design and Analysis of Chute System to obtain World Class OEEijsrd.com
A large investment in a piece of capital machinery and, in theory, it could run 24 hour a day for seven days a week at its optimum Speed. If it did this you gain the maximum value from the investment. In reality there is number of element that can affect the value gained from the investment. So that fully utilization of equipment can be done. Hence for fully utilization of any equipment any firm must have to calculate OEE. This paper represents the methodology applied in increasing the OEE of an Organization by exchanging the feed mechanism from a conveyor to a Chute system.
An overview study of working condition and productivity of construction labou...eSAT Journals
Abstract Labour Productivity plays a significant role in the construction sector. It assists construction sector to be combative to accomplish aims and to encounter the investors and to be innovative. Productivity being a captivating theme and a prevailing subject in construction sector, guaranteed cost optimization and well-organized handling of assets. Now a day, throughout the world productivity is the major issue of concern. The objective of the research is finding the important factors influencing the fluctuations in labour productivity in construction projects of suburban Mumbai, India, evaluating the effect of the Welfare group, safety group and Output group on the fluctuations of labour productivity and suggesting recommendation to diminish the fluctuations of labour productivity. The above goals are accomplish through analysis using sets of questions based on output, welfare and safety of labour. The analysis are been shown in a tabular format in which facilities available for labours at all sites visited is calculated in percentage. Tabulated results of Reliability analysis are followed by the comments, which are based on reliability analysis and compared with the guidelines given by National Building Codes [THIRD REVISION OF SP (PART 7)] DOC: CED 46. Conclusions are been specified to improve the labour productivity at construction sites in suburban Mumbai. This paper emphasis on the ability to create change and manage labour factors affecting productivity in construction planning. Three major heads, which have vital effect on the labour productivity, are output groups, safety groups and welfare groups. Codes like National building codes and Minimum Wages Act are been considered as base for the study. Keywords: Labour Productivity, Welfare, Safety, Output, Personal Protective Equipment (P.P.E), Comments
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Abstract Over the past few decades, manufacturing has evolved from a more labor-intensive set of mechanical processes to a sophisticated set of information based technology processes. With the existence of various advanced manufacturing technologies (AMTs), more and more functions or jobs are performed by these machines instead of human labour. This study was undertaken in order to research the extent of AMTs adoption in manufacturing companies in Kenya. In order to investigate a survey was conducted via questionnaires that were sent to 183 selected AMT manufacturing companies in Kenya. 92 companies responded positively. All the surveyed companies were found to have a measure of investment in at least two of the 14 types of AMTs investigated. In general the company surveyed showed that the level of AMT adoption in Kenya is very low with investments levels at a mean of 2.057 and integration levels at a mean of 1.639 in a scale of 1-5. Keywords—AMT adoption, AMT investments, AMT integration, companies in Kenya.
Estate Management Services
(Annual Maintenance Contracts Housing Society, Hotels, Clubs & Conventional Centres, Annual Maintenance Contracts Offices, Office Complexes & Buildings, Recruitment of Skilled Manpower, Recruitment of Security Guards, Income from QTRS Rent)
Estate management can be defined simply as the management of urban and rural buildings to make money for the owner. Estate management can also be defined as an art of science of directing and supervising of one’s interest in land or landed property in other to achieve some optimum returns which may not only be financial but political, social statute, prestige and other returns.
Estate Management concerns the appraisal, acquisition, development, marketing and disposal of property, or sometimes the ongoing management of property. Estate Management includes wide category of commercial property such as offices, hotels, and retail development, or it can encompass residential property.
See more
https://bit.ly/2xROvly
https://bit.ly/2GfQLrs
Contact us:
Niir Project Consultancy Services
An ISO 9001:2015 Company
106-E, Kamla Nagar, Opp. Spark Mall,
New Delhi-110007, India.
Email: npcs.ei@gmail.com , info@entrepreneurindia.co
Tel: +91-11-23843955, 23845654, 23845886, 8800733955
Mobile: +91-9811043595
Website: www.entrepreneurindia.co , www.niir.org
Tags
#Estate_Management, #Estate_Management_Unit, #Real_Estate_Management, Real Estate Management Business Plan, #Estate_Management_Business, #Real_Estate_and_Property_Management, How to Start a Facilities Management Business, #Facility_Management_Business_Opportunity_in_India, Facility Management, Facility Management Services Business Plan, Facility Management Business in India, Facility Management Business Plan PPT, #Starting_a_Facilities_Management_Business, #Commercial_Facilities_Management, How to Start Real Estate Business, Real Estate, Real Estate, Real Estate Business, Real Estate Sector, How to Start a Property Management Business, Annual Maintenance Contracts Housing Society, Hotels, Clubs & Conventional Centres, Annual Maintenance Contracts Offices, Office Complexes & Buildings, Recruitment of Skilled Manpower, Recruitment of Security Guards, Income from QTRS Rent, Real Estate Management Business Plan, Commercial Property Management Business Plan, Detailed Project Report on Estate Management, #Project_Report_on_Estate_Management, Pre-Investment Feasibility Study on Estate Management, Techno-Economic feasibility study on Estate Management, #Feasibility_report_on_Estate_Management, Free Project Profile on Estate Management, Project profile on Estate Management, Download free project profile on Estate Management
Any firm typically made a large investment in a piece of capital machinery and, in theory, it could run 24 hour a day for seven days a week at its optimum Speed. If it did this you gain the maximum value from the investment. In reality there is number of element that can affect the value gained from the investment. So that fully utilization of equipment can be done. Hence for fully utilization of any equipment any firm must have to calculate OEE. This paper represents the methodology applied in increasing the OEE of an Organization by exchanging the feed mechanism from Bowl Feeder to a Conveyor.
An overview study of working condition and productivity of construction labou...eSAT Journals
Abstract Labour Productivity plays a significant role in the construction sector. It assists construction sector to be combative to accomplish aims and to encounter the investors and to be innovative. Productivity being a captivating theme and a prevailing subject in construction sector, guaranteed cost optimization and well-organized handling of assets. Now a day, throughout the world productivity is the major issue of concern. The objective of the research is finding the important factors influencing the fluctuations in labour productivity in construction projects of suburban Mumbai, India, evaluating the effect of the Welfare group, safety group and Output group on the fluctuations of labour productivity and suggesting recommendation to diminish the fluctuations of labour productivity. The above goals are accomplish through analysis using sets of questions based on output, welfare and safety of labour. The analysis are been shown in a tabular format in which facilities available for labours at all sites visited is calculated in percentage. Tabulated results of Reliability analysis are followed by the comments, which are based on reliability analysis and compared with the guidelines given by National Building Codes [THIRD REVISION OF SP (PART 7)] DOC: CED 46. Conclusions are been specified to improve the labour productivity at construction sites in suburban Mumbai. This paper emphasis on the ability to create change and manage labour factors affecting productivity in construction planning. Three major heads, which have vital effect on the labour productivity, are output groups, safety groups and welfare groups. Codes like National building codes and Minimum Wages Act are been considered as base for the study. Keywords: Labour Productivity, Welfare, Safety, Output, Personal Protective Equipment (P.P.E), Comments
By Mrs Sudha A Mujumdar, Founder Member & Hon Secretary, Quality Circle Forum of India, Ankleshwar Chapter presented at Gujarat State Center The Institution of Engineers, Ahmedabad on 12th Feb 2016
Advanced manufacturing technology adoption in manufacturing companies in kenyaeSAT Journals
Abstract Over the past few decades, manufacturing has evolved from a more labor-intensive set of mechanical processes to a sophisticated set of information based technology processes. With the existence of various advanced manufacturing technologies (AMTs), more and more functions or jobs are performed by these machines instead of human labour. This study was undertaken in order to research the extent of AMTs adoption in manufacturing companies in Kenya. In order to investigate a survey was conducted via questionnaires that were sent to 183 selected AMT manufacturing companies in Kenya. 92 companies responded positively. All the surveyed companies were found to have a measure of investment in at least two of the 14 types of AMTs investigated. In general the company surveyed showed that the level of AMT adoption in Kenya is very low with investments levels at a mean of 2.057 and integration levels at a mean of 1.639 in a scale of 1-5. Keywords—AMT adoption, AMT investments, AMT integration, companies in Kenya.
Estate Management Services
(Annual Maintenance Contracts Housing Society, Hotels, Clubs & Conventional Centres, Annual Maintenance Contracts Offices, Office Complexes & Buildings, Recruitment of Skilled Manpower, Recruitment of Security Guards, Income from QTRS Rent)
Estate management can be defined simply as the management of urban and rural buildings to make money for the owner. Estate management can also be defined as an art of science of directing and supervising of one’s interest in land or landed property in other to achieve some optimum returns which may not only be financial but political, social statute, prestige and other returns.
Estate Management concerns the appraisal, acquisition, development, marketing and disposal of property, or sometimes the ongoing management of property. Estate Management includes wide category of commercial property such as offices, hotels, and retail development, or it can encompass residential property.
See more
https://bit.ly/2xROvly
https://bit.ly/2GfQLrs
Contact us:
Niir Project Consultancy Services
An ISO 9001:2015 Company
106-E, Kamla Nagar, Opp. Spark Mall,
New Delhi-110007, India.
Email: npcs.ei@gmail.com , info@entrepreneurindia.co
Tel: +91-11-23843955, 23845654, 23845886, 8800733955
Mobile: +91-9811043595
Website: www.entrepreneurindia.co , www.niir.org
Tags
#Estate_Management, #Estate_Management_Unit, #Real_Estate_Management, Real Estate Management Business Plan, #Estate_Management_Business, #Real_Estate_and_Property_Management, How to Start a Facilities Management Business, #Facility_Management_Business_Opportunity_in_India, Facility Management, Facility Management Services Business Plan, Facility Management Business in India, Facility Management Business Plan PPT, #Starting_a_Facilities_Management_Business, #Commercial_Facilities_Management, How to Start Real Estate Business, Real Estate, Real Estate, Real Estate Business, Real Estate Sector, How to Start a Property Management Business, Annual Maintenance Contracts Housing Society, Hotels, Clubs & Conventional Centres, Annual Maintenance Contracts Offices, Office Complexes & Buildings, Recruitment of Skilled Manpower, Recruitment of Security Guards, Income from QTRS Rent, Real Estate Management Business Plan, Commercial Property Management Business Plan, Detailed Project Report on Estate Management, #Project_Report_on_Estate_Management, Pre-Investment Feasibility Study on Estate Management, Techno-Economic feasibility study on Estate Management, #Feasibility_report_on_Estate_Management, Free Project Profile on Estate Management, Project profile on Estate Management, Download free project profile on Estate Management
Any firm typically made a large investment in a piece of capital machinery and, in theory, it could run 24 hour a day for seven days a week at its optimum Speed. If it did this you gain the maximum value from the investment. In reality there is number of element that can affect the value gained from the investment. So that fully utilization of equipment can be done. Hence for fully utilization of any equipment any firm must have to calculate OEE. This paper represents the methodology applied in increasing the OEE of an Organization by exchanging the feed mechanism from Bowl Feeder to a Conveyor.
This presentation covers major enhancements and new features announced in OpenStack Kilo : 11th release of OpenStack..Questions if any please direct to info@thecloudenabled.com
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The expanding consumer electronics sector is primarily driving the global extension cord market. Furthermore, the rising product demand for household appliances, such as computers, televisions, kitchen equipment, etc., is also augmenting the growth of the market. Besides this, numerous hospitals and healthcare centers utilize extension cords for connecting medical devices to compatible electrical outlets, thereby propelling the product demand.
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18ME653 Supply chain management
Chapter objective:
Course Learning Objectives:
• To acquaint with key drivers of supply chain performance and their inter-relationships with strategy.
• To impart analytical and problem-solving skills necessary to develop solutions for a variety of supply chain management & design problems.
• To study the complexity of inter-firm and intra-firm coordination in implementing programs such as e-collaboration, quick response, jointly managed inventories and strategic alliances.
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• Within each organization, such as a manufacturer, the supply chain includes all functions involved in receiving and filling a customer request. These functions include, but are not limited to, new product development, marketing, operations, distribution, finance, and customer service.
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Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
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Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
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A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
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The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
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Implicitly or explicitly all competing businesses employ a strategy to select a mix
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involves recognizing relationships between elements of the marketing mix (e.g.,
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Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
Memorandum Of Association Constitution of Company.ppt
Gis on vikash industry
1. 1
ACTIVITY BASED COSTING AS A MEASURE OF IMPROVING THE COST
STRUCTURE OF VIKASH INDUSTRIES
GUIDED INDEPENDENT STUDY REPORT
Submitted By
Name: Saurabh Kumar
Roll No: 03
Course: Strategic Cost Management
Course Mentor: Pfof. F M A Khan
Delhi
2. 2
Acknowledgement
I ‘sincerely thank and pay my gratitude to my faculty mentor ‘Professor FMA Khan’ for his
valuable guidance and support on completion of this project.
Name of Student
Saurabh Kumar
3. 3
Executive Summary
Activity-Based Costing (ABC) represents an alternative paradigm to traditional cost
accounting system and it often provides more accurate cost information for decision making
such as product pricing, product mix, and make-or buy decisions. ABC models the causal
relationships between products and the resources used in their production and traces the cost
of products according to the activities through the use of appropriate cost drivers.
In this project, the costing system followed by Vikash Industries is compared with ABC in
terms of the effects on the product costs that are carried out to highlight the difference
between two costing methodologies. By using this methodology, a valuable insight into the
factors that cause the cost is provided, helping to better manage the activities of the company.
Vikash Industries should go for Activity Based costing as it understands true profitability of
the customers, products, or services and also helps in identifying areas where the cost can be
reduced or efficiencies can be increased.
4. 4
Table of Contents
S.No Chapter No. Contents Page No.
From - To
1. …………………… Title Page I
5. …………………… Acknowledgement II
6. …………………… Executive Summary III
7. …………………… Table of Contents / List of
Illustrations
8. Chapter-1 Introduction to the Sector/
Company
05-08
9. Chapter-2 Review of Literature 09-12
10 Chapter-3 Research Methodology 13-14
11 Chapter-4 Data Analysis & Interpretation /
Description of the Work
Performed
15-37
12 Chapter-5 Findings 38
13 Chapter-6 Suggestions 39
14 Chapter-7 Conclusions 40
5. 5
INDUSTRY PROFILE
Manufacturing Industry
Manufacturing industry refers to those industries which involve in the manufacturing and
processing of items and indulge in either creation of new commodities or in value addition.
The manufacturing industry accounts for a significant share of the industrial sector in
developed countries. The final products can either serves as a finished good for sale to
customers or as intermediate goods used in the production process.
Manufacturing industries are the chief wealth producing sectors of an economy. These
industries use various technologies and methods widely known as manufacturing process
management. Manufacturing industries are broadly categorized into engineering industries,
construction industries, electronics industries, chemical industries, energy industries, textile
industries, food and beverage industries, metalworking industries, plastic industries, etc.
Manufacturing industries are important for an economy as they employ a huge share of the
labor force and produce materials required by sectors of strategic importance such as national
infrastructure and defense. However, not all manufacturing industries are beneficial to the
nation as some of them generate negative externalities with huge social costs. The cost of
letting such industries flourish may even exceed the benefits generated by them.
India’s manufacturing base, which is the fourth-largest among emerging economies, is among
the fastest growing and has seen more investments as a proportion of gross domestic product
than any country except China. Employment opportunities in the manufacturing industry
have declined comparatively. Manufacturing industry analysis also suggests that in some
countries like China, technological know how has to be developed. Despite the fact that
China is ranked fourth in the manufacturing productivity, due to technological lacunae, it is
not being able to compete in the world market
6. 6
ORGANIZATIONAL PROFILE
VIkash Industries, a pioneer in the manufacture of sheet metal pressed components was
established in the year 1977. Ever since, it has grown into a big organization with a focus in
quality in everything.
An ISO 9001-2000 Company with a good customer base in the domestic as well as the
International market activities of Vikash Industries include tool design also with a highly
skilled & professional work force, tools is designed for the components as per the customer
requirements. Their specialty being the deep drawn components, they cater the electrical,
elevator, home appliances automobile industry and the defense.
Vikash Industries are in it for a long haul with a focus on continual improvement. They
are having mechanical presses ranging from 10T to 80T capacity & hydraulic presses ranging
from 10T to 250T capacity, out of which 50T, 80T, 160T & 250T hydraulic presses are
double acting presses to carry out deep drawing operations. They also use triple acting
arrangement for some of these machines to carry out more precision items & to make
multiple operations at a time.
Apart from this, shearing machine of capacity 3.0mm x 2500mm & 10mm x 2000mm
both hydraulically operated are installed for better cutting accuracy. The other relevant
machineries such as welding transformers, spot welding, grinding, and circle cutting
machines are installed to support our manufacturing activity with maximum productivity. The
two material handling equipments for loading & unloading of tools are in place to make
setting faster and easier. The separate tool maintenance area to carry out maintenance of tool
is provided with surface grinding & drilling machines to attend immediate rectification, such
as sharpening of punches & dies. They are equipped with 62 KVA generators to overcome
power failure. The painting facility with 7 tank process of components before painting is
available. The painting booth & drier for quick drying is also installed to give our customers
a complete satisfaction by supplying ready for fitment components.
7. 7
Vikash Industry has the pride to have clients from various industries many of them are well -
known in the global industrial community. Some of our esteemed clients are as under:-
Cummins Generator Technologies
OTIS Elevator (I) Ltd.
Trident Power craft Pvt. Ltd.
Crompton Greaves Ltd
Kaytee Switch Gears Ltd.
IFB India
QUALITY POLICY AT VIKASH INDUSTRIES
1. To meet customers requirement and strive to exceed customer expectations.
2. Manage all activities and related resources as a process.
3. Create and maintain an environment in which personnel are fully involved in
achieving organization objectives so as to ensure continual improvement and growth.
4. Take decisions and implement necessary actions based upon analysis of data and
information.
5. Involve all our suppliers in quality improvement process as to ensure mutually
beneficial and long time relationship.
8. 8
List of Customers of Vikash Industries:
Cummins Generator Technologies, India
Motorsense, U.K
Cummins Generator Technologies, Mexico
Fasco Motors, USA
ABB Ltd, Bangalore
OITS Elevator company, India
Trident Power craft Pvt.Ltd, Hubli
Kirloskar Electric co. Hubli
Mallik Engineering , Bangalore
Telco Construction Equipment, Dharwad
9. 9
Review of Literature:
ACTIVITY BASED COSTING
Activity Based Costing (ABC) is an accounting technique that allows an organization to
determine the actual cost associated with each product and service produced by the
organization without regard to the organizational structure. It is developed to provide more-
accurate ways of assigning the costs of indirect and support resources to activities, business
processes, products, services, and customers. ABC systems recognize that many
organizational resources are required not for physical production of units of product but to
provide a broad array of support activities that enable a variety of products and services to be
produced for a diverse group of customers. The goal of ABC is not to allocate common costs
to products. The goal is to measure and then price out all the resources used for activities that
support the production and delivery of products and services to customers.
Concept of Activity-Based-Costing:
An organization performs activities to do its business. These activities define the kind of
business you are in: a ship owner has an activity to unpack boats; an accounting firm prepares
tax returns; a manufacturer produces products; a council delivers services; a university
teaches students. All activities consume resources. It is the consumption of these resources
that adds to overhead costs.
The basis of Activity Based Costing is look at the activities required to produce the cost of
the product or service. The activities consume resources and the cost of these can be
calculated. The amount of activity required for each product and service is determined, hence
the real cost can be determined.
10. 10
What's what in ABC?
The activity is the work that is done.
The resource is what the activity uses to do the work e.g. people, equipment, and
services. Resources cost money.
The cost of the activity depends on the quantity of resources used to accomplish the
activity.
The cost driver for an activity is the factor that influences the amount of the resources
that will be consumed by this activity.
Example: the activity is delivering goods. The costs of this activity include the truck
drivers' wages, fuel, depreciation of the truck, insurance, etc. The quantities of the
resources that will be consumed by this activity are influenced by the number of
deliveries made per year. Hence the cost driver could be the number of deliveries. A
cost driver is designed to allocate the delivery activity cost pool to the cost objects.
The activity driver measures how much of the activity is used by the cost object.
Example: Product A is delivered once a month, whereas product B is delivered once a
week. Products A and B require a different number of deliveries, hence the cost of the
delivery activity should be assigned to each product on the basis of the number of
deliveries each uses.
The cost object is whatever it is you wish to cost. It could be a product, service,
process, job or customer.
While traditional costing arbitrarily allocates overhead costs, ABC traces overhead costs by
looking at the activities that each product and service calls upon. With ABC the products
consume the activities. It is the activities that cost money.
Why use Activity-Based-Costing?
Activity-Based-Costing is necessary for the following reasons.
Understand true profitability of your customers, products, or services
Quantify the cost of non-value added activities such as errors and reworks
Identify opportunities to reduce costs and/or increase efficiency
11. 11
Obtain actionable information to negotiate price increases for unprofitable
clients
Stratify overhead costs so they can be managed more effectively.
ACTIVITY BASED COSTING ADVANTAGES
More accurate costing of products/services, customers, distribution channels.
Better understanding overheads.
Easier to understand for everyone.
Utilizes unit cost rather than just total cost.
Integrates well with Six Sigma and other continuous improvement programs.
Makes visible waste and non-value added.
Enables costing of processes, supply chains, and value streams
Activity Based Costing mirrors way work is done
Facilitates benchmarking.
ACTIVITY BASED COSTING DISADVANTAGES
More time consuming to collect data.
Cost of buying, implementing and maintaining activity based system.
Makes waste visible which some executives and managers don't want their boss to
see.
12. 12
How does Activity Based Costing differ from traditional cost accounting
systems?
Most traditional costing systems utilize a single basis, (e.g. direct labor) to distribute the
indirect costs to all products and services. This method of allocating indirect costs commonly
results in erroneous cost data. Often products which have high volume (and high labor cost)
are over costed. Likewise, the cost of lower volume products are often understated, and many
of the indirect costs of these products are overlooked.
Rather than relying on a single basis to distribute costs, ABC assigns costs to activities and
products based on how the costs (resources) are actually consumed by the process or product.
By moving away from traditional cost allocation methods and using improved ABC methods
of tracing and assignment, ABC provides managers with a clearer picture of cost of processes
and the profitability of customers and products.
13. 13
ResearchMethodology
The present study is an attempt to understand and ascertain the costing method followed in
Vikash Industries and to compare it with the costing method Activity Based Costing.
Objectives of the study:
To study the functions and operations of the organization
To know and understand the existing costing method followed by Vikash Industries.
To identify activities involved in manufacturing of UC Range series 4 end cover.
To identify cost of the activities involved in manufacturing the product UC Range
series 4 end cover.
To allocate the cost for the activities.
To find the cost per unit of the product UC Range series 4 end cover.
To compare existing costing method followed by vikash Industries with Activity
Based Costing.
Scope of the study:
The scope of this study is to know and understanding the various processes and activities
involved in manufacturing Industries especially in VIKASH INDUSTRIES. It involves
finding out the cost per unit of the product UC Range series 4 end cover by following
Activity based Costing.
Need for the study:
The theoretical aspects of ACTIVITY BASED COSTING provide the framework of the
study. A conceptual and the practical approach is the need of the hour. Hence the field study
becomes as essential part of the curriculum. Thus this project study conducted to integrate
theoretical and practical aspects of Activity based costing in the organization.
14. 14
Data Collection
Secondary data was collected through last year’s balance sheet of Vikash
Industries.
Books on cost accounting were referred.
Company website
16. 16
DETAILS OF THE PRODUCT
Product name: UC Range series 4 end cover
Raw Material Requirements for the product
1) Metal sheet of length 1250*2500*1.2mm
2) Weight of the sheet is 30kg
3) 21 Covers can be prepared from one metal sheet.
4) Sheets required to prepare 1000 units is 48sheets.
5) Cost of sheet metal per kg 37Rs.
6) Weight of a Cover = 30kg/21
=1.42kg
7) Gross Material cost per unit = 1.42 x Rs55
= Rs78.1/Cover
8) Process Generated Scrap =0.65 kgs
9) Scrap rate =Rs12/kg
10) Revenue generated from scrap = 0.65 x 10
= Rs 6.5
11) Net material cost = 78.1– 6.5
= Rs71.6
17. 17
COSTING FOLLOWED BY THE COMPANY
Product: UC Range series 4 end cover
Number of units produced = 300000 Covers p.a
Particulars Total cost(in
Rs)
Cost/unit
(in Rs)
DIRECT COST
Direct Material (Raw Material Consumed) 3,05,73,918
Direct Wages 18,93,573
Direct Expenses 45,65,266
Prime Cost 3,70,32,757 123.4
FACTORY OVERHEADS
fuel oil & lubricant 1,58,029
Depreciation on machinery 8,04,853
Repairs and maintenance 3,91,235
Insurance 56,147
Rates and Taxes 2,61,532
Indirect material 14,73,273
Factory cost 31,45,069 10.48
ADMINISTRATIVE OVERHEADS
Printing and stationary 69,255
Postage and telegram 18,929
Newspapers and magazines 5,964
Professional charges 27,619
Office furniture 5,646
Leave with wages 7,095
Telephone expenses 1,75,338
Salary to partners 14,60,000
Vehicle maintenance 72,347
Sundry expenses 84,809
Salary to staff 2,59,203
Cost Of Goods Sold 21,86,205 7.28
SELLING AND DISTRIBUTION
Advertisement expenses 3,410
Traveling expenses 1,82,480
Sales Promotion expenses 5,500
Packing charges 4,97,360 6,88,750
Cost Of Sales 4,30,52,781 143.50
PROFIT 52,81,095 17.6
SALES 4,83,33,876 161.1
18. 18
CALCULATION OF COST PER UNIT BY ACTIVITY BASED
COSTING
1) Purchase of Raw material
Raw Material Charge
Weight of the goods 5000kgs (for the specified component) of sheet metal
Delivered from R.C Nagar Belgaum to Akash industries Belgaum = Rs.600.00
Therefore charges per unit = Rs600/5000kgs
= Rs0.12/kg
Cost of per cover =1.42kg x Rs0.12
=Rs0.1704/cover
a) Loading and unloading Charges = Rs300.00/ton
5 Ton x Rs300 = Rs1500.00
Therefore charges for per unit = Rs1500/5000kgs
= Rs0.20/kg
Cost per cover =1.42 x Rs0.20
=Rs0.284/cover
c) Storage charges = space required 10 x 5ft
Activity Sub Activity CostDriver
Purchase Raw material transport Weight of product
Loading and unloading Weight of product
Storage Weight of product
Material cost Weight of product
19. 19
Rent 20000/month
Building area = 10000sq ft
Storage Cost =50sq ft x Rs2.00
=Rs100.00/- p.m
Storage cost per day =Rs100/26Days
=Rs3.84/day
Storage cost per Cover =Rs3.84/1000Covers
=Rs0.00384/cover
d) Material cost = 5000kgs x Rs 71.28 (exclusive of
transport and loading and unloading
charges)
= Rs3,56,400
=5000kgs/1.42wt per kg
=3521 Covers
=Rs3,56,400/3521 Covers
=Rs101.22 – scrap
=Rs101.22– Rs6.5
=Rs94.72/cover
Total cost incurred for purchase of raw material
Activity Sub Activity Cost
Purchase Raw material transport Rs0.1704/cover
Loading and unloading Rs0.284/cover
Storage Rs0.00384/cover
Material cost Rs 94.72/cover
Total Rs95.17
20. 20
2) Manufacturing cost
Activity Sub Activity Activity Driver
Manufacturing Shearing
Combination of man and
machine hour
Circle cutting
Combination of man and
machine hour
Deep drawing Combination of man and
machine hour
Trimming Combination of man and
machine hour
Piercing Combination of man and
machine hour
Process labor
Wages
per day
Hours
Number
of
Covers
per 8 hrs
Cost of
Machine
Hp per
machine
Space
occupie
d by the
machine
Cost
per sq
ft
Shearing 3
300/wor
ker
8 1000 500000 5
100 sq ft Rs2
Circle
cutting
1 150 8 800 100000 0.5
50 sq ft Rs 2
Deep
drawing
2
150
&135
8 800 800000 7
100sq ft Rs 2
Trimming 1 150 8 500 300000 3
80sq ft Rs 2
Piercing 1 150 8 900 400000 3 50 sq ft Rs 2
21. 21
COST OF EACH PROCESS
1) Shearing
a) Man cover rate: = wages/number of Covers
= Rs900/1000Covers
= 0.9/Cover rate
b) Machine cover rate =cost of machine x depreciation
=Rs500000 x 10% depreciation
=Rs50000 p.a
=Rs50000/300days
= Rs166.6per day
=Rs166.6/1000Covers
=Rs0.17/Cover
c) Space occupied by = 100 Sq ft x Rs 2 per sq ft
the machine
= Rs200 p.m
= Rs200/26days
=Rs7.69/day
=Rs7.69/1000Covers
=Rs 0.00769/Cover
d) calculation of electricity
Monthly electricity bill = 31,266
Monthly power consumption = 45hp
Therefore,
Rs31,266/45hp = Rs694.8 per hp/ month
22. 22
Power Consumption = 5hp
For 5hp = Rs694.8 x 5hp = Rs3,474
Electricity bill per month = Rs3474.00
= Rs3474/26days
=133.61/day
=133.61/1000
=Rs0.1336/Cover
Fuel oil & lubricants = Rs1,58,028 p.a
= Rs 158028/ 300days
= Rs 526.76/day
= Rs 526.76/25machines
=Rs21.07/machine
=21.07/1000Covers
=0.021/Cover
Total Cost of shearing activity
Activity Sub Activity Cost
Shearing Man cover rate Rs0.9/cover
Machine cover rate Rs0.17/cover
Space occupied by the
machine
Rs0.00769/cover
electricity Rs0.1336/cover
Fuel oil & lubricants Rs0.021/cover
Total Rs 1.232/cover
23. 23
2. Circle cutting
a) Man cover rate =wages/number of Covers
= Rs150/800Covers
=Rs0.1875/Cover
b) Machine cover rate =Rs100000 x 10% depreciation
=Rs10000 p.a
=Rs 10000/300days
=Rs33.33/per day
=Rs33.33/800Covers
=Rs0.0416/Cover
c) Space occupied by = 50Sq ft x Rs 2 per sq ft
the machine
= Rs100 p.m
= Rs100/26days
=Rs3.84/day
=Rs3.84/800Covers
=Rs 0.0048/Cover
e) calculation of electricity
Monthly electricity bill = Rs31,266
Monthly power consumption = 45hp
Therefore,
Rs31,266/45hp = Rs694.8 per hp/ month
Power Consumption = 0.5hp
For 0.5hp = Rs694.8 x 0.5hp = Rs347.4
Electricity bill per month = Rs347.4
= Rs347.4/26days
=13.36/day
=13.36/800Covers
=Rs0.0167/Cover
24. 24
Fuel oil & lubricants = Rs1,58,028 p.a
= Rs 158028/ 300days
= Rs 526.76/day
= Rs 526.76/25machines
=Rs21.07/machine
=21.07/800Covers
=0.026/Cover
Total Cost of circle cutting activity
Activity Sub Activity Cost
Circle cutting Man cover rate Rs0.1875/cover
Machine cover rate Rs0.0416/cover
Space occupied by the
machine
Rs0.0048/cover
electricity Rs0.0167/cover
Fuel oil & lubricants Rs0.026/cover
Total Rs0.2766/cover
3. Deepdrawing
a) Man hour rate =wages/number of Covers
= Rs285/800Covers
=Rs0.3562/Cover
b) Machine hour rate =Cost of machine x Depreciation
=Rs800000 x 10% depreciation
=Rs80000 p.a
25. 25
= Rs80000/300days
=Rs266.67/per day
=Rs266.67/800Covers
=Rs0.333/Cover
c) Space occupied by = 100Sq ft x Rs 2 per sq ft
the machine
= Rs200 p.m
= Rs200/26days
=Rs7.69/day
=Rs7.69/800Covers
=Rs0.0096/Cover
d) calculation of electricity
Monthly electricity bill = Rs31,266
Monthly power consumption = 45hp
Therefore,
Rs31,266/45hp = Rs694.8 per hp/ month
Power Consumption = 7hp
For 7hp = Rs694.8 x 7hp = Rs4863.6
Electricity bill per month = Rs4863.6
= Rs4863.6/26days
=187.06/day
=187.06/800Covers
=Rs0.233/Cover
Fuel oil & lubricants = Rs1,58,028 p.a
= Rs 158028/ 300days
26. 26
= Rs 526.76/day
= Rs 526.76/25machines
=Rs21.07/machine
=21.07/800Covers
=0.026/Cover
Total Cost of deep drawing activity
Activity Sub Activity Cost
Deep Drawing Man cover rate Rs0.3562/cover
Machine cover rate Rs0.333/cover
Space occupied by the
machine
Rs0.0096/cover
electricity Rs0.233/cover
Fuel oil & lubricants Rs0.026/cover
Total Rs 0.9578/cover
27. 27
4. Trimming
a) Man hour rate =Wages/number of Covers
= Rs150/500Covers
=Rs0.3/Cover
b) Machine hour rate =Cost of machine x depreciation
=Rs300000 x 10% depreciation
=Rs30000 p.a
= Rs30000/300days
=Rs100/per day
=Rs100/500Covers
=Rs0.2/Cover
c) Space occupied by = 80Sq ft x Rs 2 per sq ft
the machine
= Rs160 p.m
= Rs160/26days
=Rs6.15/day
=Rs6.15/500Covers
=Rs 0.012/Cover
d) calculation of electricity
Monthly electricity bill = Rs31,266
Monthly power consumption = 45hp
Therefore,
Rs31,266/45hp = Rs694.8 per hp/ month
Power Consumption = 3hp
For 3hp = Rs694.8 x 3hp = Rs2084.4
Electricity bill per month = Rs2084.4
= Rs2084.4/26days
=80.16/day
=80.16/500Covers
=Rs0.16/Cover
28. 28
Fuel oil & lubricants = Rs1,58,028 p.a
= Rs 158028/ 300days
= Rs 526.76/day
= Rs 526.76/25machines
=Rs21.07/machine
=21.07/500Covers
=0.042/Cover
Total Cost of trimming activity
Activity Sub Activity Cost
Trimming Man cover rate Rs0.3/cover
Machine cover rate Rs0.125/cover
Space occupied by the
machine
Rs0.012/cover
electricity Rs0.16/cover
Fuel oil & lubricants Rs0.042/cover
Total Rs 0.639/cover
5. Piercing
a) Man hour rate
=Rs 150/900Covers
=0.166/Cover
b) Machine hour rate =400000 x 10% depreciation
29. 29
=40000 p.a
= 40000/300days
=133.33/per day
=133.33/900Covers
=0.148/Cover
c) Space occupied by = 50Sq ft x Rs 2 per sq ft
the machine
= Rs100 p.m
= Rs100/26days
=Rs3.84/day
=Rs3.84/900Covers
=Rs 0.0042/Cover
d) calculation of electricity
Monthly electricity bill = Rs31,266
Monthly power consumption = 45hp
Therefore,
Rs31,266/45hp = Rs694.8 per hp/ month
Power Consumption = 3hp
For 3hp = Rs694.8 x 3hp = Rs2084.4
Electricity bill per month = Rs2084.4
= Rs2084.4/26days
=80.16/day
=80.16/900Covers
=Rs0.089/Cover
Fuel oil & lubricants = Rs1,58,028 p.a
= Rs 158028/ 300days
= Rs 526.76/day
= Rs 526.76/25machines
=Rs21.07/machine
=21.07/900Covers
=0.023/Cover
30. 30
Total Cost of piercing activity
Activity Sub Activity Cost
Piercing Man cover rate Rs0.166/cover
Machine cover rate Rs0.148/cover
Space occupied by the
machine
Rs0.042/cover
electricity Rs0.089/cover
Fuel oil & lubricants Rs0.023/cover
Total Rs0.468/cover
Activity Sub Activity Cost
Manufacturing Shearing Rs1.232/cover
Circle cutting Rs0.2766/cover
Deep drawing Rs 0.9578/cover
Trimming Rs 0.639/cover
Piercing Rs0.468/cover
Total Rs3.5734/cover
31. 31
TotalCostof the processes
3) Inspection
Inspection rate 10% of number of units produced per day
1000Covers x 10% = 100Covers to be inspected
1) Salary of the inspector = Rs8000/month
Time required to inspect = 1 hour
Per day salary = Rs8000/26days
=Rs307.69/day
Per hour salary =Rs 307.69/8hRs
= Rs 38.46/hr
Wages to the inspector = 1hr x Rs38.46
= Rs38.46/hr
2) Cost of instruments required to inspect = Rs 8500
Expected life of instrument is one year
Instruments charges per month = Rs8500/12months
= Rs708.33/month
Per day charges = Rs708.33/26 days
= Rs 27.24/day
Per hour charges = Rs27.24/8hrs
= Rs3.4/hr
32. 32
3) Calibration charges per year = Rs900
Per month charges = Rs900/12months
= Rs75/month
Per day charges = Rs75/26days
= Rs3/day
Per hour charges = Rs3/8hr
=Rs0.375/hr
Total of inspection activity
Activity Sub Activity Cost
Inspection Salary of the inspector Rs38.46/hr
instruments required to
inspect
Rs3.4/hr
Calibration Rs0.375/hr
Total Rs42.23/hr
Cost of Per Cover Rs 0.0422/cover
33. 33
4) Painting
.
1) Cost of paint and thinner
Paint Rs250/ltr
Thinner Rs150/ltr
Divided in the ratio of 75:25
Cost of Paint = Rs250 x 75/100
=Rs 187.5
Cost of Thinner = Rs150 x 25/100
=Rs 37.5
Cost of mixture total = Rs187.5 + Rs37.5
= Rs225
Total Area of component covered by the mixture is 45 sq ft
Area of the a component = 1.72 sq ft
Covers that can be painted = 45sq ft/1.72sq ft
= 26Covers
Cost of paint per cover =Rs225/ 26Covers
= Rs8.6/Cover
2) Labour cost
People required for painting = 2
Wages per day = Rs 320
Covers painted in one day = 200 Covers
Cost per cover = Rs320/200covers
=Rs1.6/cover
34. 34
3) Paint booth operation cost = Rs300000
Deprecation = 20% of the cost
=Rs 300000 x 20%
= Rs60000p.a
Per month = Rs60000/12months
=Rs5000p.m
Per day = Rs5000/26days
= Rs192.3/day
Cost of per covers =Rs 192.3/200Covers
=Rs0.961/Cover
4) Power charges Rs 5500/month
Total Power consumption =20hp
Therefore,
Rs5500/20hp =Rs275per hp/month
Power consumption =5hp
For 5hp =5hp x Rs275
Electricity bill per month for 5hp =Rs1375
Per day charges = Rs1375/26days
= Rs53/day
Per cover charges =Rs53/200Covers
=Rs0.265/Cover
5) Area of painting booth = 60 x 20ft
Rent = 20000 p.m
Built area = 10000sq ft
Rent per sq ft = Rs30000/10000sq ft
= Rs3/sq ft/month
Cost of area = 1200sq ft x Rs3
= Rs 3600
Per day charges =Rs3600/26
= Rs138.46/day
35. 35
Per cover =Rs138.46/200Covers
= Rs0.692/Cover
Area of the Cover = 1.72sq ft
Cost of per cover = Rs12.11 x 1.72sq ft
= Rs20.82/cover
Total cost of painting activity
Activity Sub Activity Cost
Painting Cost of paint and thinner Rs8.6
Labour cost Rs1.6
Paint booth operation cost Rs0.961
Power charges Rs0.265
Area of painting booth Rs0.692
Total Rs12.11/sq ft
Cost of Per Cover Rs20.82/cover
5) Dispatching
1) Packing charges :
Packing material required: ---
Cost of wooden box = Rs 3000 (inclusive transportation cost, taxes)
Cost of plastic wire = Re 1.50/Cover
Cost of paper = Re1.00/Cover
Number of Covers packed per box = 200 covers
Rs3000 + (Re1.50 x 200) + (Re1.00 x 200) = Rs3500
36. 36
2) labour
People required = 3
5 boxes packed per day
Wages = Rs200 + Rs150 + Rs150
= Rs500/day
Wages per box = Rs500/5boxes
= Rs100/box
Total =Rs 3500 + Rs100
= Rs 3600
Per Cover = Rs3600/200Cover
=Rs18/Cover
Total of dispatching Activity
Activity Sub Activity Cost
Despatching Packing charges Rs3500
labour Rs100
Total
Cost Per Cover
Rs3600/box
Rs18/Cover
37. 37
COST PER UNIT OF THE PRODUCT
ACTIVITIES
Amount
in Rs
COST/COVER
Amt in Rs
1 PURCHASE OF RAW MATERIALS 95.017
2 MANUFACTURING
Shearing 1.232
Circle cutting 0.2766
Deep drawing 0.9578
Trimming 0.639
Piercing 0.468
Total 3.5734
3 INSPECTION 0.0422
4 PAINTING 19.90
5 DESPATCHING 18.00
GRAND TOTAL 136.68
38. 38
FINDINGS
1. Vikash Industries are specialized in deep drawn components that cater the electrical,
elevator, home appliances automobile industry and the defense.
2. Vikash Industries follows traditional method of costing.
3. The product UC Range series 4 end cover is over costed.
4. According to traditional costing the cost of the cover is Rs.143.50
5. According to Activity Based costing the cost of the cover is Rs136.68
6. According to costing followed by Vikash Industries they first identify the cost then
they go for producing the product rather than identifying the activities first.
7. Appropriate variable overheads are identified to individual products through ABC.
8. All levels of activities in the manufacturing cost hierarchy viz unit level, batch level,
product level and facility level have been identified.
9. Cost drivers for the activities have been identified.
10. Vikash Industries relates overheads to cost centers which are not realistic to the
behavior of costs.
11. To get a realistic analysis of cost behavior, the overheads have been properly related
to cost drivers.
39. 39
SUGGESTIONS
1. Vikash Industries should adopt Activity Based costing in their organization.
2. As ABC integrates well with Six Sigma and continuous improvement programs the
company can achieve minimum rejection rate.
3. To arrive at the actual cost of the product, overheads should not be directly assigned
to the cost center which is basically done in traditional costing.
4. Instead of focusing more on cost reduction they should focus more on cost control.
5. Vikash Industries can adopt cost control strategy where in the company can begin by
evaluating non-labor expenses which can be controlled.
6. Labor and employment costs are a source of considerable expense and should be
constantly monitored.
7. If it is possible to amalgamate two jobs into one, make some jobs part time, use
temporary contract labor, outsourcing to specialists, consider if some other choice of
labor cost saving is available.
8. Vikash Industries should follow an open style with clear and concise objective for the
successful implementation of ABC.
9. Organization-wide awareness should be extended to convince the participants to
change, as well as effecting the change.
10. Overheads are part of running a business but can be controlled. Everything from
cleaning materials to the cost of vehicle operation, machine maintenance, consumable
materials and staff employment costs can, and must be kept as low as possible.
40. 40
CONCLUSION
ABC utilizes the activity concept and by using the activities, ABC can successfully link the
product costs to production knowledge. How a product is produced, how much time is needed
to perform an activity and finally how much money is absorbed by performing this task are
answered by the help of ABC studies. This method is a dynamic tool for continuous
improvement. With ABC to its benefit, any enterprise will have a built in competitive cost
advantage and can continuously add value to both its stakeholders and customers.
Therefore, Activity-Based Costing measures the costs and profits of an organization based on
the activities performed within that organization. By focusing on processes that contribute to
revenues and business operations, ABC can accurately determine how each process relates
back to specific products, customers, or services. This can make a big difference after
considering warehouse, sales, customer service, administration and other costs that are often
applied at a standard rate, if at all. With ABC you can drill into profitability and performance
by almost any factor you can think of.