PROJECT REPORT ON

PROCESS COSTING ON PARLE G

UNIVERSITY OF MUMBAI

MASTER OF COMMERCE
(Accountancy)
SEMESTER – I
2015-16

SUBMITTED BY
Name: VIRAJ V. BALSARA

Roll No.: 32

PROJECT GUIDE
Subject Teacher name
DR. NISHIKANT JHA
K.P.B HINDUJA COLLEGE OF COMMERCE
315, NEW CHARNI ROAD, MUMBAI-400 004

1
 M.Com (Accountancy)
1st SEMESTER

PROCESS COSTING ON PARLE G

SUBMITTED BY
VIRAJ BALSARA
Roll No.: 32

2
 Smt. P.D. Hinduja Trust’s

K.P.B. HINDUJA COLLEGE OF COMMERCE

315, New Charni Road, Mumbai 400 004 Tel.: 022- 40989000 Fax: 2385 93 97. Email:
hindujacollege@gmail.com
NAAC Re-Accredited ‘A’
ISO 9001:2008 THE BEST COLLEGE OF UNIVERSITY OF MUMBAI FOR THE ACADEMIC YEAR 2010-
2011
Prin. Dr. Minu Madlani (M. Com., Ph. D.)

CERTIFICATE

This is to certify that Ms. VIRAJ V. BALSARA of M.Com (Accountancy)

Semester 1st [2015-2016] has successfully completed the Project on

“PROCESS COSTING ON PARLE G” under the guidance of DR.

NISHIKANT JHA.

________________ ________________
Project Guide Co-coordinator

________________ ________________
Internal Examiner External Examiner

________________ ________________
Principal College Seal

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 DECLARATION

I Mr. VIRAJ V. BALSARA student of M.Com-Accountancy, 1st semester

(2015-2016), hereby declare that I have completed the project on “PROCESS
COSTING ON PARLE G”

The information submitted is true and original copy to the best of our
knowledge.

(Signature)

Student

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 INDEX

SR. No TOPIC PAGES

1 Introduction to Process Costing 6-15

2 Distinction between job costing & process costing 16-17

3 Valuation of Work In Progress 18-22

4 Introduction to Parle G & Its Process 23-34

5 Practical sum 35-37

6 Conclusion 38

7 Bibliography 39

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 CHAPTER: 1 PROCESS COSTING

1.1 INTRODUCTION OF PROCESS COSTING:

Process costing is an accounting methodology that traces and accumulates direct

costs, and allocates indirect costs of a manufacturing process. Costs are

assigned to products, usually in a large batch, which might include an entire

month's production. Eventually, costs have to be allocated to individual units of

product. It assigns average costs to each unit, and is the opposite extreme of Job

costing which attempts to measure individual costs of production of each unit.

Process costing is a type of operation costing which is used to ascertain the cost

of a product at each process or stage of manufacture.

Process costing is suitable for industries producing homogeneous products and

where production is a continuous flow. A process can be referred to as the sub-

unit of an organization specifically defined for cost collection purpose. The

importance of process costing

Costing is an important process that many companies engage in to keep track of

where their money is being spent in the production and distribution processes.

Understanding these costs is the first step in being able to control them. It is

very important that a company chooses the appropriate type of costing system

for their product type and industry. One type of costing system that is used in

certain industries is process costing that varies from other types of costing (such

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as job costing) in some ways. In Process costing unit costs are more like

averages, the process-costing system requires less bookkeeping than does a job-

order costing system. So, a lot of companies prefer to use process-costing

system.

In process costing it is the process that is costed (unlike job costing where each

job is costed separately). The method used is to take the total cost of the process

and average it over the units of production.

Cost per unit = Cost of inputs

Expected output in units

1.2 DEFINITION OF PROCESS COSTING:

CIMA defines process costing as "The costing method applicable where goods

or services result from a sequence of continuous or repetitive operations or

processes. Costs are averaged over the units produced during the period".

1.3 WHEN PROCESS COSTING IS APPLIED?

Process costing is appropriate for companies that produce a continuous mass of

like units through series of operations or process. Also, when one order does not

affect the production process and a standardization of the process and product

exists. However, if there are significant differences among the costs of various

products, a process costing system would not provide adequate product-cost

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information. Costing is generally used in such industries such as petroleum, coal

mining, chemicals, textiles, paper, plastic, glass, and food.

1.4 REASONS FOR USE OF PROCESS COSTING:

Companies need to allocate total product costs to units of product for the

following reasons:

a) A company may manufacture thousands or millions of units of product in

a given period of time.

b) Products are manufactured in large quantities, but products may be sold

in small quantities, sometimes one at a time (automobiles, loaves of

bread), a dozen or two at a time (eggs, cookies), etc.

c) Product costs must be transferred from Finished Goods to Cost of Goods

Sold as sales are made. This requires a correct and accurate accounting of

product costs per unit, to have a proper matching of product costs against

related sales revenue.

d) Managers need to maintain cost control over the manufacturing process.

Process costing provides managers with feedback that can be used to

compare similar product costs from one month to the next, keeping costs

in line with projected manufacturing budgets.

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 e) A fraction-of-a-cent cost change can represent a large dollar change in

overall profitability, when selling millions of units of product a month.

Managers must carefully watch per unit costs on a daily basis through the

production process, while at the same time dealing with materials and

output in huge quantities.

f) Materials part way through a process (e.g. chemicals) might need to be

given a value, process costing allows for this. By determining what cost

the part processed material has incurred such as labor or overhead an

"equivalent unit" relative to the value of a finished process can be

calculated.

1.5 ADVANTAGES OF PROCESS COSTING:

1. Costs are be computed periodically at the end of a particular period

2. It is simple and involves less clerical work that job costing

3. It is easy to allocate the expenses to processes in order to have accurate

costs.

4. Use of standard costing systems in very effective in process costing

situations.

5. Process costing helps in preparation of tender, quotations

6. Since cost data is available for each process, operation and department,

good managerial control is possible.

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 1.6 LIMITATIONS OF PROCESS COSTING:

1. Cost obtained at each process is only historical cost and are not very

useful for effective control.

2. Process costing is based on average cost method, which is not that

suitable for performance analysis, evaluation and managerial control.

3. Work-in-progress is generally done on estimated basis which leads to

inaccuracy in total cost calculations.

4. The computation of average cost is more difficult in those cases where

more than one type of products is manufactured and a division of the cost

element is necessary.

5. Where different products arise in the same process and common costs are

prorated to various costs units. Such individual products costs may be taken

as only approximation and hence not reliable.

1.7 PROCEDURE OF PROCESS COSTING:

For each process an individual process account is prepared. Each process of

production is treated as a distinct cost centre.

I. ITEMS ON DEBIT SIDE OF PROCESS A/C

Each process account is debited with –

a) Cost of materials used in that process.

b) Cost of labour incurred in that process.

c) Direct expenses incurred in that process.

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 d) Overheads charged to that process on some pre determined.

e) Cost of ratification of normal defectives.

f) Cost of abnormal gain (if any arises in that process)

II. ITEMS ON CREDIT SIDE OF PROCESS A/C

Each process account is credited with

a) Scrap value of Normal Loss (if any) occurs in that process.

b) Cost of Abnormal Loss (if any occurs in that process)

1.8 COST OF PROCESS:

The cost of the output of the process (Total Cost less Sales value of scrap) is

transferred to the next process. The cost of each process is thus made up to cost

brought forward from the previous process and net cost of material, labour and

overhead added in that process after reducing the sales value of scrap. The net

cost of the finished process is transferred to the finished goods account. The net

cost is divided by the number of units produced to determine the average cost

per unit in that process. Specimen of Process Account when there are normal

loss and abnormal losses.

Dr. Process I A/c. Cr.

Particulars Units Rs. Particulars Units Rs.

To Basic Material xxx xx By Normal Loss xx Xx

To Direct Material xx By Abnormal Loss xx Xx

To Direct Wages xx By Process II A/c. xx Xx

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 To Direct Expenses xx (output

transferred to

To Production xx Next process)

Overheads

To Cost of xx By Process I xx Xx

Rectification of Stock A/c.

Normal Defects

To Abnormal Gains xx

xx xxx xx Xxx

1.9 PROCESS LOSS:

In many process, some loss is inevitable. Certain production techniques

are of such a nature that some loss is inherent to the production. Wastages of

material, evaporation of material is unavoidable in some process. But

sometimes the Losses are also occurring due to negligence of Labourer, poor

quality raw material, poor technology etc. These are normally called as

avoidable losses. Basically process losses are classified into two categories

(a) Normal Loss

(b) Abnormal Loss

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a. NORMAL LOSS:

Normal loss is an unavoidable loss which occurs due to the inherent nature of

the materials and production process under normal conditions. It is normally

estimated on the basis of past experience of the industry. It may be in the form

of normal wastage, normal scrap, normal spoilage, and normal defectiveness. It

may occur at any time of the process.

No of units of normal loss: Input x Expected percentage of Normal Loss.

The cost of normal loss is a process. If the normal loss units can be sold as a

crap then the sale value is credited with process account. If some rectification is

required before the sale of the Normal loss, then debit that cost in the process

account. After adjusting the normal loss the cost per unit is calculates with the

help of the following formula:

Cost of good unit: Total cost increased – Sale Value of Scrap

Input – Normal Loss units

b. ABNORMAL LOSS:

Any loss caused by unexpected abnormal conditions such as plant breakdown,

substandard material, carelessness, accident etc. such losses are in excess of pre-

determined normal losses. This loss is basically avoidable. Thus abnormal

losses arrive when actual losses are more than expected losses. The units of

abnormal losses in calculated as under:

Abnormal Losses = Actual Loss – Normal Loss

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The value of abnormal loss is done with the help of following formula:

Value of Abnormal Loss:

Total Cost increase – Scrap Value of normal Loss x Units of abnormal loss

Input units – Normal Loss Units

Abnormal Process loss should not be allowed to affect the cost of production as

it is caused by abnormal (or) unexpected conditions. Such loss representing the

cost of materials, labour and overhead charges called abnormal loss account.

The sales value of the abnormal loss is credited to Abnormal Loss Account and

the balance is written off to costing P & L A/c.

Dr. Abnormal Loss A/c. Cr.

Particulars Units Rs. Particulars Units Rs.

To Process A/c. xx xx By Bank A/c. xx Xx

By Costing P & L xx Xx

A/c.

xx xxx xx xxx

ABNORMAL GAIN:

The margin allowed for normal loss is an estimate (i.e. on the basis of

expectation in process industries in normal conditions) and slight differences are

bound to occur between the actual output of a process and that anticipates. This

difference may be positive or negative. If it is negative it is called ad abnormal

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Loss and if it is positive it is Abnormal gain i.e. if the actual loss is less than the

normal loss then it is called as abnormal gain. The value of the abnormal gain

calculated in the similar manner of abnormal loss.

The formula used for abnormal gain is:

Abnormal Gain

Total Cost incurred – Scrap Value of Normal Loss x Abnormal Gain Unites

Input units – Normal Loss Units

The sales values of abnormal gain units are transferred to Normal Loss Account

since it arrive out of the savings of Normal Loss. The difference is transferred to

Costing P & L A/c. as a Real Gain.

Dr. Abnormal Gain A/c. Cr.

Units Rs. Particulars Units Rs.

Particulars

To Normal Loss xx xx By Process A/c. xx xx

A/c.

To Costing P & L xx xx

A/c.

xx xx xx xx

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CHAPTER 2: DISTINCTION BETWEEN JOB COSTING
AND PROCESS COSTING
Job order costing and process costing are two different systems. Both the
systems are used for cost calculation and attachment of cost to each unit
completed, but both the systems are suitable in different situations. The basic
difference between job costing and process costing are

Basis of Job order costing Process costing

Distinction
1. Specific order Performed against Production is contentious
specific orders
2. Nature Each job many be Product is homogeneous
different. and
Standardized.
3. Cost determination Cost is determined for Costs are complied for
each job separately. each process for
department on time basis
i.e. for a given
Accounting period.
4. Cost calculations Cost is complied when a Cost is calculated at the
job is completed. end of the cost period.
5. Control Proper control is Proper control is
comparatively difficult as comparatively easier as
each product unit is the production is
different and the standardized and is more
production is not suitable.
Continuous.
6. Transfer There is usually not The output of one
transfer from one job to process is transferred to
another unless there is another process as input.
some surplus work.
7. Work-in-Progress There may or may not be There is always some
work-in-progress. Work-in-progress
because of continuous
production.
8. Suitability Suitable to industries Suitable, where goods
where production is are made for stock and
intermittent and productions is
Customer orders can be continuous.
identified in the value of
production.

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2.1 INTER PROCESS PROFITS:
Normally the output of one process is transferred to another process at cost but

sometimes at a price showing a profit to the transfer process. The transfer price

may be made at a price corresponding to current wholesale market price or at

cost plus an agreed percentage. The advantage of the method is to find out

whether the particular process is making profit (or) loss. This will help the

management whether to process the product or to buy the product from the

market. If the transfer price is higher than the cost price then the process

account will show a profit. This problem arises only in respect of stock on hand

at the end of the period because goods sold must have realized the internal

profits. The unrealized profit in the closing stock is eliminated by creating a

stock reserve. The amount of stock reserve is calculated by the following

formula.

Stock Reserve = Transfer Value of stock x Profit included in transfer price

Transfer Price

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CHAPTER 3: VALUATION OF WORK-IN-PROGRESS
3.1 MEANING OF WORK IN PROGRESS:
Since production is a continuous activity, there may be some incomplete

production at the end of an accounting period. Incomplete units

mean those units on which percentage of completion with regular to all

elements of cost (i.e. material, labour and overhead) is not 100%. Such

incomplete production units are known as Work-in-Progress. Such Work-in-

Progress is valued in terms of equivalent or effective production units.

3.2 MEANING OF EQUIVALENT PRODUCTION UNIT:

This represents the production of a process in terms of complete units. In other

words, it means converting the incomplete production into its equivalent of

complete units. The term equivalent unit means a notional quantity of

completed units substituted for an actual quantity of incomplete physical units

in progress, when the aggregate work content of the incomplete units is deemed

to be equivalent to that of the substituted quantity. The principle applies when

operation costs are apportioned between work in progress and completed units.

Equivalent units of work in progress = Actual no. of units in progress x

Percentage of work completed.

Equivalent unit should be calculated separately for each element of cost (viz.

material, labour and overheads) because the percentage of completion of the

different cost component may be different.

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 3.3 ACCOUNTING PROCEDURE:

The following procedure is followed when there is Work-in Progress

i. Find out equivalent production after taking into account of the

process losses, degree of completion of opening and / or closing stock.

ii. Find out net process cost according to elements of costs i.e. material,

labour and overheads.

iii. Ascertain cost per unit of equivalent production of each element of

cost separately by dividing each element of costs by respective

equivalent production units.

iv. Evaluate the cost of output finished and transferred work in progress.

3.4 PROBLEMS ON EQUIVALENT PRODUCTION:

The problems are dividend in to four groups. They are:

I. When there is only closing work-in-progress but without process

losses

II. When there is only closing work-in-progress but with process

losses

III. When there is only opening as well as closing work-in- progress

without process losses

IV. When there is opening as well as closing work-in- progress with

process losses

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Situation I: When there is only closing work-in-progress but

without process losses:

In this case, the existence of process loss is ignored. Closing work-in-

progress is converted into equivalent units on the basis of estimates on degree

of completion of materials, labour and production overhead. Afterwards, the

cost per equivalent unit is calculated and the same is used to value the

finished output transferred and the closing work-in-progress.

Situation II: When there is closing work-in-progress with

process loss or gain:

If there are process losses the treatment is same as already discussed in this

chapter. In case of normal loss nothing should be added to equivalent

production. If abnormal loss is there, it should be considered as good units

completed during the period. If unit’s scrapped (normal loss) have any

reliable value, the amount should be deducted from the cost of materials in

the cost statement before dividing by equivalent production units. Abnormal

gain will be deducted to obtain equivalent production.

Situation III: Opening and closing work-in-progress without

process losses.

Since the production is a continuous activity there is possibility of

opening as well as closing work-in-progress. The procedure of conversion

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 of opening work-in-progress will vary depending on the method of

apportionment of cost followed viz, FIFO, Average cost Method and LIFO.

3.5 METHODS OF VALUATION OF WORK IN PROGRESS:

(a) FIFO METHOD:

The FIFO method of costing is based on the assumption of that

the opening work-in-progress units are the first to be completed.

Equivalent production of opening work-in-progress can be

calculated as follows:

Equivalent Production = Units of Opening WIP x Percentage of

Work needed to finish the units

(b) AVERAGE COST METHOD:

This method is useful when price Fluctuate from period to

period. The closing valuation of work-in-progress in the old

period is added to the cost of new period and an average rate

obtained. In calculating the equivalent production opening units

will not be shown separately as units of work-in-progress but

included in the units completed and transferred.

(c) WEIGHTED AVERAGE COST METHOD:

In this method no distinction is made between completed units

from opening inventory and completed units from new

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 production. All units finished during the current accounting period

are treated as if they were started and finished during that period.

The weighted average cost per unit is determined by dividing the

total cost (opening work-in-progress cost + current cost) by

equivalent production.

(d) LIFO METHOD:

In LIFO method the assumption is that the units entering into the

process is the last one first to be completed. The cost of opening

work-in-progress is charged to the closing work-in-progress and thus the

closing work-in- progress appears cost of opening work-in-progress. The

completed units are at their current cost

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CHAPTER 4: PROCESS COSTING OF PARLE G

4.1 HISTORY OF PARLE G:

A long time ago, when the British ruled India, a small factory was set up in the

suburbs of Mumbai city, to manufacture sweets and toffees. The year was

1929 and the market was dominated by famous international brands that were

imported freely. Despite the odds and unequal competition, this company

called Parle Products, survived and succeeded, by adhering to high quality and

improvising from time to time. A decade later, in 1939, Parle Products began

manufacturing biscuits, in addition to sweets and toffees. Having already

established a reputation for quality, the Parle brand name grew in strength with

this diversification. Parle Glucose and Parle Monaco were the first brands of

biscuits to be introduced, which later went on to become leading names for

great taste and quality.

Parle Biscuits Limited is a subsidiary of the Parle Products Limited, Mumbai,

which is a closely held company run by the Chauhans. Today Parle enjoys a

40% share of the total biscuit market and 15% share of the total confectionery

market in India.

Parle-G or Parle Glucose biscuits, manufactured by Parle Products Pvt. Ltd,

are one of the most popular biscuits in India. Parle-G is one of the oldest brand

names as well as the largest selling brand of biscuits in India. For decades, the

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product was instantly recognized by its iconic white and yellow wax paper

wrapper with the depiction of a young girl on the front. Parle-G has been a

strong household name across India.

By the year 1949, Parle Glucose biscuits were available not just in Mumbai but

also across the state. It was also sold in parts of North India. The early 50s

produced over 150 tons of biscuits produced in the Mumbai factory. Looking

at the success of Parle-G, a lot of other me-too brands were introduced in the

market. And these brands had names that were similar to Parle Glucose

Biscuits. This forced Parle to change the name from Parle Glucose Biscuits to

Parle-G. Originally packed in the wax paper pack; today it is available in a

contemporary, premium BOPP pack with attractive side fins. The new airtight

pack helps to keep the biscuits fresh and tastier for a longer period. Parle-G

was the only biscuit brand that was always in short supply. It was heading

towards becoming an all-time great brand of biscuit. Parle-G started being

advertised in the 80's.

It was advertised mainly through press ads. The communication spoke about

the basic benefits of energy and nutrition. In 1989, Parle-G released its Dadaji

commercial, which went on to become one of the most popular commercials

for Parle G. The commercial was run for a period of 6 years.

The goal was to spread joy and cheer to children and adults alike, all over the

country with its sweets and candies. Since then, the Parle name has spread in

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all directions and has won international fame. Parle has been sweetening the

lives of people all over India and abroad. Apart from the factories in Mumbai

and Bangalore, Parle also has factories in Bahadurgarh, Haryana and

Rajasthan. These are the largest biscuit and confectionery plants in the

country. Additionally, Parle Products also has 10 manufacturing units and 75

manufacturing units on contract.

The company's slogan is “G means Genius”. The name, "Parle-G", is derived

from the name of the suburban rail station, Vile Parle which in turn is based on

village Parle in olden days (there is also area called Irla nearby where the Parle

Agro production factory is based).

This popular biscuit is primarily eaten as a tea-time snack. Parle-G is the

largest selling biscuit in the world. It has 70% market share in India in the

glucose biscuit category followed by Britannia, Tiger (17-18%) and ITC's

Sunfeast (8-9%). The brand is estimated to be worth over Rs 2,000 crore (Rs

20 billion), and contributes more than 50 per cent of the company's turnover

(Parle Products is an unlisted company and its executives are not comfortable

disclosing exact numbers). Last fiscal, Parle had sales of Rs 3,500 crore (Rs 35

billion). It also is popular across the world and is starting to sell in Western

Europe and USA.

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4.2 MANUFACTURING PROCESS OF PARLE G:

MANUFACTURING PROCESS FLOW CHART

RAW MATERIAL TESTING

MIXING

MOULDING

BAKING

COOLING

PACKING

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 Actual process of production is divided into 6 steps. Following are the steps

of production process.

a. CHECKING OF RAW MATERIAL:

Before starting actual process of making biscuits all raw material checked in

laboratory if quality of raw material is not good then they return those of

raw material.

b. MIXING OF INGREDENTS:

After checking of raw material, raw materials are going for mixture. In

mixing department 3 big mixers are working known as Steven Mixers.

These mixers mix the all raw material in their appropriate ratio. Each

mixer has capacity of 500kg mixing at a time.

c. MOULDING SECTION:

In moulding section the ready mixture go from one big machine. This

machine cut this mixture in a perfect size & shape of glucose biscuit. And

stamp on that biscuit Parle-G.

d. BAKING SECTION:

In banking section biscuits are go from one big oven. These ovens are

categorized in eight parts. Parle agro has the biggest oven in Asia.

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e. COOLING:

After the process of baking the biscuits are very hot it should be cool

before packing. For cooling, biscuits rolled through conveyer belt.

f. PACKING:

Ready biscuits are sent for packing in packing section. Packing process of

Parle-G biscuits is different for Domestic product and Export goods.

Packing process of product is fully automatic. There are 10 machine are

setup for packing biscuits quantity wise like 200g, 1.5 kg etc.

Out of 10 machines two machines are not convertible for packing

different types of goods. These two machines are made only for Family

Pack.

For Export goods they are using special Aluminium Foil pack because it

should be preserved for more than 1 year. The size of biscuits is small.

For cream biscuits, Packing of cream biscuits is done by quantity wise.

28
4.3 PROCESS LAYOUT OF PARLE PRODUCT LTD:

PROCESS LAYOUT CHART

STEPHAN STEPHAN

MIXER MIXER

CURVE
MOULDING OVEN
PLATE

COOLING

CURVE PLATE CONVYER

MULTI
STALKING
PACK
TABLE
MACHINE
BOX SEALING
MACHINE
TAPPING

DEVIRSION BELT

CONVEYOR BELT CONVEYOR BELT

DISPATCH SECTION

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 Following are the machinery used in manufacturing;

a. STEPHEN MIXER:

The Stephan TK Mixer is an ideal component to

fully automatically feed the down-stream make-

up equipment for biscuits, bread, rolls, buns,

cake, sweet goods, cookies and crackers.

b. ROTARY MOULD:

i. structure in corrosion-proof; anodized

aluminum and Asia 304 stainless steel

ii. satin stainless steel paneling

iii. swivel wheels and support feet

iv. trays loader with automatic chain feed

v. feeder roller anodized aluminum

vi. 1.00 kW speed validates

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c. COOLING CONVEYOR:

The biscuit coming from stripping conveyor is

directed on to the cooling conveyor to transfer the

heat in the biscuit to atmospheric air as it is passing

on it. The total travel of the cooling conveyor is 1.5

times the oven length. As per need specifications it need the travel of 150 ft.

d. LAMINATOR:

Laminators are generally used for production of all kinds of hard biscuits,

crackers and cocktail snacks. With laminator it is possible to create a puffy

pastry-like structure, which is of decisive importance for the quality level and

consequently for the sales success. Laminating of Dough band improves the

weight/volume ratio considerably.

e. BISCUIT BAKING OVEN:

The oven body consists of steel steam tight

tunnel with equally divided zones of the

radiators. Stainless steel expansion joints are

provided between these zones in order to

eliminate the expansion of the oven section. The inspection doors are

provided for inspection of the baking goods during the process.

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f. BAKING SYSTEM:

The baking in the heating chamber takes

place by radiators located under and above

the wire mesh band which distribute heat

for uniform baking. The recirculation

heating gases of these radiators can be

controlled for each zone separately. The closed recirculation system is having

slight vacuum so that combustion gases cannot enter into the baking chamber.

The ventilating fan is for circulation of the heating gases through the

recirculation system and thermostatically controlled burners provide the set

temperature of the heating gases.

g. ROTARY CUTTER:

The single head rotary cutter prints fine design on a continuously fed dough

sheet and also cuts out the individual dough piece. The unit powered by

1.5KW helical geared motor and speed controlled by AC frequency

controller. Drive is given to cutting roller only to accommodate different

sizes of dies in this machine.

32
h. COUNTING UNIT:

The counting unit counts and see that the biscuit making process is going fine

or not, i.e. as per the program set in the machine, program is set as per the

grams required. Generally 16 biscuits are taken by the counting unit so that it

leads to 100 grams.

i. MULTIPACK WRAPPING MACHINE:

This machine helps in wrapping the biscuits on

the particular wrapper fixed on the roller of the

machine. The wrapper is feed into the machine

and the sealing of the wrapper is done by four

heater roller, which is fitted on the machine. This

heater roller heat up the plastic and seals the

packet. And at the same time the jaw cutter cut the

packet on the cutting edge marked i.e. as per the grams of the packet which is

feed in the automatic machine. The packets coming out from the wrapping

machine in a minute is programmed in computer and can be changed as per

the need.

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j. POLY BAGS:

Poly bags contain 24 packets of Parle G biscuits in one poly bag. There are 4

workers employed on this section who take care of the work by putting 24

packets of biscuits in the bag and forwarding it to sealing machine section.

k. SEALING MACHINE:

The sealing machine has heater rod for sealing the poly bag in which 24 packet

of biscuit are placed, and it have a conveyer belt on other side so that when the

poly bag passes through the heater and get sealed then it is passed to the

tapping machine.

l. TAPPING MACHINE:

Six such poly bags are placed in one such corrugated box and the box is

passed through the tapping machine where are tapped and then sent through a

long diversion conveyer belt. This belt helps to transfer the box to the dispatch

section directly. 36 boxes are arranged on pallet in the dispatch section, from

where they are transferred to the various dealers all over the India and

worldwide.

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CHAPTER 5: PRACITICAL SUM

The product of a company passes through 3 distinct process. The following

information is obtained from the accounts for the month. (All figures in lakhs)

Particulars Process A Process B Process C

Direct Material 7800 5940 8886

Direct Wages 6000 9000 12000

Production 6000 9000 12000

overheads

3000 units @ Rs. 3 were introduced to process A. There was no opening stock

of materials or Work-in-progress. The output of each process passes directly to

the next process and finally to finished stock A/c.

The following additional data is obtained:

Process Output Percentage of Normal loss to input Scrap Rs.

A 2850 5% 2

B 2520 10% 4

C 2250 15% 5

35
 Solution: (All figures are in lakhs)
Dr PROCESS A A/C
Particulars
Cr Units Amt Particulars Units Amt
To Input Cr
3000 9000 By Normal loss 150 300
To Direct materials 7800 2850 28500
By Output transferred
To Direct wages 6000 to Process B A/c
To Factory overheads 6000

3000 28800 3000 28800

Dr PROCESS B A/C Cr
Particulars Unit Amt Particulars Unit Amt
To Process A A/c 2850 28500 By Normal loss 285 1140

To Direct materials 5940 By Abnormal loss 45 9000

To Direct wages 9000
By Output transferred 2520 50400
To Factory overheads 9000 to process C A/c

2850 52440 2850 52440

36
Dr PROCESS C A/C Cr
Particulars Unit Amt Particulars Unit Amt
To Process B A/c 2520 50400 By Normal loss 378 1890

To Direct materials 8886 2250 85500

By Output transferred
To Direct wages 12000 to Final stock A/c
To Factory overheads 12000
To Abnormal gain 108 4104

2628 87390 2628 87390

37
CHAPTER 7: CONCLUSION:

Process costing is a term used in cost accounting to describe one method

for collecting and assigning manufacturing costs to the units produced.

Processing cost is used when nearly identical units are mass produced.

Process costing is used to ascertain the cost of each stage, where material is

passed through various operations to obtain final results, with b- products in

many cases at different stages.

38
 CHAPTER 8: BIBLOGRAPHY:

i. http://en.wikipedia.org/wiki/Parle-G

ii. http://www.parleproducts.com/

iii. http://www.slideshare.net

iv. http://archive.mu.ac.in/myweb_test/MCOM-Ac-%20Paper%20-

%20II.pdf

v. https://www.scribd.com/doc/201165312/process-costing-of-ParleG

vi. https://www.scribd.com/doc/174987872/Process-Costing#download

39