INSTITUTE OF COMMERCE, NIRMA UNIVERSITY

B.COM (HONOURS) PROGRAMME

SEM-2

GROUP PROJECT ON COST ACCOUNTING

Submitted by group no : 7
 HARSH PATWA (IC171120)
 HARSH TRIPATHI (IC171121)
 HARSHIL VIRADIYA (IC171122)

Submitted to:
Dr. Sumita Shroff Goyal
 INDEX

Job costing –Lockheed martin Page no- 1

Process costing- Hershey food corporation Page no- 1
Contract costing- DSME Page no- 1
Service costing- Transport corporation India Page no- 2
Multiple costing- Toshiba Page no- 2

Process costing- Raymond Page no- 3,4

Contract costing- JVK infra. LTD. Page no- 4,5
Service costing- TCI ltd. Page no- 5,6
Job costing- Eroes International Page no- 6
Multiple costing- Kesar enterprise. LTD. Page no- 7

Job costing- Bombay Dying Page no-8,9

Process costing- JCT LTC. Page no-10,11,12
Contract costing- Jaiprakash association Page no-13
LTD.
Service costing- Allcargo Logistics Page no-14
Multiple costing- Hitachi LTD. Page no- 15
Chapter-2 Video Transcript Page no- 16,17
Chapter-3 ABC analysis and own venture Page no.- 18,19
Chapter-4 Conclusion & Contributions Page no- 20
 CHAPTER-1
Methods of costing and their corresponding companies

HARSH PATWA (IC171120)

1.JOB COSTING –“LOCKHEED MARTIN”
Lockheed Martin (Advanced Technology) company has worldwide
interest in aeroplane ,defence etc. It headquarter in Bethesda
Maryland , Washington D.C ,with 97,000 employees worldwide.
The company uses job costing because they make missile products
and they records revenue and cost for each job .Job at Lockheed
Martin results in a unique product and has different material and
labour requirements and managers also want to review actual
revenues and cost for each job to see if the job is profitable , accuracy
of cost estimates.
2.PROCESS COSTING -“HERSHEY FOODS
CORPORATION”
Hershey Food Corp. is best known for its chocolate products,
including brands like Almonds Joy ,Hershey’s kisses , and Reese’s.
Hershey’s products are sold in than 90 countries worldwide.
Hershey Food Corp.. uses process costing since it produces identical
units of product in batches employing a consistent process .Process
Costing require the use of work –in- progress inventory accounts for
each process. Thus Hershey would track production costs using
separate work-in-progress inventory accounts for each stage of
production.
3.CONTRACT COSTING-“DAEWOO SHIPBUILDING AND
MARINE ENGINEERING”
Daewoo Shipbuilding & Marine Engineering Co., Ltd (DSME) is
one of the "Big Three" shipbuilders of South Korea ).
DSME uses Contract Costing because costs are allocated , collected
and accumulated according to the contract works. Each contract is
treated as a separate entity in which each conract account may be
maintained separately or in general ledger itself.
4.SERVICE COSTING –“TRANSPORT CORPORATION
INDIA LTD.
Transport Corporation of India Limited is an integrated multi-modal
logistics and supply chain solutions provider in India with a Global
presence, headquartered in Gurugram, Haryana, India. It was
founded in 1958 as a 'one man one truck' company by Shri Prabhu
Dayal Agarwal fondly known as PD JI at Kolkata, India. TCI has
1400+ offices all across India with 5000+ employees.
This Company apply Service Costing because first, log sheet is
maintained for each vehicle to record the details of trips, running
time, capacity, distance covered, cost of petrol/diesel, lubricants,
loading and unloading time etc. made by the vehicle on daily basis ,
secondly ,all costs incurred during a particular period are collected
from various documents and then a proper calculation of total cost
unit is very important so as to correctly ascertain the cost per unit of
transport service provided. The cost unit for passenger transport is
passenger kilometre and for goods transport is tonne kilometre.
5.MULTIPLE COSTING-“TOSHIBA”
Toshiba, is a Japanese multinational conglomerate , headquartered
Tokyo,Japan. Its diversified products and services include
information technology and communications equipment and
systems, electronic components and materials, power systems,
industrial and social infrastructure systems, consumer electronics,
household appliances, medical equipment, office equipment, as well
as lighting and logistics.
Company uses this costing because as the final products needs a cost
associated with it , so do each of the parts created by the other
process .Each component can be and usually is costing using
different practise.
 Harshil Viradiya (ic171122)
1) Process costing :
This method is mostly used in mass production industries
manufacturing standardised products in continuous process. Process
costing methodology that traces and accumulates direct cost and
allocates indirect costs of manufacturing process. In this method
costs are accumulated for each process or department. Here raw
material has to passes through several processes. In order to derive
cost per unit, the total cost of process is divided by the number of
units produced. This method applicable where goods or service
repetitive operations.
Process costing applied on Raymond:
Raymond Company is Indian branded fabric and fashion retailer,
incorporated. It is founded in 1925. Raymond headquarters in
Mumbai. Raymond producing suiting fabric, garments, denim,
cosmetic etc. Raymond shops with network of over 700 retail shops
spread across India and overseas, in 200 cities.
 Yarn cost :
Yarn is the major part of making Raymond’s products like suit,
garments, fabric, denim etc. so first Raymond have to borrow yarn
from his vendor for that have to pay out some cost and this cost will
be incurred in final goods.

 Cutting cost:
Cutting is the most part for prepare kind of products. Company have
to give contract to contractor do cutting. By this order company have
to pay some cost to the contractor. It will be incurred in final goods.

 Stitching cost:
 If factory pay piece rate to operator for the stitching purpose then
take piece rate or calculate direct stitching labour cost from the
monthly wages both are calculate upon final goods.

 printing cost :
Make such colourful products have to do print upon Raymond’s all
verities like suit, fabric etc. for that company have to hire some
machinery and labour.
This type rise machinery cost and labour cost which is incurred in
final products.

 Finishing cost:
Finishing process includes thread trimming, checking, ironing, and
packing and finally company calculated process wise cost and sum
up those finishing cost. It can take monthly basis in finishing
department.
This type Raymond’s product come through above all process and
above all cost are affected on products.

2) Contract costing:
Contract means agreement between customer and companies.
Contract costing is the variation of job costing therefore principle of
job costing applies on this method. There are small different between
job costing and contract costing is that job is small and contract is
big so we can say that contract is big job and job is small contract so
mostly principal of job costing applied on this method. Generally the
duration of contract is long period. In this method company are
working on requirement basis of customer. Here this costing method
applied to determine GVK’s cost of construction work performed as
per the customer’s specification.

Contract cost applied on GVK Infrastructure LTD

GVK’s full name is Gunupati venkata Krishna. GVK is working on
contract basis of customers in construction, established in
Hyderabad. They makes Airports, Hospitality, Bridges, etc they take
contract for the specific time period as per customer order, recently
they took order for making airport of Navi Mumbai and as per
customer requirement completion contract they provide some
resources, some equipment, subcontractor, machinery, labour
supplier, In which some specific direct cost and indirect cost
incurred such as

 Direct cost
Direct cost are those JVK temporary office structures, specific
salaries for foremen, engineers and job superintendents and rent for
specific equipment, labour wages these all expenses are contributing
in contract cost.
 Indirect cost:
Indirect costs are those bookkeeper, employees who don’t woke on
actual job site, insurance all expenses contributing in contract cost.

3) Service costing:
Service costing is like operation costing which is used in undertaking
which provide services instead of manufacturing products. Service
cost is cost of providing service to the manufacturing products. This
cost mostly used by transportation industries.

Service costing applied on TCI Express LTD

TCI Company’s full name is Transportation Corporation of India
limited. TCI express provide services to the manufacturing products
through land, air and anywhere in India and world whenever
customer book shipment through TCIEXPRESS, rest assured it will
be delivered on time every time.TCI seaway has well equipped ship
in its fleet and caters to the coastal cargo requirement for
transporting container and bulk cargo from one country to another
country.
TCI Express whatever service provided in which some specific cost
incurred such as labour cost, packaging cost, transportation cost, rent
of ship, warehousing, insurance expenses, logistic management fees,
distribution processing fees etc so that we can say that theses all of
costs are service costing.

4) Job costing:
Job costing is specific order costing which applies where work is
undertaken to customer’s special requirement and each order is of
short duration comparative with those to which contract costing. Job
is cost unit which consist of single order or contract. The cost of
completed job will be the material used for the job.

Job costing applied on Eros international company:

Eros international is pioneer and innovator in Indian film
entertainment. Over past 39 years, the Eros group has acquired co-
produced and distributed some of the most recognized and
successful Indian films across theatrical, television and other
formats. As per customers (like directors) orders Eros are makes
films and Eros has globally released Indian language film which has
been amongst the top box office grossing films in India. As per their
customers order Eros distribute films worldwide, multi-channel in
locale language distribution network of their parent company. Non
Indian customer who views Indian film for them dubbed in local
language.
So for the making films some cost will be incurred which is sets
expenses, some equipment, camera’s cost, budget need to pay actors,
graphics expenses, films distribution expenses etc so we can say that
these all kind of expenses are job costing.
5) Multiple costing :
Multiple cost is also known as composite costing, when the output
is comprised pf many assemble parts or components as with
machinery, car, television, costs have to be ascertained for each
component as well as with finish products. Different methods of
costing may involve in such costing for different components
therefore this type of costing is known as composite costing or
multiple costing.
Multiple costing applied on KESAR ENTERPRISE LTD
KESAR ENTERPRISE is manufacturing cogeneration machine.
Kesar’s cogeneration plant is at Baheri and Uttar Pradesh. For the
manufacturing this machine they require some specific parts such as
gasoline engines, diesel engines, heat exchangers, some electrical
equipment, some metal parts, heat boiler, iron some instruments, like
bolt, screw etc. These all kind of parts is assemble and then after it
will become final product. So we can say that as per the above
process of becoming final product in which many costs are incurred
as above so these all costs are multiple costs.
Harsh Tripathi (IC171121)
JOB COSTING
Company-THE BOMBAY DYEING & MFG.CO.LTD.

Bombay Dyeing was est. on 23rd August 1879 and is the flagship
company of the Wadia Group. The primary business is of the
company is Textiles. The company is one of the oldest Textile
company which is currently present (working) of the country. The
major products of the company is BED SHEET, TOWEL and
BLANKETS.

JOB COSTING
Job costing is a system determine manufacturing costs
systematically by dividing them in overhead, direct material and
direct labour costs and estimating them at their actual value.
Manufacturing firms are using job costing to control the use of raw
materials, labour hours and equipment by allocating the cost of each
customer order separately.

HOW JOB COSTING IS APPLIED IN BOMBAY DYEING

As to manufacture something the organisation needs material to
produce its products and as it’s a very basic thing that for textile
company the material to produce its textile products is Cloths. So the
direct material used by Bombay dyeing in their products is Cloths,
Dye, lining, zips pads, labels, tapes, fusible, packing material.
The cost of direct labour in Bombay Dyeing includes cutting, fusing,
regular sewing, special machine operations, pressing, finishing,
inspection and packing. Labours of all types and grade has a direct
overhead which includes holiday pay, sick pay, fringe benefits, etc
and the statutory payments made by the employer for each
employee. This is usually expressed as a percentage of salary and
when this percentage is added to the employee’s wage, it becomes
the basis of calculating of direct labour cost.
Bombay Dyeing also takes order for some specific orders in which
the company manufactures its product according to the customers
want. For example many Hotels orders their rooms bed sheet and
towels to Bombay Dyeing according to their theme or requirement
of their rooms. Like the name of the hotel on the towel and bed sheet
according to the theme of the room or the colour of then rooms. So
when this type of order is received Bombay Dyeing has to
manufacture this products separately just according to the customers
requirement so in the job order costing is applied.
 PROCESS COSTING

COMPANY – JCT LIMITED

JCT was established in the year 1923. JCT Limited, one of the
leading manufacturer of textiles and filament yarn, is the flagship
company of Thapar Group. With operations in two distinct
businesses – cotton, synthetic & blended textiles and nylon filament
yarn – JCT Limited is a market driven company flued by good work
ethic, values and a high standard of performance. It is this culture
that has helped establish the company’s reputation as one of the
finest in the country.

PROCESS COSTING
Process costing is the method of assigning costs to units of
production in companies producing large quantities of homogeneous
products. 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.

HOW PROCESS COSTING IS APPLIED IN JTC LTD.

Process involved in textile manufacturing is as follows:-
 Spinning
 Weaving
 Dyeing
 Printing
 Finishing
 SPINNING
Spinning is the twisting together of drawn-out strands of fibers to
form yarn, and is a major part of the textile industry. The yarn is then
used to create textiles, which are then used to make clothing and
many other products. It is the process of converting or twisting fibres
like cotton, rayon into yarn. If simply we want to understand then it
means making threads from textile fibres, so there is an separate
machine just only for the spinning of the fibers which are heavy in
cost and even costly to maintain it, so the cost of only spinning
process is to be calculated separately.
WEAVING
Weaving involves using a loom to interlace two sets of threads at
right angles to each other: the warp which runs longitudinally and
the weft (older woof) that crosses it. One warp thread is called an
end and one weft thread is called a pick. The warp threads are held
taut and in parallel to each other, typically in a loom. There are many
types of looms.
 Shedding: where the ends are separated by raising or lowering head
frames (heddles) to form a clear space where the pick can pass
 Picking: where the weft or pick is propelled across the loom by hand,
an air-jet, a rapier or a shuttle.
 Beating-up or battening: where the weft is pushed up against the fell
of the cloth by the reed.
The machinery used in the weaving process is huge in amount. The
entire cost of the weaving process can be calculated separately.
DYEING
Dyeing in textiles is a process in which colour is transferred to a
finished textile or textile material (like fibers and yarns) to add
permanent and long-lasting colour. It can be done by hand or by
machine. Dyes can come as powders, crystals, pastes or liquid
dispersions, and they dissolve completely in an aqueous solution like
water. When the textile and the dye come into contact, the textile is
completely saturated by the dye and coloured. The ink or the colour
and the machines used in the dyeing process is the cost of printing
of the textile and can be calculated separately.

PRINTING
Textile printing is the process of applying colour to fabric in definite
patterns or designs. In properly printed fabrics the colour is bonded
with the fiber , so as to resist washing and friction . Textile printing
is related to dyeing but in dyeing properly the whole fabric is
uniformly covered with one colour, whereas in printing one or more
colours are applied to it in certain parts only, and in sharply defined
patterns. The ink or the colour and the machines used in the printing
process is the cost of printing of the textile and can be calculated
separately.

FINISHING
Finishing refers to the processes that convert the woven or knitted
cloth into a usable material and more specifically to any process
performed after dyeing the yarn or fabric to improve the look,
performance, or "hand" (feel) of the finish textile or clothing. All
the process mentioned above are the process to make the products of
JCT LTD. So this costs are affected to produce its products.
SERVICE COSTING
COMPANY- ALLCARGO LOGISTICS LTD.
Allcargo the part of Avvashya Group. It was founded in the year
1993 by Shashi Kiran Shetty. The company operated across 90
countries and is the India’s largest publicly listed logistic company.

SERVICE COSTING
Service costing is a type of operation costing which is used in
organisations which provides service instead of producing goods.

HOW SERVICE COSTING IS APPLIED IN ALLCARGO

LOGISTICS LTD.
Transport Costing is one of the major costing of a logistic company.
It many be internal transport to carry good from one station to
another or external transport to deliver the goods to the costumers.
The cost is calculated in the numbers of kilometres run by the
particular vehicle travelled and fuel used.
The cost for the maintenance and operations of the warehouse. As
the company has to store the goods so the need the place to store the
goods. The cost of the warehouses can be calculated in the terms of
the area or the size of the warehouse.
Loading and Unloading costs. The company has to load and unload
the goods to transport it from one place to another. So the loading
and unloading is done through heavy and huge machineries ,so the
company has to purchase as well as maintain this machines.
Cost of maintaining the Goods. Some of the goods need to kept in
very cold temperature and some are need to be kept in hot or humid
temperature so the company has to provide that kind of rooms to
maintain this goods which are arrived and are going to depart.
Security of the goods. As the goods in the company are not their
goods they are of others they just transports the goods so the
company has to bare the cost for the security of the goods.

CONTRACT COSTING
COMPANY-Jaiprakash Associates Limited
The Jaypee Group is an Indian conglomerate based in Noida, India.
It was founded by Jaiprakash Gaur which is involved in well
diversified infrastructure conglomerate with business interests in
Engineering & Construction, Power, Cement, Real Estate,
Hospitality, Expressways, IT, Sports & Education (not-for-profit).
CONTRACT COSTING
Contract costing is the tracking of costs associated with a specific
contract with a customer. The entire project is done according to the
preference and the needs of the customer.
HOW CONTRACT COSTING IS APPLIED BY
JAIPRAKASH ASSOCIATES LTD.
Jaiprakash associates ltd. Is one of the major real estate
(construction) company in the country. It builds building according
to the contract or order given by the any customer. Mostly the
customers of this company are any other huge corporate companies.
So, generally the project are huge and very costly. The major costs
occurred by the company during a given contract are:
LABOUR COST: It is one of the major cost of the projects. The
cost is depended according to the time worked by the labour and
sometimes it also depends upon the class or level or according to the
skills of the labour. It also includes the salary of the staff or the site
engineer till the time the site is not ready.
MATERIAL COST: This is also one of the major cost of the
project. As we know that to build a building there is the need to
materials for example- bricks, sand, cement, rods, steel, etc.
THE COST OF PURCHASING EQUIPMENT: This cost is also
important as the site needs huge machineries to construct a building
like crane, tractors, JCB, bulldozer, etc.
All this cost are kept in record by the company then this all costs are
reimbursed by the customer plus the profit as the company takes
order for profits only.

MULTIPLE COSTING
COMPANY- HITACHI LTD.
Hitachi is a highly diversified company that operates eleven business
segments: Information & Telecommunication Systems, Social
Infrastructure, High Functional Materials & Components, Financial
Services, Power Systems, Electronic Systems & Equipment,
Automotive Systems, Railway & Urban Systems, Digital Media &
Consumer Products, Construction Machinery and Other
Components & Systems. Its headquarters is in Tokyo, Japan. In this
project our product of Hitachi is air conditioner.
MULTIPLE COSTING
When the output is comprised of many assembled parts or
components, as with television, motor cars, Air conditioner or
electronics gadgets, costs have to be ascertained for each
component, as well as with the finished product.
HOW MULTIPLE COSTING IS APPLIED IN HITACHI LTD.
An air conditioning system generally consists of five mechanical
components:
1. Compressor
2. Fan
3. Condenser Coil (Hot)
4. Evaporator Coil (Cool)
5. Chemical Refrigerant
All the above part are needed to manufacture air conditioner and
therefor the part are to be manufactured by the company to make the
finished product and as to manufacture this part the company has to
bare the manufacturing cost of it to make a finished product (air
conditioner) by assembling all this parts.
 CHAPTER-2
Video Transcript
HOW HERSHEY’S KISSES ARE MADE

FERMENTATION (STEP 1)
Cocoa beans are placed in large heaps for one week to allow the
cocoa flavour to develop.

ROASTING (STEP 2)
The Cocoa Beans are roasted at very high temperatures.

HULLING (STEP 3)
A Hulling machine separates the shell from the inside of the bean
(called the nib).

MILLING (STEP 4)
The nibs are grounded into chocolates liquor (a liquid with pure
chocolate flavour that contains no alcohol).

MIXING (STEP 5)
The Chocolate liquor is mixed with butter, sugar and milk , this
mixture is dried into a brown powder , called Chocolate Crumb ,and
processed into chocolate paste .

MOLDING (STEP 6)
Machines are used to fill more than 1,000 kisses per minute with
chocolate. The chocolate is then chilled with to form solid kisses’s
shape.

PACKAGING (STEP 7)
The candy is wrapped , packaged and ready to be shipped.
 CHAPTER-3
ABC analysis and cost classification of the venture
selected.

ABOUT OUR OWN VENTURE

The venture we have selected is a shop of burger. The cost included
in the venture of a burger shop would be

MATERIAL COST:

 Bread
 Patty
 Cheese
 Sauces
 Packing (to wrap the burger)
 Cold-Drink
 Ice (for cold-drink)

FIXED COST:
 Rent of the shop. As the venture would be quite small in the
initial stage it would be difficult to purchase an shop.

VARIABLE COST:

 Lighting of the shop

 Gas used to cook the burger
 Salaries paid to the cook of the venture
 Telephone expenses to receive the orders for delivery
 Vehicle fuel for the delivery of the orders
 Internet bill/expenses for online ordering system
ACTIVITY BASED COSTING IN OUR VENTURE
Activity-bases costing is a costing methodology that identifies
activities in an organisation and assigns the cost of each activity with
resources to all products and services according to the actual
consumption by each.

Suppose that ever the bill of lighting and gas comes is divided(amt.)
by burger and cold-drinks then the number (amt.) between both
burger and cold-drink would be same. But burger used more gas and
lighting as compare to cold-drink so it would not be fair to divide
the cost of lighting and gas in equal amount for both burger and cold-
drink. So we need to identify the amount of lighting & gas used by
burger so we can price the burger according to it (not including other
costs). So the price of the burger would be more then the price of the
cold-drink. If activity-based costing was not done for burger and
cold-drink it would been an difficult task to price the both products.
Therefore Activity-based costing is necessary for our venture.
 CHAPTER-4
Conclusion
By working on this project we came to know about various types of
costings in detail and how this types of costing are used/practised in
real by various listed companies. We learned that how costing is
important for an firm by doing ABC analysis by making our own
firm.

Contribution by group member in the project

1) Harsh Patwa (IC171120)
 JOB COSTING –“LOCKHEED MARTIN”
 PROCESS COSTING - “HERSHEY FOODS
CORPORATION”
 CONTRACT-COSTING-“DAEWOO
SHIPBUILDING AND MARINE ENGINEERING”
 SERVICE-COSTING –“TRANSPORT
CORPORATION INDIA LTD.
 MULTIPLE COSTING-“TOSHIBA”
 Video and its Transcript

2) Harsh Tripathi
 Job Costing- Bombay Dying
 Process Costing- JCT LTD.
 Contract Costing- Jaiprakash Associates Limited.
 Service Costing- Allcargo Logistics LTD.
 Multiple Costing- Hitachi Ltd.
 Own Venture
 ABC analysis for the venture (with Harshil)
 Project Structure (chapter, index, etc.)
3)Harshil Viradia
 Job Costing- Eroes International
  Process Costing- Raymond LTD.
 Contract Costing- GVK Infra LTD.
 Service Costing- TCI
 Multiple Costing- Kesar Enterprise LTD.
 ABC Analysis of the selected venture (with Harsh.T)
ACKNOWLEDGEMENT

WE WOULD LIKE TO EXPRESS OUR SPECIAL THANKS OF

GRATITUDE TO OUR DR. SUMITA SHROFF GOYAL AS WELL AS
OUR DEAN PROFESSOR DEEPAK DANAK WHO GAVE US THE
GOLDEN OPPORTUNITY TO DO THIS WONDERFUL PROJECT ON
STUDYING ABOUT “ COST ACCOUNTING USED BY REAL
COMPANIES ” WHICH ALSO HELPED US IN DOING A LOT OF
RESEARCH AND WE CAME TO KNOW ABOUT SO MANY NEW
THINGS, WE ARE REALLY THANKFUL TO THEM. SECONDLY WE
WOULD ALSO LIKE TO THANK OUR PARENTS AND FRIENDS
WHO HELPED US A LOT IN FINALIZING THIS PROJECT WITHIN
THE LIMITED TIME FRAME.