Case 5: Application of Costing to Indigenous Business Unit in Hubli City A case study of Morab Mahila Graha Udhyoga *Prof. Mahesh Bendigeri **Ms. Kruthika R Megeri ***Ms. Nandini K Anand Introduction:
Jolada rotti is a specialty North Karnataka unleavened Indian bread made out of jowar (Sorghum). The name literally translates into sorghum bread. Jolada rotti is part of the staple diet of most of the districts of North Karnataka, where it is eaten with pulse curries such as Jhunka, enne gai or with assorted chutnies. Jollad Rotti is eaten with the following curries (Pallya): Stuffed bell pepper, stuffed brinjal (yengai), Bijapur style Brinjal (Tumbagayi) and Jawari Pundi Pallya, hesar kaalu, jhunkad vadi and any fresh salads. Chutneys that go well with jolad rotti include Shenga Hindi (a kind of peanut chutney with garlic), and aradidda khara. Jollad rotti can also be eaten with hot jhunka or pitla, known as jhunka bhakri or pitla bhakri; this is a famous combination in Belgaum and Maharashtra. Students Background: Learning is fun when theory is put into practice. Students get practical knowledge by working on live cases. In this regard a team of two students as a part of their academic requirement were given the task of application of costing to small scale industry. The students were informed to select their own firm for the study. Accordingly the students have selected Morab Mahila Graha Udhyoga, Dharwad. Ms. Kruthika Megeri and Ms. Nandini K Anand of Sem II class of the batch 2013-15 had personally visited the Morab Mahila Graha Udhyoga situated in Dharwad for their study. The students through interaction with the owner collected the information with respect to manufacturing of Jowar Roti. Brief Profile of Morab Mahila Graha Udhyoga, Dharwad: Morab Mahila Graha Udhyoga was established on 8th Dec 2009 by Two women vendors Ms. Ratna M Morab and Mrs. Gangava M Morab with a group of four womens. It is a small business unit involved in making of Jowar Rotties and Chapathies. It is located in Mahatma Basaveshwar Nagar, Dharwad. The initial investment was Rs. 25000 in addition to some small instruments. The objectives of this business unit was to provide quality products to customers which helps for successful of the business. Presently there are five members working in this business unit. They supply roti to hotels, Daba, Savaji Kanavalli and Mess. In addition to this the undertake order during marriage and festival season. The main items available in this unit are: • Jowar Roti *Chapathies *Lemon Pickle *Mango Pickle • Red chilli paste *Ginger and Garlic paste *Different types of chattnies
Objective of the Study: • To determine the cost of manufacturing per Jowar roti/Chapati • To determine the basis of allocating common overhead • To determine the profit per Roti/chapati Purpose of the Study: The main purpose of this study is the application of costing technique for home made industry. From cost point of view, it look very easy to ascertain the cost of Jowar Roti/Chapati. So an attempt has been made by the students to know how the cost is ascertained for those item which we consume every day. 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. Data collection and Analysis Following is the information collected from owner of Morab Mahila Graha Udhyoga, Dharwad with respect to component of cost sheet. The information is collected for 18000 Jowar Roti manufactured in a month. Based on this the analysis was done to determine the most appropriate way of ascertain the cost per Jowar Roti. The information collected here are based on the oral interaction done with the owner. Analysis and Findings: • From the analysis it is found that the total cost for preparing 18000 Jowar Roti is Rs. 29880, of this the major cost being the labor cost which account for Rs. 15000 per month for 5 workers. • Total cost per Jowar Roti/Chapati is Rs. 1.66 • Selling price per Jowar Roti/Chapati is Rs. 3 • Profit per Roti /Chapati is Rs. 1.34, which come to Rs. 24120 from sale of 18000 roti per month. • Total Revenue generated from sale is Rs. 54000. ie. Rs. 3 per roti/chapatti x 18000 roti/chappati. • On an average 600 roti/chapatti are prepared and sold per day. 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 a given product/ service. We conclude that small business unit can also make huge amount of profit if cost are properly accounted for.
Cost Sheet of Manufacturing of Jowar Roti/Chapati 18000 Jowar Roti/chappati in a month. Total
Cost Per Jowar Roti/Chapati
1500 200 8400
0.08 0.01 0.47
15000
0.83
Prime Cost
210 25310
0.01 1.41
Works Cost
920 26230
0.05 1.46
1500 150 27880
0.08 0.01 1.55
2000 29880 24120 54000
0.11 1.66 1.34 3.00
Particulars Direct Material Jowar 60kg @ Rs. 25 per kg Rice 5 kg @ Rs. 40 per kg Wheat 350kg @ Rs. 24 per kg Direct Wages 5 workers @ Rs. 3000 per month Direct Expenses Floor mill charges Factory Overhead Gas Charges Administrative Overhead Shop Rent Bill Book and Stationery Cost of Production Selling and Distribution Overhead Plastic bag and paper for packing Total cost Profit Sales 18000 roti @ Rs. 3 each
Field visit Video available on YouTube click on this link: http://youtu.be/snRLJhChtvk Field Visit Snaps
Reference: Project report submitted by Ms. Kruthika Megeri and Ms. Nandini K Anand on 17 th feb 2014. http://en.wikipedia.org/wiki/Jolada_rotti