Fauji cement ltd

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Fauji cement ltd

  1. 1. COST CLASSIFICATION OF BY: THAWBAN ANWAR BAIG
  2. 2. PRODUCTION PROCESS <ul><li>FAUJI CEMENT IS MANUFACTURED FROM BEST QUALITY RAW MATERIALS USING DRY PROCESS </li></ul><ul><li>MAJOR INGREDIENTS </li></ul><ul><ul><li>LIMESTONE </li></ul></ul><ul><ul><li>CLAY </li></ul></ul>
  3. 3. PRODUCTION PROCESS <ul><li>FIRST RAW MATERIALS ARE QUARRIED, CRUSHED AND CORRECTED </li></ul><ul><li>AFTER WHICH THEY ARE MIXED IN THE CORRECT PROPORTIONS TO FORM THE BEST RAW MIX </li></ul><ul><li>THE RAW MIX IS THEN GROUND IN A RAW MILL </li></ul>
  4. 4. PRODUCTION PROCESS <ul><li>SUBSEQUENTLY BURNT IN A ROTARY KILN AT A TEMPERATURE AROUND 1450 °C </li></ul><ul><li>THE RAW MATERIALS UNDER GO A NUMBER OF COMPLEX CHEMICAL REACTIONS IN THE BURNING PHASE AND LEAVE THE KILN AS CEMENT CLINKER, CONSISTING OF AGGLOMERATE OF CLINKER MINERALS </li></ul>
  5. 5. PRODUCTION PROCESS <ul><li>FINALLY THE CLINKER IS GROUND TO A FINE POWDER CALLED CEMENT, IN A CEMENT MILL TOGETHER WITH 4-6% GYPSUM </li></ul><ul><li>THE GYPSUM SERVES TO RETARD THE SETTING TIME OF THE CEMENT, WHICH WOULD OTHERWISE HARDEN, IMMEDIATELY WITH THE ADDITION OF WATER </li></ul>
  6. 8. MANUFACTURING COST <ul><li>DIRECT MATERIAL </li></ul><ul><ul><li>LIME STONE </li></ul></ul><ul><ul><li>CLAY </li></ul></ul><ul><ul><li>LATERITE </li></ul></ul><ul><ul><li>GYPSUM </li></ul></ul><ul><li>DIRECT LABOR </li></ul><ul><ul><li>SKILLED LABOR </li></ul></ul><ul><ul><li>CONTRACT LABOR </li></ul></ul>SALARIES
  7. 9. MANUFACTURING COST <ul><li>DIRECT DEPARTMENTAL COSTS </li></ul><ul><ul><li>EMPLOYEES OTHER BENEFITS </li></ul></ul><ul><ul><li>REPAIR AND MAINTENANCE </li></ul></ul><ul><ul><li>STORES AND SPARES </li></ul></ul><ul><ul><li>LINING PLATE </li></ul></ul><ul><ul><li>GRINDING MEDIA COSTS </li></ul></ul><ul><ul><li>INSURANCE </li></ul></ul>
  8. 10. COST BEHAVIOR <ul><li>VARIABLE COSTS (DIRECT) </li></ul><ul><ul><li>PURCHASE OF RAW AND PACKING MATERIAL </li></ul></ul><ul><ul><li>FUEL AND POWER COST </li></ul></ul><ul><ul><li>STORE AND SPARES (INCLUDING REPAIR AND MAINTENANCE) </li></ul></ul><ul><ul><li>PURCHASED EQUIPMENT COST </li></ul></ul><ul><ul><li>PURCHASES EQUIPMENT INSTALLED </li></ul></ul><ul><ul><li>INSTRUMENTATION INSTALLED </li></ul></ul><ul><ul><li>CONVEYER BELT INSTALLED </li></ul></ul><ul><ul><li>ELECTRICAL INSTALLED </li></ul></ul><ul><ul><li>BUILDING (INCLUDING SERVICES) </li></ul></ul><ul><ul><li>LAND </li></ul></ul><ul><ul><li>YARD IMPROVEMENT </li></ul></ul><ul><ul><li>SERVICES FACILITIES </li></ul></ul>
  9. 11. COST BEHAVIOR <ul><li>VARIABLE COSTS (INDIRECT) </li></ul><ul><ul><li>ENGINEERING AND SUPERVISION </li></ul></ul><ul><ul><li>CONSTRUCTION EXPENSE </li></ul></ul><ul><ul><li>LEGAL EXPENSE </li></ul></ul><ul><ul><li>CONTRACTOR FEE </li></ul></ul><ul><li>FIXED COSTS </li></ul><ul><ul><li>SALARIES AND WAGES </li></ul></ul><ul><ul><li>DEPRECIATION </li></ul></ul><ul><ul><li>SELLING AND ADMINISTRATIVE EXPENSE </li></ul></ul><ul><ul><li>FINANCIAL EXPENSE </li></ul></ul><ul><ul><li>MISCELLANEOUS EXPENSE </li></ul></ul>
  10. 12. MANUFACTURING OVERHEAD <ul><li>FACTORY </li></ul><ul><li>ADMINISTRATION </li></ul><ul><li>FINANCIAL </li></ul>
  11. 13. MANUFACTURING OVERHEAD <ul><li>Factory Overhead </li></ul><ul><ul><li>Repair and maintenance </li></ul></ul><ul><ul><li>Insurance </li></ul></ul><ul><ul><li>Furnace oil/diesel/coal/Rdf </li></ul></ul><ul><ul><li>Stores and spares consumed </li></ul></ul><ul><ul><li>Power/gas </li></ul></ul><ul><ul><li>Depreciation </li></ul></ul><ul><ul><li>Technical fee and assistance </li></ul></ul>
  12. 14. MANUFACTURING OVERHEAD <ul><li>Administration overhead </li></ul><ul><ul><li>Rent, rates and taxes </li></ul></ul><ul><ul><li>Travelling and entertainment </li></ul></ul><ul><ul><li>Legal and professional </li></ul></ul><ul><ul><li>Printing and stationary </li></ul></ul><ul><ul><li>Employees insurance </li></ul></ul><ul><ul><li>Communication and establishment </li></ul></ul><ul><ul><li>Donation </li></ul></ul><ul><ul><li>Administration vehicles Expense </li></ul></ul>
  13. 15. MANUFACTURING OVERHEAD <ul><li>Financial Overhead </li></ul><ul><ul><li>Fee and charges on loans </li></ul></ul><ul><ul><li>Interest/markup on long term finances </li></ul></ul><ul><ul><li>Bank charges and commission </li></ul></ul><ul><ul><li>Markup on short term borrowings </li></ul></ul><ul><ul><li>Markup on WPPF </li></ul></ul><ul><ul><li>Guarantee commission </li></ul></ul>
  14. 16. BASIS OF ALLOCATION OF OVERHEADS TO DEPARTMENTS <ul><li>Departments RATIOS </li></ul><ul><li>Crusher 7% </li></ul><ul><li>Stockhall staker 3% </li></ul><ul><li>Raw mill 17% </li></ul><ul><li>Kiln 40% </li></ul><ul><li>Cement mill 20% </li></ul><ul><li>Packing plant 10% </li></ul><ul><li>Compressed air 2% </li></ul><ul><li>Power plant 1% </li></ul>
  15. 17. BASIS OF ALLOCATION OF OVERHEADS ON COMMON ASSETS <ul><li>Departments RATIOS </li></ul><ul><li>Crusher 7% </li></ul><ul><li>Stockhall staker 7% </li></ul><ul><li>Raw mill 17% </li></ul><ul><li>Kiln 39% </li></ul><ul><li>Cement mill 19% </li></ul><ul><li>Packing plant 5% </li></ul><ul><li>Compressed air 3% </li></ul><ul><li>Power plant 3% </li></ul>
  16. 18. PRIME COST <ul><li>DIRECT MATERIAL DIRECT LABOR </li></ul><ul><ul><li>LIME STONE </li></ul></ul><ul><ul><li>CLAY </li></ul></ul><ul><ul><li>LATERITE </li></ul></ul><ul><ul><li>GYPSUM </li></ul></ul><ul><ul><li>SKILLED LABOR </li></ul></ul><ul><ul><li>CONTRACT LABOR </li></ul></ul>
  17. 19. CONVERSION COST <ul><li>DIRECT LABOR MANUFACTURING OVERHEAD </li></ul><ul><ul><li>SKILLED LABOR </li></ul></ul><ul><ul><li>CONTRACT LABOR </li></ul></ul>FACTORY ADMINISTRATION FINANCIAL
  18. 20. SUNK COST <ul><li>COMPANY BUILT A NEW PLANT IN JHANG BAHTAR AND THIS IS SUNK COST FOR THE COMPANY </li></ul><ul><li>THE WORK IN PROCESS MATERIALS OR INVENTORY IS ALSO THE SUNK COST FOR THE FAUJI CEMENT </li></ul>
  19. 21. OPPORTUNITY COST <ul><li>THE CONSTRUCTION OF NEW PLANT IN JHANG BAHTAR IS OPPORTUNITY COST FOR THE COMPANY </li></ul><ul><li>ON THE OTHER HAND COMPANY COULD HAVE BOUGHT MARKETABLE SECURITIES, RAW MATERIALS OR ANY OTHER THING </li></ul>
  20. 22. <ul><li>THANK YOU! </li></ul>

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