Process Costing Project Repot

PARMAR ARJAN S
PREFACE
As a part of the course curriculum the T.Y. B.B.A students are
required to prepare a group project for the paper of practical studies.
For this particular report, we are required to do an analysis on any
specific industry by gathering and analyzing primary and secondary
data. Through this in depth study of ADINATH DYESTUFF
INDUSTRIES, I have been able to relate various management
aspects.
For this purpose, our M.J. COLLEGE OF COMMERCE
affiliated to Bhavnagar University, Bhavnagar, arranged 21 days of
training programme which is necessary for any B.B.A student. This is
in order to sharpen our skills and to bridge the gap of the theory and
practice. I have completed my training at ADINATH DYESTUFF
INDUSTRIES.
My project report will give brief details with clear objectives of all
the departments of ADINATH DYESTUFF INDUSTRIES with its
current affairs and working.
I have received all information and co-operation from the staff
members. I hope so this report fulfills need of the educational
requirements.
ADINATH DYESTUFF INDUSTRIES

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PARMAR ARJAN S
DECLARATION
I PARMAR ARJAN S student of M.J. COLLEGE OF
COMMERCE of T.Y.BBA hereby declare that I have undergone the
industrial training at ADINATH DYESTUFF INDUSTRIES and taken
training from 08/11/2010 TO 28/11/2011 i.e. for 21 days. During this
training I was guided by MISS.SWATI MEDAM coordinator of our
college. I ensure that whatever details presented in this project report
is based on my training and information provided by the concerned
organization.
Place: Bhavnagar
Date:
Students Sign
PARMAR ARJAN

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PARMAR ARJAN S
ACKNOWLEDGEMENT
Gratitude is certainly to be placed on record at the right time
with the right sense of morality. During the perseverance of this
project, I was supported by different individuals whose names if not
mentioned would be inconsiderate on my part.
I would like to extend our sincere gratitude and also I am
thankful to Principal of Dr K.S. VATALIYA And SWATI MEDAM
coordinator of BBA, who initiated me into the project of ADINATH
DYESTUFF INDUSTRIES. It is indeed been a great learning
experience working under his guidance during the course of project. I
thank him for his invaluable advice and guidance that he provided me
throughout the completion of this project.
I would also like to thank Mr. JASVANTRAI P. GANDHI, the
Partner of ADINATH DYESTUFF INDUSTRIES for his great
assurance for making the project evergreen.
I would also like to thank the librarian of my college, my college
friends & of course my family members who gave me all the support
and backing and always came forward whenever a helping hand was
needed.
Lastly, I would like to thank all those who directly or indirectly
help me in giving final touch up to the project report.

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PARMAR ARJAN S
COMPANY PROFILE
Name of the Unit

Director
Year of Estab.
Address
Contact Details
Website
Email
Product Range

Mr. Jasvantrai P. Gandhi
1992
49,G.I.D.C.,Industrial Estate,
Mahuva-364290,
Dist. Bhavnagar, Gujarat.
(O) +91-2844-246357
+91-2844-246014
(Fax) +91-2844-223357
www.adinathindustries.co.in
gpdyes@rediffmail.com
Reactive V.S. Dyes
Reactive ME Dyes
Reactive HE Dyes
Reactive M Dyes
Reactive H Dyes
Logo

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PARMAR ARJAN S
HISTORY & DEVELOPMENT OF THE UNIT
M/s ADINATH DYESTUFF INDUSTRIES is a partnership firm

established in 1992. It is a small scale industry running successfully
by its directors. This unit is being engaged in manufacturing of
Synthetic Organic Dyes from years. Apart from manufacturing, they
are also the exporters of Reactive Dyes.
At the time of establishment of the unit i.e. in 1992, Mr.
Sureshbhai P. Gandhi and Mr. Jasvantrai P. Gandhi were the
entrepreneurs of the firm. Today, Mr. Jasvantrai P. Gandhi is the one
who looks after this unit. Adinath Dyestuff Industries produces the
S.O. Dyes which is consumed very high in India as well as in abroad.
Here there have been 45 H.P. connections from PGVCL Company.
Today Adinath Dyestuffs Industries is one of the good reactive
and organic dyestuffs industries in the G.I.D.C. Mahuva that has been
developed at a greater extent at what it should be. Thus it can be said
that Adinath Dyestuffs Industries have been the popular industries in
the field for the manufacturers & exporters of reactive dyes.
Thus it looks that the history of the Adinath Dyestuffs Industries
sounds good and it can be expected that it may achieve all its goals
and may prove beneficial for the country.

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PARMAR ARJAN S
SIZE OF THE UNIT AND FORM OF THE ORGANIZATION

Size of the Unit: Mainly, there are three types of the sizes of the unit. They are
as follows: Large Scale Unit
Medium Scale Unit
Small Scale Unit
In large scale unit, investments are above 5 crores. In medium
scale unit, investments are from 1 crore to 5 crores. In small scale
unit, investments does not exceed 1 crore.
Adinath Dyestuff Industry is a small scale unit manufacturing
and exporting reactive & synthetic organic dyes.
Form of the Organization: Every economic activity is carried out by organization. There
are various forms of organization. They are: Sole Proprietorship firm
Partnership firm
Joint Stock Company
Co Operative Society
In Sole Proprietorship there is only one owner. In Partnership
firm there are minimum 2 and maximum 20 members. In Co
Operative society there has been minimum 2 and maximum 10
members.

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PARMAR ARJAN S
Adinath Dyestuff Industry is a partnership firm which

manufactures and exports reactive and synthetic organic dyes.
MANUFACTURING PROCESS
Raw material like Hydrochloric acid, vinyle sulphone, sodium

nitrate soda ash, sodium bi- carbonate, H.C.L. and other raw material
along with water and ice mixed in vessel by coupling. Then the said
liquid solution goes to spray dryer through screw pump for spray by
hot air generator.
The said crude material in powdered form goes to ball mill for
mixing and adding the other material like sodium sulphate and dedusting oil as per customers standards.
The finished goods of reactive dyes packed in drums and cartons
as per customers requirement. This material is ready for dispatch.
MANUFACTURING PROCESS
MIXING PROCESS
SPRAY DRYING PROCESS
BALL MILLING
PROCESS
SPRAY DRYING PROCESS

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PARMAR ARJAN S
DETAILS OF MACHAINARY
1. Big sizes vessel: The raw materials brought into the factory
are opened on to the ground as per the requirement then it
poured into the vessel where it mixes one with another.
2. Pipe line: The above materials are mixed and then taken
into the Pipeline which passes through pipe to Spray Dyers.
3. Spray Dryer: The above materials are hooted up with the

help of boiler into it.
4.
Hot Air Generator: In this process it is used in the

manufacture of S.O.Dyes which haves producing capacity of
about 2 Lacs Kilo calary per hour.
5. Ball Mill: Ball mill is used to make above mentioned

materials standardized and to some extent fines.
6. Laboratory: It is the place where Lab Technicians measure

strength and shades through spectrometer.
7.
Packing: The above materials are packed in HDPE

Drums/Bags as per the buyers instructions.

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PARMAR ARJAN S
(iso4)WASHING
Perspiration
HYPO.
Dischargeability
SHADE
(4.0%)
LIGHT(1/1)
MANUFACTURING PRODUCTS
YELLOW FG
(Yell.- 42)
YELLOW GR
(Yell.- 15)
G.YELLOW RNL
(Orange- 107)
4.5
ORANGE 2R
4.5
ORANGE 3R
(Orange- 16)
4.5
4.5
RED C2G
(Red- 106)
RED 5B
(Red- 35)
RED F3B
(Red- 180- A)
V.S.
DYES

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RED RB
(Red- 198- A)
BLUE 3R
(Blue- 28)
4.5
4.5
T-BLUE G
(Blue- 21)
4.5
DK BLUE HR
(Blue- 89)
BLACK B
(Black- 5)
BLACK
N- 150
These are Vinylsulphone based dyes and are very popular because
of brilliancy, reproducibility of shades & can be applied by dyeing &
printing.

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ME
DYES
(iso4)WASHING
Perspiration
HYPO.
Dischargeability
SHADE
(4.0%)
LIGHT(1/1)
PARMAR ARJAN S
YELLOW ME 4 G
(Yell.- 160 A)
6-7
4-5
G.YELLOW MER
(Yell. 145)
6-7
ORANGE ME2 R
(Orange- 122)
4-5
RED ME4 B
(Red- 195)
4-5
RED ME6 B
(Red- 250)
3-4
N- BLUE ME2 G
(Blue- 194)
BLACK
HFGR
These are a bifunctional dye which gives high level fixation & has
very good fastness properties which can be applied at 40 0C to 600C.
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M
DYES
(iso4)WASHING
Perspiration
HYPO.
Dischargeability
SHADE
(4.0%)
LIGHT(1/1)
PARMAR ARJAN S
YELLOW M4G
(Yell.- 22)
5-6
4.5
ORANGE M2R
(Orange- 4)
RED M5B
(Red- 2)
4-5
4-5
4-5
RED M8B
(Red- 11)
4-5
4-5
4-5
MAGENTA MB
(Violet- 13)
4-5
N. BLUE M3R
These are highly reactive dyes and mainly used for dyeing.

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HE
DYES
(iso4)WASHING
Perspiration
HYPO.
Dischargeability
SHADE
(4.0%)
LIGHT(1/1)
PARMAR ARJAN S
YELLOW HE 4 G
(Yell.- 81)
5-6
4-5
G. YELLOW HER
(Yell.- 84A)
ORANGE HER
(Orange- 84)
4-5
RED HE 7 B
(Red- 141)
4-5
RED HE 8 B
(Red- 152)
4-5
4.5
GREEN HE 4 B
(Green- 19A)
N. BLUE HER
(Blue- 171)
4-5
4-5
These are high exhaust dyes with high fixation efficiency. These dyes
have superior light, wash & rubbing fastness which can be applied at
800C to 850C.
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H
DYES
(iso4)WASHING
Perspiration
HYPO.
Dischargeability
SHADE
(4.0%)
LIGHT(1/1)
PARMAR ARJAN S
YELLOW H 4 G
(Yell.- 18)
6-7
G. YELLOW HR
(Orange- 12)
ORANGE H2R
(Orange- 13)
4-5
RED H 8 B
(Red- 31)
3-4
N. BLUE RX
(Blue- 59)
4-5
4-5
BLACK HN
(Black- 8)
4-5
4-5
3-4
These are less reactive dyes and are used for dyeing as well as
printing.
NOTE: -
Kindly see annexure for colour samples.

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PARMAR ARJAN S
ORGANIZATION STRUCTURE
MANAGING DIRECTOR
(JASVANTRAI P. GANDHI)
GENERAL MANAGER
(MOHANSINH T. GOHIL)
CENTRAL EXCISE
CONSULTANT
(ARUNSINH N. RATHOD)
CHIEF ACCOUNTANT
(RAMESHBHAI D. GANDHI)
CHIEF CHEMIST
(BATUKGIRI A. GAUSWAMI)
SUPERVISOR
(HARJIBHAI G. BAMBHANIYA)
WORKERS
CLERK
(VASANTBHAI L. MAKWANA)

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PARMAR ARJAN S
TIME KEEPING SYSTEM

Time keeping system is one of the important functions which
every organization tries to maintain whether it may be a small scale
or a big scale industry. It is also an important function also for the
employees for the organization. The organization can achieve its
goals and achieve its success if the working of time keeping system
of a firm is perfectly set.
Adinath Dyestuffs Industries also have a beneficial time for the
employees as well as for the employees. The unit is been in only the
one shift and it sometimes moves to two shifts as per the order of the
customers. They keep a regular attendance register for the record for
their employees. The employees have to sign the register when they
enter the factory and when they leave the factory. The register is
regularly been checked by the M.D. at some intervals.
Office Timings: 9.00
2.00
4.30
5.00
AM to 2.00 PM
PM to 4.30 PM
PM to 8.00 PM
PM to 5.20 PM
1st Section
Lunch Time
2nd Section
Tea Time
Production timings: 9.00 AM to 1.00 PM

1.00 PM to 2.00 PM
2.00 PM to 8.00 PM
5.30 PM to 6.00 PM
1st Section
Lunch Time
2nd Section
Tea Time
There has been Flexibility in the time duration of both

employees as well as for the workers. Sometimes the employees give
some more time to the organization as per their time when their work
ends.
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PARMAR ARJAN S
EMPLOYEE SERVICES
Employees are said to be the heart of the organization. Without
employees no organization would work proper. Employees should be
provided full services from the organization because they play an
important role in the organization. It is said that An organization is
said to be healthy only and only if its employees are healthy.
Adinath Dyestuffs Industries provides the best services much
more than a small scale industry provides. As it is a small scale
industry and its unit is very small it provides full services to their
employees and their workers. Some of them are as below:
Full Security to the Staff
Public Holiday
Weekly Off
Medical Help to Staff and their Family
Provide Bonus
Insurance
Financial Help
Tea & Coffee as per their time
2 Pairs of Clothes during year
Thus it looks very good to see that the Adinath Dyestuffs Industries
takes very much care for the employee services & thus helps the
workers and the employees all round development and raise their
living standards.
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PARMAR ARJAN S
CONTRIBUTION OF THE UNIT TO THE INDUSTRY
Adinath Dyestuffs Industries is an oldest manufacturing unit for

reactive & organic dyes. Being a small scale unit, it also tries to
provide some facilities to society and the surroundings of Mahuva
city. It has established new machineries of latest technology for the
fast and safe work for their workers. Its 25% of trade is done in local
region while its 75% of trade is done internationally. So its products
are being exported world wide. Thus, manufacturing and exporting of
reactive & organic dyes has been proved beneficial for the industry in
India as well as abroad. Apart from this, it also gives physical as well
as financial help to their employees as and when needed.
It can be said that Adinath Dyestuffs Industries has also been
contributed a lot for the development of the industry. There have been
the noticeable contributions from the side of the company. Thus,
Adinath Dyestuffs Industries contributes well to the industry.

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PARMAR ARJAN S
INTRODUCTION
Finance is the life blood of modern business. Finance is
required to purchase expensive machinery, and also for day to day
expenses on raw materials, labour and operational and
administrative needs of business. All the above functions are carried
out at the top level in the organization and so the management of
finance is also done at the top level management or is carried out by
the finance manager, if any.
Definitions: Financial management means rising of adequate funds at the
minimum cost and using them effectively in the business.
Financial management is concerned with the efficient use of an
important economic resource, namely, Capital Funds.
In Adinath Dyestuff Industries, Financial Management is
handled by their well qualified M.D so their financial position is very
good. All the activities relating to finance are well planned by the
financial management. Adinath Dyestuff Industries is having a
separate financial department. The main aim of this department is to
raise finance at the right time and in right quantity and also to use it
most effectively. And so the financial department carries and solves
all the functions relating to finance. Finally it can be said that financial
management also plays an important role in the organization.

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ORGANIZATION OF THE FINANCE DEPARTMENT

GENERAL
MANAGER
CHIEF
ACCOUNTANT
ASSISTANT
ACCOUNTANT 1
ASSISTANT
ACCOUNTANT 2
CLERK
CASH
BANK

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PARMAR ARJAN S
INVENTORY & ACCOUNTING METHOD

Inventory method: This is one of the most important factors in the organization. In
simple words, Inventory means the Stock. The method of recording
the stock is known as Inventory Method.
In Adinath Dyestuff Industries, this method is being well
implemented. In - coming and out going of each and every item are
recorded in register.
Accounting Method: As per the rule of Government of India, on every 31 st March the
books of accounts are closed and got being audited by the Chartered
accountant and as per the account statement of C.A. the unit pays its
due of Income Tax.
In Accounting Method, profit is regarded as the revenue
realized during the period minus the actual costs and expenses
incurred in producing the revenue. This concept of profit is also
known as the residual concept.
In Adinath Dyestuff Industries, this method is also being well
implemented.
Thus it can be said that it depends on the type and firm of the
organization as how to implement the particular method.

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MANAGEMENT OF FIXED ASSETS

Fixed assets are those assets which are for long term usage
and are very expensive. Fixed assets play a very important role
during the closing of the unit. Machinery, land, building, motor car or
bikes, furniture etc. are the examples of fixed assets. Fixed assets
are also the way to raise the Capital fund of an organization. At last, it
can be said that, fixed assets are the important resources of an
organization and also plays a crucial role in the profit of an
organization.
Fixed assets consist of the cost of expenditure on the following
assets such as: Land
Building
Goodwill
Leaseholds
Plants & machinery
Furniture & fittings
Patents, trademarks & designs
Live stock & vehicle etc
In Adinath Dyestuffs Industries, management of fixed assets is
taken good into consideration. As Adinath Dyestuffs Industries is a
small scale industry, although its investment in fixed assets is very
high.
As the investment of Adinath Dyestuffs Industries in fixed
assets is very high, it is having a strong & good financial position in
business.

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PARMAR ARJAN S
Capital = Total Assets Current Liabilities.

FINANCIAL PLANNING
Financial planning is primarily a statement estimating the

amount of capital and determining its composition. The responsibility
of framing the financial plan rests with the top level management in
the organization. Without a detailed financial plan, the lower and
middle level management may develop its own policies and
procedures which would create confusion and waste such as loss of
time, goodwill and financial resources.
The factors taken into mind while developing the financial plan are as
follows: Analysis of past performance
Government policies
Alternative sources of finance
Degree of risk
Forecasting cash flows
Quantifying investment needs
Attitude of the management
In Adinath Dyestuffs Industries, the financial planning is done by
the managing director taking in mind all the above factors. Thus
we can say that Adinath Dyestuffs Industries is also been the part
of the Financial Planning.
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PARMAR ARJAN S
CONCLUSION
At the completion of my project, I would like to conclude that

this project report is being made on the basis of the information
given from the Adinath Dyestuffs Industry. This industry is so well
organized and managed that its products are accepted in national
as well as in international markets. I can surely say that this
industry is financially sound and having efficient & effective
management body that it has fair relations with its employees &
workers.
So I am very much grateful to the Adinath Dyestuffs Industries

for having such a nice training & tremendous support. Thus my
best wishes to Adinath Dyestuffs Industries to reach the peak of
success & prosperity.

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PARMAR ARJAN S
INTRODUCTION
In those industries where product passes through distinct
stages of production, the method of costing employed to ascertain
cost of production at each stage is known as Process Costing. It is
possible to ascertain the total desirable. Different quantities and types
of by products and wastages arise in various processes, which
makes it desirable to find out separate cost of each process or
operation for each unit. This method is used by industries where
there is a continuous flow of identical products and it is not possible
to distinguish one unit from another. There are numerous industries
using process costing, some of which are cost of the product even in
these industries, which is not as follows: textiles, chemical works,
soap- making, paints manufacturing, fertilizer industries etc.

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PARMAR ARJAN S
CONCEPT AND MEANING OF PROCESS COSTING
The method of cost accounting used by processing firms is

called process costing system. For each process function, product
costs lie direct materials, direct labor and factory overheads are
accumulated under process costing method. For instance, the
processing of a herbal medicine includes herbs processing, herbs
mixing,
herbs
medicine
making
and
packing.
Ascertainment of process costs facilitates to control costs, evaluate
performance and efficiency of each process. The cost of production
ascertained is compared with the prevailing market price of similar
products to assess performance. A constant reference of costs by
elements is needed to assess efficiency and performance of each
process. The purpose of assessing efficiency and performance of
each process can be achieved if a separate process account is
maintained for each process. The process account so maintained
provides necessary cost information essential for controlling the costs
and evaluating performance and efficiency of each process.
Process accounting helps a manufacturing firm to ascertain the cost
of production and the cost per unit of output at each stage of process.
The output of one process forms an input to the next process.
Transferring the output to the next process continues until the final
process produces finished products

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APPLICATION OF PROCESS COSTING

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
information.
Costing is generally used in such industries such as
Petroleum
Coal mining
Chemicals
Textiles
Paper
Plastic
Glass
Paints manufacturing
Biscuit works
Soap making
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PARMAR ARJAN S
Fertilizer industries etc
REASONS FOR USE

Companies need to allocate total product costs to units of
product for the following reasons:
A company may manufacture thousands or millions of units of

product in a given period of time.
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.
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.
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.
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

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on a daily basis through the production process, while at the

same time dealing with materials and output in huge quantities.
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.
FUNDAMENTAL PRINCIPLES & PROCESS

COSTING
The following are the fundamental principles of process costing:1. Cost of materials, wages and overhead expenses are collected
for each process or operation in a period.
2. Adequate records in respect of output and scrap of each

processor operation during the period are kept.
3. The cost per finished output of each process is obtained by

deviating the total cost incurred during a period by the number
of units produced during the period after taking into
consideration the losses and amount realized from sale of
scrap.
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4. The finished product along with its cost is transferred from one
process to the next process just like raw materials of that
process.
ELEMENTS OF PRODUCTION COSTING
The following are the main elements of production cost in

process costing:
Materials:
Generally in process costing, all the material required for

production is issued to the first process, where after processing it is
passed to the next process and soon. Some operation on the
material is performed in each process which has been passed from
the first process.
Labour:
Generally, the cost of direct labour is very small part of the cost
of production in industries adopting process costing. The direct
labour element becomes smaller and smaller while the overhead
element increases with the introduction of more and more automatic
machinery.
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Production overhead:
The overhead element of total cost is generally very high in

process costing great care is required to ensure that each process is
charged with a reasonable share of production overhead. The actual
overheads are debited to each process account.
FEATURES OF PORCESS COSTING
Production is continuous in a series of stages called processes.

Each Process is deemed as a cost centre and costs are
accumulated for each process separately along with finished
output and in progress.
Products and Processes are standardized.
The output of one process becomes the raw material to the
next process, usually till the final product is completed.
The cost of the previous process is transferred to the next
process along with the output. Sometimes, the transfer may be
at a transfer price inclusive of profit.

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There may be process losses of the input. They may be normal

or abnormal or both.
Completed and semi-finished goods must be expressed in
common terms for cost determination.
Since Production is of identical units, the total cost of a process
is to be divided with the unit of output to obtain the average cost
per unit.
Two or more products may be produced unavoidably in the
same process. They may be of equal importance or of
disproportionate values.
It is not possible or necessary to trace or identify specific loss of
material inputs with product or output.
ADVANTAGE OF USING PROCESS COSTING
1. Cost of each process and that of finished products can be

determined at short intervals, weekly or daily.
2. Cost control and control over production are more effective

because of uniform output and usage of predetermined costs
as budgeted or standard costs.
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3. Cost ascertainment is simple and less expensive.
4. Average cost per unit can be easily obtainable.
5. Indirect expenses can be apportioned and allocated more

accurately and reliable data can be obtained.
6. Valuation of inventories is easier and accurate.
7. Quotations become easier due to standardized processes.
DISADVANTAGES OF PROCESS COSTING
1. Costs obtained at the end of processes are historical costs and

their utility for cost control and managerial decision making is
not significant.
2. Inefficiencies in process can be concealed.
3. Later processes may be adversely affected due to the

inefficiency of earlier processes.
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PARMAR ARJAN S
4. Evaluating the efficiency of individual workers or supervisors is

difficult.
5. Apportionment of Joint Costs to common products may lead to

irrational pricing decisions.
OBJECTIVE OF STUDY
To find out different elements of cost in each process.
To find out per unit of finish goods of each process.
To make a comparative analysis of cost per kg of output of
each process for the financial year 2008-08 & 2009-10.
To find a trends in the cost per unit of finished goods of each
process in the financial year 2008-09 & 2009-10 and find the
cause of deviation for each process from both a positive angle
(decreasing cost) & negative angle (increasing cost).
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To find out the revisions & the causes of deviation.

To find out the % of output to total input & its maintainability in
the year 2009-10 as compare to the financial year 2008-09.
SCOPE OF THE STUDY

The term scope means the area covered by any particular
topic. Over here the topic of the study is Process costing. So the term
scope over here dictated that extent of the area or data related to
subjected matter that something deals with or to which it is relevant in
the Process Costing.
1)
The scope of research in Process costing is like cost
collection research, raw material cost, labour charges research etc.

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2)
In scope where if any amount is false, the effect on this
whole project or project maker have to suffer a lot.

3)
The main scope over here is to observing or examines
the Process Costing.

4)
Also one of the scope of Process costing research is to
maintain the various cost of research like raw-material purchase cost

research, production cost research, sales cost, etc.
5)
In the present scenario there is a complex business
environment, so the research has a several application which has

developed specific approach with special future.
WHAT IS RESEARCH
Research is done to gain some knowledge so as to it may aid in
understanding the information gathered on specific topic. It is
scientific and systematic way of understanding information on
specific and particular subjects. It is a scientific investigation to
understand the case and effect as well as the reasons through
investigation. It is an academic activity and it is to be used in
technical sense.
Research is an original contribution to the existing stock of
knowledge making for its development. It is the pursuit of truth with
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PARMAR ARJAN S
the help of study, observation comparison and experiment. In

short, the search for knowledge of finding solution to a problem is
research. Such term refers to the systematic method consisting of
solving the problem formulating of hypothesis, collecting the facts
or data. Analyzing the facts and reaching certain solution towards
the certain problems or in certain generalization for some
theoretical formulation.
Today competition and markets both have expanded; the

company now and then can not afford to undertake research
activity as research involves huge cost. The company undertakes
research activities when it perceives that something is going wrong
or there is lack of information to solve a particular problem.
RESEARCH METHODOLOGY
There are some distinctions made between research technique
and research methods. Research techniques refers to the
behaviour and instrument used in performing research operations
such as making observation, recording data, techniques of
processing data.
Research methodology refers to the behaviour and instrument
used in selecting and constructing research technique.

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PARMAR ARJAN S
All those methods which are used by the researchers during the
course of studying his/her research problem are termed as
research methodology. Research methodology is a way to
systematically solve the researcher problem. It may be understood
as a science of studying how research is done scientifically.
Research methodology has may dimensions and research
methods do constitute the part of the research methodology. Thus
the research methodology is not only the research methods but
also consider the logic behind the methods used in the context of
research study and explain by a particular method is used.
RESEARCH DESIGN
The particular structure designed by the researcher for the
purpose of his/her search is known as research design. It is an
arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose
with economic in procedure.
Thus, the research design is an outline of which the research
will do from operational implication to the final analysis of data.
SOURCE OF DATA :Data has to be collected from the right source so as to serve
the purpose of the research. Data are collected as per the
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PARMAR ARJAN S
requirement of the research project. There are two main source of

data.
(1)
PRIMARY DATA :-
The primary source means the data are collected from the first
time directly from the sample or population as per the requirement.
(2)
SECONDRY DATA :-
The secondary data are those which have already been collected by
someone else and which have already past through statistical
process like information available from news paper, magazine,
journals, web sites, books, or periodical reports, data services and
computer data banks.
For my research studies on process costing, I have used
the secondary data and I have a used the following instruments: Cost sheet of the company.
Web site: - www. Adinathindustries.com
Data related to production.
DATA PROCESSING
Any research work machineries out needs proper planning and
execution. It should start with clear- cut objectives, which should be
well, define so the direction of research can be determined.
(2008-2009)
DATA
SR.NO.
1
2
PARTICULARS
Raw-material
introduced
( Rs. 30 per unit )
Direct labours
Mixing
process
Spray
drying
process
Ball
milling
process
Spray
drying
process
6000 kg
-----
-----
-----
25%
15%
35%
25%

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PARMAR ARJAN S
3
4
5
6
7
( Rs. 40000 )
Electricity charges
10%
( Rs. 25000 )
Other raw-material
----( Rs.20 per unit )
Loss in weight
5%
Normal loss
3.34%
Sales price per ton Rs. 3750
30%
25%
35%
-----
-----
545 kg
7%
3%
6%
4%
7%
3%
Calculation :Mixing process A/C

PARTICULARS
To Raw-material
To Direct labour
To Electricity
KGs
6000
-
Rs.
180000
10000
2500
PARTICULARS
By Loss in weight
By Normal loss
By Process:-2 A/C
KGs
300
200
5500
Rs.
192500
Total
6000
192500
Total
6000
192500
Normal output = (Unit introduced) (loss in weight + normal loss)

= 6000-(300+200)
= 5500
Normal cost per unit for normal output = Total cost Normal output
= 192500 5500
= Rs. 35 per kg

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PARMAR ARJAN S
Spray drying process A/C

PARTICULARS
To Process:-1 A/C
To Direct labour
To Electricity
Total
KGs
5500
-
Rs.
192500
6000
7500
PARTICULARS
By Loss in weight
By Normal loss
By Process:-3 A/C
KGs
385
165
4950
Rs.
206000
Total
5500
206000
5500 206000

= 5500-(385+165)
= 4950
= 206000 4950
= Rs. 41.62 per kg
Ball milling process A/C
PARTICULARS
By Process:-2 A/C
To Direct labour
To Electricity
Total
KGs
4950
-
Rs.
206000
14000
6250
PARTICULARS
By Loss in weight
By Normal loss
By Process:-3 A/C
KGs
297
198
4455
Rs.
226250
Total
4950
226250
4950 226250

= 4950-(297+198)
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PARMAR ARJAN S
= 4455
= 226250 4455
= Rs. 50.78 per kg
PARTICULARS
By Process:-3 A/C
To other raw
material
To Direct labour
KGs
4455
545
Rs.
226250
10900
PARTICULARS
By Loss in weight
By Normal loss
KGs
350
150
Rs.
-
10000
By Finished good
A/C
4500
258000
To Electricity
To packaging exp
8750
2100
5000
258000
Total
5000 258000
Total

= 5000-(350+150)
= 4500
= 258000 4500
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PARMAR ARJAN S
= Rs. 57.33 per kg

If unit introduced = Normal output
6000 kg
100kg
= 4500 100 6000
4500 kg
?
= 75 kg
2009-2010
DATA
SR.NO.
1
2
3
4
5
PARTICULARS
Raw-material
introduced
( Rs. 35 per unit )
Direct labours
( Rs.110000 )
Electricity charges
( Rs. 60000 )
Other raw-material
( Rs.25 per unit )
Loss in weight
Mixing
process
Spray
drying
process
Ball
milling
process
Spray
drying
process
10500 kg
-----
-----
-----
25%
15%
35%
25%
10%
30%
25%
35%
-----
-----
-----
918 kg
5%
7%
6%
7%

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PARMAR ARJAN S
6
7
Normal loss
3.34%
Sales price per ton Rs. 4500
3%
4%
3%
Calculation :Mixing process A/C

PARTICULARS
To Raw-material
To Direct labour
To Electricity
KGs
10500
-
Rs.
367500
2750
6000
PARTICULARS
By Loss in weight
By Normal loss
By Process:-2 A/C
Total
10500
401000
Total
KGs
525
350
9625
Rs.
401000
10500 401000

= 10500-(525+350)
= 9625
= 401000 9625
= Rs. 41.66 per kg
PARTICULARS
To Process:-1 A/C
To Direct labour
To Electricity
Total
KGs
9625
-
Rs.
401000
16500
18000
PARTICULARS
By Loss in weight
By Normal loss
By Process:-3 A/C
KGs
634
289
8702
Rs.
435500
Total
9625
435500
9625 435500

= 9625-(634+289)
= 8702
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PARMAR ARJAN S
= 435500 8702
= Rs. 50.05 per kg
Ball milling process A/C
PARTICULARS
By Process:-2 A/C
To Direct labour
To Electricity
Total
KGs
8702
-
Rs.
435500
38500
15000
PARTICULARS
By Loss in weight
By Normal loss
By Process:-3 A/C
KGs
522
348
7832
Rs.
489000
Total
8702
489000
8702 489000

= 8702-(522+348)
= 7832
= 489000 7832
= Rs. 62.44 per kg
PARTICULARS
By Process:-3 A/C
To other raw
material
To Direct labour
KGs
7832
918
Rs.
489000
22950
PARTICULARS
By Loss in weight
By Normal loss
KGs
613
262
Rs.
-
27500
By Finished good
7875
564500

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PARMAR ARJAN S
A/C
To Electricity
To packaging exp
Total
21000
4050
8750 584500
Total
8750
584500

= 8750-(613+262)
= 7875
= 584500 7875
= Rs. 71.68 per kg
If unit introduced = Normal output
10500 kg
100kg
7875 kg
?
= 7875 100 10500

= 75 kg
DATA ANALYSIS & INTERPRETATION

The company is production consist of six process is as follows:
1)
Mixing process
2)
Spray drying process
3)
Ball milling process
4)
Spray drying process

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PARMAR ARJAN S
The cost of conversion can be calculated for each process

independently on per unit basis. The unit of measurement is kgs so
from computing the cost per kg of output in each process. The cost
per kg of the final output of the last process can be computed easily.
The overall cost per kg of output in each process has gone
down in same processes very highly. When the cost per kg of output
of the year 2008-09 are compared with 2009-10.
The cost of 1st process Mixing process was Rs.30 per kg
of output in the year 2008-09, while it was Rs. 35 per kg in the

year of 2009-10.
The cost per kg of finished output of Spray Drying process
was Rs. 35 per kg in the financial year 2008-09. While it was

Rs.41.66 per kg of output in the year 2009-10.
The cost per kg of output in 3 rd process Ball milling process
was Rs.50.78 per kg of output in the year 2008-09. While it was

Rs 62.44 per kg of output in the year 2009-10.
The cost per kg of finished output in 4 th process Spray
drying process was Rs.57.33 per kg of finished goods in the

year 2008-09. While it was Rs.71.68 per kg in the year2009-10.
The finished output as % of raw material introduced was study
as 75 kgs per 100 kgs of input in both the financial year 2008-09 &
2009-10.
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PARMAR ARJAN S
RESEARCH FINDING
The cost per kg of output of process in the 1 st process Mixing

process has decline by 10 % in the year 2008-09.
The cost per kg of output of process in 2 nd process Spray

drying process has declined by 16.84 % in the year 2009-10
compare to 2008-09.

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PARMAR ARJAN S
In the 3rd process Ball milling process the cost per kg of

output process had decline by 18.67 % in the year 2009-10
compare to 2008-09.
The cost per kg of output of process in the 4 th process Spray
drying process has decline by 20.02 % in the year 2009-10

compare to 2008-09.
The decrease in cost was possible due to high efficiency and
efficient monitoring of different elements of cost in the process. The
management ensures that raw-material was purchase in the right
time in the right quality at the right price at right cost so that material
cost where control & reduced. This is improve the overall profitability
of the concern.
SUGGESTIONS
In the ADINATH DYSTUFF PVT LTD used method of
production is very outdated and not use modern technology

to produced dyes. If the advance technologies are used by
ADINATH DYSTUFF PVT LTD than the productivity
increases and cost of product become very low and
profitability of the company increases.

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PARMAR ARJAN S
In the ADINATH DYSTUFF PVT LTD, workers are unskilled.

If the training given to the workers than the production
efficiency and product quality as well as low cost of product
so profitability increase.
ADINATH DYSTUFF PVT LTD is small industries the scope
of expansion is very large.
Companies are not given any advertisement in the domestic
market. If the advertisement given by the company than the
demand of product are increases which is result in to more
production of product.
LIMITATION OF STUDY
This report is prepared only for my education purpose.

My industrial training report is completed within 21 days.
There may be a possibility of grammatical mistake.
- 50 -
PARMAR ARJAN S
The figures, I have taken for analyzing process costing is

approximate.
CONCLUSION
This firm is produced dyes without creating air pollution and

water pollution. The manufacturing dyes are not harmful for the health
and environment. So, its product are really good one for us and
environment. It has a steady growth and profitability is good due to
the cost of the product not increases quickly because the control of
the managing director is very strict.
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PARMAR ARJAN S
I am really very thankful to all professors who guided me in all

possible way. I am also thankful to proprietor of the firm for their
support in preparation of this project report on process costing.
BIBLIOGRAPHY
Book referred : Financial management by: Shri B.S. Shah.

Financial management by: Shari Khan & Jain.

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PARMAR ARJAN S
Research methodology by: Prof. C. Kothari.

Accountancy - 4 by : Sudhir Prakashan
Web sites
o www.adinathindustries.com
o http://www.karthik.sparkzspot.com/?p=1120
o http:// advantages-using-process-costing. Com
o http://smallbusiness.chron.com/advantages-processcosting-4065.html
o http://www.brighthub.com/office/finance/articles/78918.a
spx

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PARMAR ARJAN S

ADINATH DYESTUFF INDUSTRIES

ADINATH DYESTUFF INDUSTRIES

ADINATH DYESTUFF INDUSTRIES

Name of the Unit

ADINATH DYESTUFF INDUSTRIES

ADINATH DYESTUFF INDUSTRIES

HISTORY & DEVELOPMENT OF THE UNIT

M/s ADINATH DYESTUFF INDUSTRIES is a partnership firm

ADINATH DYESTUFF INDUSTRIES

SIZE OF THE UNIT AND FORM OF THE ORGANIZATION

ADINATH DYESTUFF INDUSTRIES

Adinath Dyestuff Industry is a partnership firm which

Raw material like Hydrochloric acid, vinyle sulphone, sodium

SPRAY DRYING PROCESS

ADINATH DYESTUFF INDUSTRIES

3. Spray Dryer: The above materials are hooted up with the

Hot Air Generator: In this process it is used in the

5. Ball Mill: Ball mill is used to make above mentioned

6. Laboratory: It is the place where Lab Technicians measure

Packing: The above materials are packed in HDPE

ADINATH DYESTUFF INDUSTRIES

ADINATH DYESTUFF INDUSTRIES

ADINATH DYESTUFF INDUSTRIES

ADINATH DYESTUFF INDUSTRIES

Kindly see annexure for colour samples.

ADINATH DYESTUFF INDUSTRIES

ADINATH DYESTUFF INDUSTRIES

TIME KEEPING SYSTEM

Production timings: 9.00 AM to 1.00 PM

There has been Flexibility in the time duration of both

CONTRIBUTION OF THE UNIT TO THE INDUSTRY

Adinath Dyestuffs Industries is an oldest manufacturing unit for

ADINATH DYESTUFF INDUSTRIES

ADINATH DYESTUFF INDUSTRIES

ORGANIZATION OF THE FINANCE DEPARTMENT

ADINATH DYESTUFF INDUSTRIES

INVENTORY & ACCOUNTING METHOD

ADINATH DYESTUFF INDUSTRIES

MANAGEMENT OF FIXED ASSETS

ADINATH DYESTUFF INDUSTRIES

Capital = Total Assets Current Liabilities.

Financial planning is primarily a statement estimating the

At the completion of my project, I would like to conclude that

So I am very much grateful to the Adinath Dyestuffs Industries

ADINATH DYESTUFF INDUSTRIES

ADINATH DYESTUFF INDUSTRIES

CONCEPT AND MEANING OF PROCESS COSTING

The method of cost accounting used by processing firms is

ADINATH DYESTUFF INDUSTRIES

APPLICATION OF PROCESS COSTING

Fertilizer industries etc

REASONS FOR USE

A company may manufacture thousands or millions of units of

ADINATH DYESTUFF INDUSTRIES

on a daily basis through the production process, while at the

Materials part way through a process (e.g. chemicals) might

FUNDAMENTAL PRINCIPLES & PROCESS

2. Adequate records in respect of output and scrap of each

3. The cost per finished output of each process is obtained by

ELEMENTS OF PRODUCTION COSTING

The following are the main elements of production cost in

Generally in process costing, all the material required for