Saintgits Institute Of Management Kottayam

CMA FIELD STUDY

Conducted at Nice Rubber Industries, Poovanthuruth, Kottayam
Group 2 1/31/2012

CMA FIELD STUDY ON NICE RUBBER INDUSTRIES.

Objective of the study

1.) 2.) To understand the manufacturing process of Anti-fatigue rubber mats. To understand the concept of Process costing by implicating this on the real scenario. 3.) To gain first in hand knowledge about real-life business, the formalities to set-up a unit in the Industrial area etc.

Area of study The study was conducted at Nice Rubber Industries at Poovanthuruth Industrial Area, Kottayam.

Saintgits Institute Of Management

Kottayam | Cost & Management Accounting

CMA FIELD STUDY ON NICE RUBBER INDUSTRIES.

COMPANY PROFILE
Nice Rubber has been present in Kerala for more than 24 years first through a Rubber acquisition shop in Kottayam since 1988, and then from 1995 and 2000 through its subsidiary Nice Rubber Sandals and Nice Rubber Industries in Poovanthuruth Industrial area which accommodates 186 companies. Mr. Thampi Philip, an Entrepreneur ventured into rubber business with an insight in the growing Indian rubber business domain. He has been the Managing Director of the shop since its inception and has taken the shop to its current levels of stature and recognition with his experience and vision. Nice Rubber Industry manufactures eight types of anti fatigue rubber mat products. Raw materials required for the production are acquired from various parts of Kerala and Gujarat. The production capacity is 2,400 units per day but due to poor market conditions, demand and other stringencies, the Company has curtailed its capacity to 50 % as it is idoneous to the current scenario. The products are marketed and sold by agencies in Delhi, Gujarat and Maharashtra, Hence there is no sales in Kerala market. Production is decided by the market conditions, even though the Company is sending its products to its distributors in an average of 2-3 loads in a month. Competitors are usually North Indian bound market players as the product is marketed in North Indian states. But major competitors are inbound in Kerala itself as the North Indian key market players are outsourcing their products to Kerala rubber mat producers. The main competitors are Lijo Rubber Industries, Dolphin Rubbers and Nice Products (A sister-concern).
Saintgits Institute Of Management Kottayam | Cost & Management Accounting 3

CMA FIELD STUDY ON NICE RUBBER INDUSTRIES.

Company workforce includes 12 workers, Out of which 10 are labors, one in Packaging section and the other in Administration section. The Company follows a two shift system for the working time and follows a piece rate system for wage calculation.

Saintgits Institute Of Management

Kottayam | Cost & Management Accounting

CMA FIELD STUDY ON NICE RUBBER INDUSTRIES.

PRODUCT SPECIFICATIONS
1) Euro anti-fatigue mats Euro is the highest quality and the best seller among their products. There are two types of Euro productsa) Square Size: 60 X 40 Selling price to distributor: Rs.52 per piece b) Oval Size: 60 X 40 Selling price to distributor: Rs.52 per piece

2) Catta anti- fatigue mats Lower quality compared to Euro. This type of Matt is available in square shape. a) Size: 65 X 35 Selling price to distributor: Rs. 35 per piece b) Size: 60 X 40 Selling price to distributor: Rs.52 per piece c) Size: 18 X 12 Selling price to distributor: Rs.26 per piece

Saintgits Institute Of Management

Kottayam | Cost & Management Accounting

CMA FIELD STUDY ON NICE RUBBER INDUSTRIES.

3) Spring anti-fatigue rubber mats There are two different shapes a) Oval: Size: 60 x 40 Selling price to distributor: Rs.42 per piece b) Square Size: 60 x 40 Selling price to distributor: Rs.42 per piece

4) Frame anti-fatigue rubber mats This type of matt is square shape. Size: 18 x 12 Selling price to distributor: Rs.26 per piece.

Saintgits Institute Of Management

Kottayam | Cost & Management Accounting

CMA FIELD STUDY ON NICE RUBBER INDUSTRIES.

MANUFACTURING PROCESS

Saintgits Institute Of Management

Kottayam | Cost & Management Accounting

CMA FIELD STUDY ON NICE RUBBER INDUSTRIES.

COSTING DATA

EURO 1 MIX UNIT PRODUCED 65 Process Cost Sheet Particulars RAW MATERIAL Rubber Chemical Filler Clay Oil Carriage Inward Material Consumed / Prime Cost Process 1 Labour Electricity Operation Cost Of Process 1 Process 2 Labour Electricity Operation Cost of Process 2/Work Cost Administrative Over Head Cost Of Production Selling And Distribution Over Head Packing Carriage Outward Cost Of Goods Sold Profit Sales (65*52) 10 2.4 2669.65 710.35 3380 0.15 0.03 41.07 10.93 52 117 96 2625.25 32 2657.25 1.8 1.47 40.4 0.49 40.89 80 48 2412.25 1.23 0.74 37.13 6 kg 2.25 kg 40 kg 5 kg 9L 1140 252 600 15 225 52.25 2284.25 17.53 3.87 9.23 0.23 3.45 0.85 35.16 Total Cost Rs Cost Per Unit Rs

Saintgits Institute Of Management

Kottayam | Cost & Management Accounting

CMA FIELD STUDY ON NICE RUBBER INDUSTRIES.

CATTA 1 MIX UNIT PRODUCED 60(40*60) Process Cost Sheet Particulars RAW MATERIAL Rubber Chemical Filler Clay Oil Carriage Inward Material Consumed / Prime Cost Process 1 Labour Electricity Operation Cost Of Process 1 Process 2 Labour Electricity Operation Cost of Process 2/Work Cost Administrative Over Head Cost Of Production Selling And Distribution Over Head Packing Carriage Outward Cost Of Goods Sold Profit Sales (60*52) 11 2.6 2384.1 735.9 3120 0.18 0.04 39.89 12.11 52 108 104 2338.5 32 2370.5 1.95 1.73 39.14 0.53 39.67 80 48 2126.5 1.33 0.8 35.46 4.5 kg 2.25 kg 40 kg 5 kg 9L 855 252 600 15 225 51.5 1998.5 14.25 4.2 10 0.25 3.78 0.85 33.33 Total Cost Rs Cost Per Unit Rs

Saintgits Institute Of Management

Kottayam | Cost & Management Accounting

CMA FIELD STUDY ON NICE RUBBER INDUSTRIES.

CATTA 1 MIX UNIT PRODUCED 80(35*55) Process Cost Sheet Particulars RAW MATERIAL Rubber Chemical Filler Clay Oil Carriage Inward Material Consumed / Prime Cost Process 1 Labour Electricity Operation Cost Of Process 1 Process 2 Labour Electricity Operation Cost of Process 2/Work Cost Administrative Over Head Cost Of Production Selling And Distribution Over Head Packing Carriage Outward Cost Of Goods Sold Profit Sales (80*35) 15 3.2 2448.7 351.3 2800 0.1875 0.04 30.60875 4.39125 35 144 128 2398.5 32 2430.5 1.8 1.6 29.98125 0.4 30.38125 80 48 2126.5 1 0.6 26.58125 4.5 kg 2.25 kg 40 kg 5 kg 9L 855 252 600 15 225 51.5 1998.5 10.6875 3.15 7.5 0.1875 2.8125 0.64375 24.98125 Total Cost Rs Cost Per Unit Rs

Saintgits Institute Of Management

Kottayam | Cost & Management Accounting

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CMA FIELD STUDY ON NICE RUBBER INDUSTRIES.

CATTA 1 MIX UNIT PRODUCED 120(18*12) Process Cost Sheet Particulars RAW MATERIAL Rubber Chemical Filler Clay Oil Carriage Inward Material Consumed / Prime Cost Process 1 Labour Electricity Operation Cost Of Process 1 Process 2 Labour Electricity Operation Cost of Process 2/Work Cost Administrative Over Head Cost Of Production Selling And Distribution Over Head Packing Carriage Outward Cost Of Goods Sold Profit Sales (120*26) 23 4.8 2594.3 525.7 3120 0.195 0.04 21.62 4.38 26 216 192 2534.5 32 2566.5 1.8 1.6 21.125 0.26 21.385 80 48 2126.5 0.67 0.4 17.725 4.5 kg 2.25 kg 40 kg 5 kg 9L 855 252 600 15 225 51.5 1998.5 7.13 2.1 5 0.025 1.9 0.5 16.655 Total Cost Rs Cost Per Unit Rs

Saintgits Institute Of Management

Kottayam | Cost & Management Accounting

11

CMA FIELD STUDY ON NICE RUBBER INDUSTRIES.

Chemical composition proportion used Stearic acid - 1 Kg Zinc - 250 Gms Titanium - 250 Gms Sulphur - 200 Gms TMT - 300 Gms FF - 150 Gms Colour - 100 Gms

Transportation - Rubber Kottayam -Factory Quantity transported -1000 Kg Charge - Rs.500 Rate per kg= 500/1000 = 0.5

Mahalakshmi Chemicals - Gujarat Transportation - Chemicals Gujarat - Factory Quantity - 300 Kg Charge - Rs.8000 Rate per kg= 500/1000 = 27

Arun clay producers tvm Transportation - Chinese clay Trivandrum - Factory Quantity - 10000 Kg Charge - Rs.4500 Rate per kg=4500/10000 = 0.45

Saintgits Institute Of Management

Kottayam | Cost & Management Accounting

12

CMA FIELD STUDY ON NICE RUBBER INDUSTRIES.

Samera Enterprise Transportation -Chemicals Kottayam - Factory Quantit y- 1000 Kg Charge - Rs.600 Rate per kg= 500/1000 = 0.6

Process - A Account (Product Catta - 3)

Particulars Direct Material Direct Labour Direct Expenses (Electricity+Carriage In) Units 16.155 0.67 0.9 Rs 1947 80 99.5 17.725 2126.5 Particulars Normal wastage (5% of 120Assumption)@ Rs.5 Process B transferred @ Rs.26 Units 6 11.725 Rs 30 2096.5

17.725 2126.5

Process - B Account (Product Catta - 3)

Particulars Process A transferred @ 26 Direct Labour Direct Expenses (Electricity+Carriage In) Particulars Normal wastage (5% of 11411.725 2096.5 Assumption)@Rs.5 1.8 1.6 216 192 15.125 2504.5 Finished Stock@ Rs.26 Units Rs Units 5.7 9.425 Rs 28.5 2476

15.125 2504.5

Saintgits Institute Of Management

Kottayam | Cost & Management Accounting

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