Application of Costing to Indigenous Business Unit in Hubli City *Prof. Mahesh Bendigeri **Mr. Satish Halannavar ***Mr. Santosh Nargund
An attempt has been made by students of Sem II of 2012-14 batch to align classroom teaching into practical world. It is first of its find to bridge the gap between academic learning with pratical knowledge by taking up mini project and trying to apply the concept of cost sheet to local business units. Mr. Satish Halannavar and Mr. Santosh Nargund of Sem II class have identified a Tailoring shop for the purpose of this study. The name of Tailoring shop is Manjunath Tailors. Brief Profile of Manjunath Tailors: It is a sole proprietorship concern, started in the year 1983 by Mr. Manjunath. Initially he started with Single Sewing machine. Because of hardwork and good customer relation, the business improved and today the work force size has increased to 6 people. Mr. Manjunath started this career at the age of 12, wherein initially he worked as a helper, after 5 years he started with his own shop with initial investment of Rs. 2000. He has done his education upto 4th Standard. Now he is famous tailor in Hubli. Cost Sheet: Cost sheet is a statement, which shows various components of total cost of a product/service. It classifies and analyses the components of cost of a product. It is a statement which shows per unit cost in addition to Total Cost. Selling price is ascertained with the help of cost sheet. The details of total cost presented in the form of a statement is termed as Cost sheet. It is interesting to know in tailoring industry, how tailors ascertain the cost of stitching a shirt or trousers. Most of us feel that the cost of stitching a shirt or trouser depend on some rough estimate or based on competitor price for stitching. But after conducting this mini project it was found that even tailor apply the concept of cost sheet in ascertaining the cost of stitching the shirt or trouser. Data collection and Analysis Following is the information collected from Mr. Manjunath Tailor with respect to stitching of trousers on annual basis. This is based on no. of trousers he had stitched during the year 2011-12. Even though he has not maintained formal system of accounting. Yet the information provided by him is taken as basis for preparation of cost sheet.
Cost Sheet for Stitching Trouser 1440 Trouser Stitched in the Year 2012 Amount Total Cost Per Trouser Direct Materials 67680 47 Pocketing Cloth 28800 Hooks, Button, Chain and Thread 24480 Canvas 14400 Particulars
Direct Wages Direct Expenses
172800 240480
120 167
13160
9.14
253640
176.14
2160 255800
1.5 177.64
3000 258800 245200 504000
2.08 179.72 170.28 350
Prime Cost
Factory Overhead Machine Repairs Current Bill Rent of Shop Depreciation on Scissor, Measuring Tapes, Scales
2000 6000 3500 1480
Chalk Pieces
180 Works Cost
Administative Overhead Receipt & Bill Book Cost of Production Selling & Distrubution Overhead Plastic Bag for Packing Total Cost Profit Amt charges for Stitching per Trousers
Analysis: From the analysis of Cost sheet it is found that total cost incurred for stitching 1440 trousers was Rs. 258800, and cost per trouser comes to Rs. 179.72 rounded off to Rs. 180. But the tailor charges Rs. 350 for stitching per trousers. And this accounts to Rs. 170 profit per trouser. Conclusion: From this study it is found that we can apply the concept of cost sheet to indigenous business unit and ascertain the probable cost of manufacturing a given product/ service. We conclude that small business unit can also make huge amount of profit if cost are properly accounted for, at the time of manufacturing a product/service.