2012 Product Costing Recipe Spice Adeel A. Siddiqui Sha n F o o - - PDF document

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2012 Product Costing Recipe Spice Adeel A. Siddiqui Sha n F o o - - PDF document

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2012 Product Costing Recipe Spice Adeel A. Siddiqui Sha n F o o ds (Priva te ) L td . wa s fo unde d in 1981 in a sing le ro o m a s Sha n Ma sa la . L a te r, due to its po pula rity, the c o mpa ny wa s na me d Sha n F o o ds. It

slide-1
SLIDE 1

Adeel A. Siddiqui

2012

Product Costing – Recipe Spice

Sha n F

  • o ds (Priva te ) L

td . wa s fo unde d in 1981 in a sing le ro o m a s Sha n Ma sa la . L a te r, due to its po pula rity, the c o mpa ny wa s na me d Sha n F

  • o ds. It

ha s pre se nc e in mo re tha n 50 c o untrie s to da y a nd de a ls in se ve ral b ro a d c a te g o rie s o f o ffe ring s. Sha n F

  • o ds ha s c a pita lize d o n the c ha ng ing ma rke t tre nds

a nd c o nsume r ta ste s a nd thro ug h pro duc t tria ls, it ha s ma de sure to c hurn o ut o ffe ring s tha t a re b e st in line with c o nsume r ta ste s.

Sh a n Fo o d s Priv a te Lim ite d

Ko r a n g i In d u s t r i a l A r e a , Ka r a c h i , P a k i s t a n + 9 2 – 2 1 – 3 5 0 5 3 1 9 6 + 9 2 – 2 1 – 3 5 0 5 3 0 8 0

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SLIDE 2

Le t t e r o f A c k n o w le d g e m e n t

T

  • who m it ma y c o nc e rn.

T his L e tte r is to a c kno wle dg e the e ffo rts a nd sinc e rity, o ffe re d b y the c o urse instruc to r Mr. Muha mma d Rizwa n Sid d iq ui, to te a c h the sub je c t a nd g uide . T he a c c o mplishme nt o f this re po rt is a re sult o f a c o mb ine e ffo rt ma de b y the re po rte d and the re po rting individua ls, during the te rm spring 2012. T he

  • b je c tive to write this re po rt is to le a rn the me tho d o f pro duc t c o sting use d

b y a n F MCG pro duc e r, in this c a se Sha n F

  • o ds Priva te L

imite d . I he re b y a c kno wle dg e tha t I ma y no t b e a ble to unde rsta nd a nd write the c o nte nt o f this re po rt witho ut sinc e re g uid a nc e fro m Mr. Ab dul Ga ffa r (CF O, Sha n F

  • o ds

Priva te L imite d ) a nd his a sso c ia te s, a s we ll. Gra c ia s, Ade e l A. Sidd iq ui 2010 – 1 – 27 – 11262

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SLIDE 3

Le t t e r o f Tra n s m it t a l

T

  • ,

Muha mma d Rizwa n Sidd iq ui, I nstitute o f Busine ss Ma na g e me nt, De a r Sir, I a m sub mitting this re po rt a lo ng with a pre se nta tio n o n the Pro duc t Co sting me tho d use d b y Sha n F

  • o ds Priva te L

imite d, fo r Bo mb a y Birya ni, fro m Re c ipe Mix, o n T ue sda y, da te d 24th April 2012. T he Purpo se o f this re po rt is to pro vide yo u c o nte nt o n the b a sis o f whic h yo u are a ble to a sse ss my unde rsta nding a nd c o mpre he nsio n a b o ut the c o urse title Intro duc tio n to Ma na g e ria l a nd Co st Ac c o unting . T he Co nte nt o f this re po rt is b a se d o n the info rma tio n pro vide d b y Sha n F

  • o ds Priva te limite d , fo r the purpo se . Mo re o ve r the da ta

a nd info rma tio n a c q uire d fro m Sha n F

  • o ds Priva te L

imite d ha s b e e n struc ture d a nd e la b o ra te d so tha t it c a n de live r its inte nde d o b je c tive s. T he Re po rt a lso disc usse s the ma nufa c turing pro c e ss a nd its vita ls, fo r the se le c te d pro duc t. Gra c ia s, Ade e l A. Sidd iq ui 2010 – 1 – 27 – 11262

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SLIDE 4

Lis t o f Fig u re s

F ig ure 1: Ma nufa c turing Pro c e ss F lo w Chart ............................................................. 6 F ig ure 2: Pro duc t F lo w (Bo mb a y Birya ni Ma sa la )...................................................... 8

Lis t o f Ta b le s

T a b le 1: COP Re po rt RM Wa re ho use ......................................................................... 10 T a b le 2: COP Re po rt Grinding F a c ility ....................................................................... 11 T a b le 3: COP Re po rt Pa c ka g ing F a c ility ................................................................... 12 T a b le 4: COP Re po rt Dispa tc h T e mina l ..................................................................... 13 T a b le 5: Co nso lida te d Co st o f Go o ds Ma nufa c ture d ........................................... 14

Ta b le o f C o n t e n t s

I ntro duc tio n ....................................................................................................................... 2 Pro duc t Ra ng e ................................................................................................................. 2 Org a niza tio n Ma na g e me nt .......................................................................................... 3 Planning and Re po rting .................................................................................................. 3 Se le c te d Pro duc t ............................................................................................................. 4 Ma nufa c turing Pro c e ss ................................................................................................... 4 Ma nufa c turing Pro c e ss (F lo wc ha rt) ............................................................................. 6 Co sting Me tho d ............................................................................................................... 7 Co sting ............................................................................................................................... 9

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SLIDE 5

Pro duc t Co sting – Re c ipe Spic e – Intro duc tio n Pa g e | 2

In t ro d u c t io n

Sha n F

  • o ds (Priva te ) L

imite d is a F

  • o d pro duc ts Ma nufa c turing a nd

Ma rke ting Org a niza tio n. It wa s fo unde d in 1981 in a sing le ro o m a s Sha n Ma sa la . L a te r, due to its po pula rity, the c o mpa ny wa s na me d Sha n F

  • o ds. It

ha s pre se nc e in mo re tha n 50 c o untrie s to da y a nd de a ls in se ve ral b ro a d c a te g o rie s o f o ffe ring s. Sha n F

  • o ds ha s c a pita lize d o n the c hang ing ma rke t

tre nds a nd c o nsume r ta ste s a nd thro ug h pro duc t tria ls, it ha s ma de sure to c hurn o ut o ffe ring s tha t a re b e st in line with c o nsume r ta ste s. A hug e pa rt o f the ir sa le s c o nsist o f Re c ipe Mix Ca te g o ry. Re c ipe Mix Ca te g o ry c o nsists o f 64 va ria nts, c la ssifie d into 9 ra ng e s. T he sha re o f pro duc ts fro m Birya ni Ra ng e in the Re c ipe Mix Ca te g o ry Sale s is sig nific a ntly la rg e r than a ny o the r rang e , a nd it is due to the po pula rity o f Shan Bo mb a y Birya ni Ma sa la . T his re po rt is to unde rsta nd the c o sting me tho ds Sha n F

  • o ds ha s a do pte d, fo r

the re g ula r SKU (60 g m Pa c k), o f Bo mb a y Birya ni Ma sa la .

P ro d u c t R a n g e

Sha n F

  • o ds ha ve a b ra nd po rtfo lio o f two b ra nd na me s, Sha n a nd De lve ,

whic h a re furthe r sub divide d into se ve ral c a te g o rie s a nd ra ng e s o f diffe re nt va ria nts o f pro duc ts. Prima rily, it is impo rta nt to unde rsta nd the b ro a d c a te g o rie s o f o ffe ring s b y Shan F

  • o ds. F
  • llo wing is a summa rize d list.
  • Sha n

Va ria nts

– Re c ipe Mix

64

– Pla in Spic e s

16

– Orie nta l Re c ipe

10

– Ara b ic Re c ipe

7

– Sa lt

2

– Pic kle

7

– Pa ste

3

– Sa uc e s

5

– Ric e

5

– Ve rmic e lli

1

  • De lve De se rts

– Je lly Crystals

4

– Custa rd Po wde rs

3

– Pudding Mix

3

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SLIDE 6

Pro duc t Co sting – Re c ipe Spic e – Org a niza tio n Ma na g e me nt Pa g e | 3

O rg a n iz a t io n M a n a g e m e n t

Sha n F

  • o ds stro ng ly pra c tic e Ka ize n a ppro a c h fo r c o ntinuo us impro ve me nt

a nd wa s a b le to re duc e la b o r de pe nde nc y b y imple me nting te c hno lo g ic a l a dva nc e me nts, pro c e ss a uto ma tio n, pro c e ss re -e ng ine e ring a nd stro ng BPR Stra te g ie s. T he se a c tivitie s ha ve no t re sulte d in a ny sig nific a nt re duc tio n in the ir la b o r c o st, a s the so phistic a tio n o f the pro c e ss re q uire skille d and e xpe nsive la b o r, irre spe c tive o f the fa c t tha t the c o unt o f la b o r is re duc e d re ma rka b ly, while it is b e ne fiting the m by c o ntro lling wa sta g e s a nd q ua lity sta nda rds. F

  • r fe w pro duc tio n pro c e sse s the y a re a ble to a c hie ve Six Sig ma .

T he Pro duc tio n F a c ilitie s a re le ss la b o r inte nsive , while the y a re striving to a uto ma te the ir wa re ho using a s we ll. Sha n F

  • o ds a dhe re s to the L

e an Ma nufa c turing philo so phy, a nd still striving to c o mple te ly imple me nt JI T in the pro duc tio n a nd de live ry pro c e ss. T he y a re fo c use d to find wa ys to limit the wa re ho using c o sts, b ut due to se ve ral E xte rnal fa c to rs, the y ha ve to ke e p ma te ria l a nd finish g o o ds inve nto ry. T he y ha ve pro je c te d 20% re duc tio n in pro duc tio n c o st, if JIT is c o mple te ly imple me nte d.

P la n n in g a n d Re p o rt in g

Pro duc tio n b udg e ting a nd te nta tive pla nning is do ne a nnua lly, o n the b a sis

  • f Sa le s fo re c a st a nd SNOPs, c o nside ring po ssib le wo rking da ys, e xc lud ing

Pre ve ntive Ma inte na nc e Sc he dule s, whic h is re vise d o n q ua rte rly b a sis a nd mo nito re d o n da ily b a sis. Sha n F

  • o ds pro duc t c o sting is b a se d o n a mix o f

e stima te d, e va lua te d (b udg e te d ) a nd a c tua lly e xpe nse s. Pro duc tio n, SNOPs a nd Co sting re po rt a re g e ne ra te d a nd pro duc e d in ma na g e me nt c o mmitte e me e ting s, e ve ry we e k o n Mo nda y, in whic h the ma na g e me nt a lso c ritic a lly e valua te s the e ffe c tive ne ss a nd e ffic ie nc y o f AOPs. Sha n F

  • o ds

ma na g e me nt stro ng ly a dhe re s to ma inta in the c o mplia nc e o f SNOPs, AOPs a nd F Y Ob je c tive s. T he y ha ve a n Ora c le 11 g BI, Pro duc tio n Pla nning , EAM, E RP, MRP, SC M + Inve nto ry, HRM, Fina nc ia ls, SR, PM, CMMS, Stra te g ist a nd CRM, inte g ra te d and c usto mize d mo dule s to suppo rt the ir re po rting syste m. All re po rts a re a uto g e ne ra te d a nd c a n b e fle xib ly c usto mize d b y the re po rte d, himse lf, a c c o rd ing to his e a se . T he y a re fo c use d to c o mple te ly de plo y a pa pe rle ss e nviro nme nt, whic h is a pa rt o f the ir Gre e n Pro g ra m. T his kind o f re po rting a nd a nalyzing suppo rt fro m MIS virtua lly he lpe d the m in re duc ing a dministra tive e xpe nse s a s we ll.

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SLIDE 7

Pro duc t Co sting – Re c ipe Spic e – Se le c te d Pro duc t Pa g e | 4

Se le c t e d P ro d u c t

T

  • unde rsta nd the c o sting me tho d, a do p te d b y Sha n F
  • o ds Priva te limite d , I

se le c te d a Re g ula r SKU (60 g m Pa c k) o f Bo mb a y Birya ni, fro m Re c ipe Mix Ra ng e . Re c ipe Mix Ra ng e c o nsists o f 64 diffe re nt va ria nt with 4 to 8 diffe re nt SKU’ s fo r e a c h. All the se pro duc ts a nd SKU’ s ha ve diffe re nt c o st a sso c ia tio ns, while the c o sting me tho ds a re the sa me , in this spe c ific c a te g o ry. T he Se lling Pric e o f this Pro duc t is PKR 35, a t a Ne t I nc o me le ve l o f 35~40%.

M a n u f a c t u rin g P ro c e s s

Sig nific a ntly, Sha n F

  • o ds o pe ra te s a hig hly ma c hine ry inte nsive a nd

a uto ma tic pro c e ssing fa c ility. T he y c la im tha t the y ha ve e limina te d dire c t huma n hand inte rfa c e s with the pro duc t, a fte r ste riliza tio n pro c e ss. T he Ma nufa c turing pro c e ss o f the se le c te d pro duc t is d ivide d into twe lve sub pro c e sse s, whic h a re pe rfo rme d in fo ur de pa rtme nts, liste d a s fo llo ws. T he fo llo wing list a lso c o nta ins the pe rc e nta g e o f COGM the se de pa rtme nts inc ur, fo r this pa rtic ula r pro duc t, if we do n’ t a c c umula te the c o st.

De pa rtme nt Pro c e ss(s) %a g e COGM

  • RM Wa re ho use

52

–

Quality Cla ssific a tio n 10.4

–

Ste riliza tio n 31.2

–

Co ld Sto ra g e a nd Wa re ho using 10.4

  • Grind ing F

a c ility 21.75

–

Cho pping 1.81

–

Cryo g e nic Grind ing 9.06

–

Sifting Cla ssific a tio n 1.81

–

T e mp Re g ula te d SI L O Sto ra g e 3.63

–

Re c ipe Ba tc hing 1.81

–

B le nd ing 3.363

  • Pa c ka g ing F

a c ility 21.5

–

Po lly F illing 5.02

–

Pa c ka g ing & Ca rto o ning 16.48

  • Dispa tc h T

e rminal 4.75

–

F inish Go o d Wa re ho using 4.75

E ve ry unit pro duc tio n is c o nduc te d in a b a tc h, size d a t 15 to ns, b ut the c o sting unit is 1 unit o f pro duc t, the re fo re to ta l units o f the se le c te d pro duc t, in a b a tc h is 250,000 units. T he de pa rtme nts ha ve b e e n o ptimize d to pro duc e

  • ne b a tc h a da y, ind ividua lly. T

he re fo re e ntire Supply Cha in’ s no rmal

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SLIDE 8

Pro duc t Co sting – Re c ipe Spic e – Ma nufa c turing Pro c e ss Pa g e | 5 c a pa c ity is 250,000 units a da y (8 c o ntinuo us wo rking hrs); we a k links ha ve b e e n stre ng the ne d b y c o ntinuo us Ca pa c ity E nhanc e me nt Pro g ra ms and OE E . On the b a sis o f a b o ve e valua tio ns, we c a n a ssume tha t the a ve ra g e pro duc tio n pe rio d fo r a b a tc h o f 250,000 units is 4 wo rking da ys, whic h is 32 wo rking hrs, a nd 7,812.5 units a re pro duc e d e ve ry ho ur. All T ra nspo rta tio n o f g o o ds is c o nduc te d during the nig ht shift. All inve nto rie s a re o pe ra te d o n F IF

  • O. T

he y c a n’ t pra c tic e JIT , due to the unc e rta in a va ila b ility o f Ra w Ma te ria l, c irc umsta ntia l unc e rta inty, e c o no mic , so c ia l a nd po litic a l c o nditio ns. T he re a re five q ua lity c he c ks in the pro c e ss. T he se c he c ks a re inte g ra te d e ithe r in line o r by a uto ma te sa mple de live ry syste m (T

  • QC a nd R&D), to

a sse ss fo llo wing sta nda rds.

T e sts Me tho d s T ime Re q uire d (hr)

  • Quality

Ma nual Cla ssific a tio n inline

  • Cla ssific a tio n

Grind e d Me sh Size Co mpo site s 0.25

  • Co nta mina tio n

Mic ro b io lo g ic al/ ac c e le ra te d a g e ing T e sting 24

  • Ra tio

Chro ma to g ra phy 4

  • Pro d uc t

Se nso ry T e sting Pe na l 4

  • Qua ntity

Che c k wa re syste m (Auto ) inline

  • Po lly L

e a ks Pre ssure te sting Co nve yo rs (Auto ) inline

  • Pa c ka g ing

Ma nual inline

T he se sta nda rds a re imme d ia te ly c he c ke d a fte r the se tting pro c e ss. If the pro duc tio n do e sn’ t me e t the re q uire d sta nda rds, the re is a pro c e dure fo r a ny se t o f re sults, whic h is e xe c ute d a c c o rd ing ly. F e w ma y re sult in re pro c e ssing ,

  • the r may in spo ila g e . T

he wa sta g e o f RM is ne g lig ib le , while spo ila g e c o mprise s o f pa c ka g ing ma te ria l, sig nific a ntly, whe re a s, the re pro c e ssing c o sts a re ne g lig ib le a nd wa sta g e c o sts a re a djuste d in the de pa rtme ntal c o sts. T he y ha ve de plo ye d a n e ffe c tive wa sta g e c o ntro l me c ha nism, whic h ha s e na ble d the m to re duc e wa sta g e s to the le ve ls, me ntio ne d in the fo llo wing list.

De pa rtme nt No rmal Spo ilag e (Wa sta g e )

  • RM Wa re ho use

0.1 ~ 0.5%

  • Grind ing F

a c ility 0.01 ~ 0.1%

  • Pa c king F

a c ility 0.1 ~ 1%

  • DT

2 ~ 0.1%

  • T
  • ta l Wa sta g e

0.2 ~ 1.7%

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SLIDE 9

Pro duc t Co sting – Re c ipe Spic e – Ma nufa c turing Pro c e ss (F lo wc ha rt) Pa g e | 6

M a n u f a c t u rin g P ro c e s s ( Flo w c h a rt )

Pro c ure me nt o f RM Qua lity C la ssific a tio n a nd Ste rilizing Pro c e ss I BC Sto ra g e T e mp e ra ture Re g ula te d SI L O Sto ra g e T ra nsp o rta tio n to Grind ing F a c ility Cho p p ing , Cryo g e nic Grind ing a nd Sifting Cla ssific a tio n Pro c e ss Co ld Sto ra g e a nd Wa re ho using Re c ip e Ba tc hing a nd Ble nd ing Pro c e ss Po ly F illing Pro c e ss Pa c ka g ing a nd Ca rto o ning Pro c e ss F inish Go o d Wa re ho using

Me hrunisa Wa re ho use Grinding F a c ility Pa c ka g ing F a c ility Dispa tc hing T e rmina l

Prima ry Qua lity C he c k (QC 1) Ma in Qua lity Che c k (QC 3) Mid Qua lity C he c k e a c h I ng re d ie nt (QC 2) Pre ssure T e sting (V lo c k me tho d ; QC 4) Pa c ka g ing Qua lity Che c k (QC 5) F a ils F a ils F a ils F a ils F a ils RM (S) I ng re d ie nts o f Co mp o und X RM (S) Co mp o und Y Pa c ka g ing Ro lls Ha rd Pa c ke ts a nd Ca rto o ns F igur e 1: Manufac tur ing Pr

  • c ess F

low Char t

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SLIDE 10

Pro duc t Co sting – Re c ipe Spic e – Co sting Me tho d Pa g e | 7

C o s t in g M e t h o d

F

  • r Bo mb a y Birya ni Ma sa la , Sha n F
  • o ds use s Pro c e ss c o sting a c c umula tio n

b y de pa rtme nt, with a b so rb ing F ixe d Ove rhe a ds. T he pe rc e nta g e distrib utio n

  • f Va rio us Co sts with re spe c t to COGM is a s fo llo ws.

Co st o f Go o d s Ma nufa c ture d 100%

DM 35% o f COGM

Co mpo und X DM 1 60% o f DM Co mpo und Y DM 1 35% o f DM Pa c ka g ing Ro lls DM 2 4% o f DM Hard Pa c ka ging DM 2 0.8% o f DM Ca rto o ns DM 2 0.2% o f DM

DL 20% o f COGM

RM Ware ho use 60% o f DL Grinding 20% o f DL Pa c ka g ing 20% o f DL

Prime Co st 55%

VF OH 5% o f COGM

  • V. IDM

2% o f VF OH

Sp a re Pa rts 1.5% o f VF OH Othe r Ma te ria l 0.5% o f VF OH

  • V. IDL

3% o f VF OH

Ma te ria l Ha nd ling 2.5% o f VF OH F lo o r T e c hnic ia ns 0.5% o f VF OH

Othe rs 95% o f F OH

  • V. Ene rg y

80% o f VF OH

  • V. Ma inte na nc e

10% o f VF OH

  • V. Sta ff/ Exe c Sa la rie s

5% o f VF OH

F F OH a t No rma l Ca pa c ity 40% o f COGM

I DM 25% o f F F OH I DL 20% o f F F OH

Ad min & Se c urity 15% o f F F OH Ja nito ria l 5% o f F F OH

Othe rs 55% o f F F OH

L a nd Co st 2% o f F F OH T a xe s 17% o f F F OH De p . 10% o f F F OH Ma inte na nc e 10% o f F F OH F . Ene rg y 1% o f F F OH Sta ff/ Exe c Sa la rie s 5% o f F F OH Misc Exp . 10% o f F F OH

Ma nufa c turing Co st 100%

T he se a re ro ug h pe rc e nta g e s, a s to ld b y Ab d ul Ga ffa r, (CF O a t Sha n F

  • o ds).

T he Pro duc t F lo w thro ug h va rio us pro c e sse s a nd de pa rtme nts, ma te ria ls

slide-11
SLIDE 11

Pro duc t Co sting – Re c ipe Spic e – Co sting Me tho d Pa g e | 8 a dd itio n a nd q ua lity c he c ks, a c c o rd ing to c o sts inc urre d a re e xpla ine d in F ig ure 2.

F igur e 2: Pr

  • duc t F

low (Bombay Bir yani Masala)

F OH is 225% o f DL . T he F F OH, a nd VF OH, d istrib utio n b y de pa rtme nt is a s fo llo ws. De pa rtme nt F F OH VF OH

  • RM Wa re ho use

15% o f F F OH 15% o f VF OH

  • Grinding

40% o f F F OH 35% o f VF OH

  • Pa c ka g ing

35% o f F F OH 35% o f VF OH

  • Dispa tc hing

10% o f F F OH 15% o f VF OH

0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% Departmental Processes RM Warehouse Quality Classification Sterilization Cold Storage Grinding Facility Chopping Cryogenic Grinding Sifting SILO Recipe Batching Blending Packaging Facility Polly Filling Packaging Cartooning Dispatch Terminal FG WH

RM X 0% RM Y 68% PR 74% HP & Cartoon 79% QC 1 52% QC 2 65% QC 3 74% QC 4 79% QC 5 95%

DM

  • Qaul. Check
slide-12
SLIDE 12

Pro duc t Co sting – Re c ipe Spic e – Co sting Pa g e | 9

C o s t in g

We a re a ssuming the fo llo wing to ma ke a Co st o f Pro duc tio n re po rts b y de pa rtme nts a nd a c o nso lida te d Co st o f Go o ds Ma nufa c ture d Sta te me nt, se pa ra te ly.

  • Pe rio d = Ma rc h 2012
  • 24 wo rking da ys (192 ma c hine hrs)
  • Pro duc tio n le ve l do e sn’ t me e ts the no rmal pro duc tio n c a pa c ity
  • Units intro duc e d in the pro c e ss = 6,000,000 (a t no rma l Ca pa c ity)
  • Units Pro duc e d = 5,958,066
  • Spo ila g e a t ma ximum le ve l o f No rmal Spo ila g e a t all inspe c tio ns

e xc e pt QC 2 (No Spo ila g e a t QC 2).

  • All De pa rtme nts c o mple te d the ir wo rk b y the e nd o f the mo nth
  • Se lling Pric e = PKR 35, Ma rke ting a nd Admin E

xpe nse = 10% o f Sale s

  • Pro fit Ma rg in = 34.63%
  • T

he re fo re unit COGM = PKR 19.38

  • Co nside ring a ll the da ta me ntio ne d e a rlie r
  • Ope ning a nd Clo sing inve nto rie s o f F

G a t a ll de pa rtme nts a re nil, whe re a s the Ope ning I nve nto rie s o f RM/ CF PD a t a ll de pa rtme nt is the pro duc tio n o f the Pre vio us De pa rtme nt.

  • VF

OH a nd F F OH fo r e a c h de pa rtme nt a re a s fo llo ws.

  • De pa rtme nt

F F OH VF OH

  • RM Wa re ho use

6% o f COGM 0.75% o f COGM

  • Grinding F

a c ility 16% o f COGM 1.75% o f COGM

  • Pa c ka g ing F

a c ility 14% o f COGM 1.75% o f COGM

  • Dispa tc h T

e rmina l 4% o f COGM 0.75% o f COGM

  • Unit Ma nufa c turing Co st Distrib utio n fo r Pro c e ss Co sting , witho ut ta king

lo sse s into a c c o unt.

U nit Ma nufa c turing Co st DM DL VF OH F F OH CC T

  • ta l

RMWH 6.40 2.31 0.14 1.16 3.61 10.01 Grinding F a c ility 0.00 0.77 0.34 3.08 4.19 4.19 Pa c ka g ing F a c ility 0.34 0.77 0.34 2.70 3.80 4.14 Dispa tc h T e rminal 0.00 0.00 0.14 0.77 0.91 0.91

6.74 3.85 0.96 7.70

  • 19.25
slide-13
SLIDE 13

Pro duc t Co sting – Re c ipe Spic e – Co sting Pa g e | 10

  • F
  • llo wing a re Co st o f Pro duc tio n Re po rt fo r RM Wa re ho use , using

pro c e ss c o sting me tho d

S h a n Fo o d s P r i v a t e Li m i t e d Re c ip e Mix – Bo m b a y Birya ni

C o st o f Pro d uc tio n (RM Wa re ho use )

M a r c h ‘ 1 2

T able 1: COP Repor t RM War e house

E q uiva le nt Pro duc tio n Units DM 1 CC Units I ntro duc e d

6,000,000 6,000,000

Units T ra nsfe rre d

5,970,000 5,970,000

No rma l Spo ila g e

30,000 30,000 6,000,000 6,000,000

Co st Cha rg e d Co st Units Ra te DM 1

38,403,750 6,000,000 6.40

CC

21,656,250 6,000,000 3.61 60,060,000 10.01

Co st Ac c o unting fo r Units Ra te T

  • ta l

T ra nsfe rre d Out

5,970,000 10.01 59,759,700

L

  • sse s

DM 1 30,000 6.40 192,019 CC 30,000 3.61 108,281

60,060,000

slide-14
SLIDE 14

Pro duc t Co sting – Re c ipe Spic e – Co sting Pa g e | 11

  • F
  • llo wing a re Co st o f Pro duc tio n Re po rt fo r Grinding F

a c ility, using pro c e ss c o sting me tho d

S h a n Fo o d s P r i v a t e Li m i t e d Re c ip e Mix – Bo m b a y Birya ni

C o st o f Pro d uc tio n (G rind ing Fa c ility)

M a r c h ‘ 1 2

T able 2: COP Repor t Gr inding F ac ility

E q uiva le nt Pro duc tio n Units CF PD CC Units I ntro duc e d

5,970,000 5,970,000

Units T ra nsfe rre d

5,964,030 5,964,030

No rma l Spo ila g e

5,970 5,970 5,970,000 5,970,000

Co st Cha rg e d Co st Units Ra te CF PD

60,060,000 5,970,000 10.06

CC

24,995,644 5,970,000 4.19 85,055,644 14.25

Co st Ac c o unting fo r Units Ra te T

  • ta l

T ra nsfe rre d Out

5,964,030 14.25 84,970,588

L

  • sse s

CF PD 5,970 10.06 60,060 CC 5,970 4.19 24,996

85,055,644

slide-15
SLIDE 15

Pro duc t Co sting – Re c ipe Spic e – Co sting Pa g e | 12

  • F
  • llo wing a re Co st o f Pro duc tio n Re po rt fo r Pa c ka g ing F

a c ility, using pro c e ss c o sting me tho d

S h a n Fo o d s P r i v a t e Li m i t e d Re c ip e Mix – Bo m b a y Birya ni

C o st o f Pro d uc tio n (Pa c ka g ing Fa c ility)

M a r c h ‘ 1 2

T able 3: COP Repor t Pac kaging F ac ility

E q uiva le nt Pro duc tio n Units CF PD DM 2 CC Units I ntro duc e d

5,964,030 6,023,670 6,023,670

Units T ra nsfe rre d

5,964,030 5,964,030 5,964,030

No rma l Spo ila g e

59,640 59,640 5,964,030 6,023,670 6,023,670

Co st Cha rg e d Co st Units Ra te CF PD

85,055,644 5,964,030 14.26

DM 2

2,029,224 6,023,670 0.34

CC

22,901,242 6,023,670 3.80 109,986,109 18.40

Co st Ac c o unting fo r Units Ra te T

  • ta l

T ra nsfe rre d Out

5,964,030 18.40 109,739,273

L

  • sse s

CF PD 14.26 DM 2 59,640 0.34 20,091 CC 59,640 3.80 226,745

109,986,109

slide-16
SLIDE 16

Pro duc t Co sting – Re c ipe Spic e – Co sting Pa g e | 13

  • F
  • llo wing a re Co st o f Pro duc tio n Re po rt fo r Dispa tc h T

e rmina l, using pro c e ss c o sting me tho d

S h a n Fo o d s P r i v a t e Li m i t e d Re c ip e Mix – Bo m b a y Birya ni

C o st o f Pro d uc tio n (Disp a tc h T e rmina l)

M a r c h ‘ 1 2

T able 4: COP Repor t Dispatc h T e minal

E q uiva le nt Pro duc tio n Units CF PD CC Units I ntro duc e d

5,964,030 5,964,030

T ra nsfe rre d o ut

5,958,066 5,958,066

No rma l Spo ila g e

5,964 5,964 5,964,030 5,964,030

Co st Cha rg e d Co st Units Ra te CF PD

109,986,109 5,964,030 18.44

CC

5,453,360 5,964,030 0.91 115,439,469 19.36

Co st Ac c o unting fo r Units Ra te T

  • ta l

T ra nsfe rre d Out

5,958,066 19.36 115,324,030

L

  • sse s

CF PD 5,964 18.44 109,986 CC 5,964 0.91 5,453

115,439,469

slide-17
SLIDE 17

Pro duc t Co sting – Re c ipe Spic e – Co sting Pa g e | 14

  • F
  • llo wing a re Co st o f Pro duc tio n Re po rt fo r Dispa tc h T

e rmina l, using pro c e ss c o sting me tho d

S h a n Fo o d s P r i v a t e Li m i t e d Re c ip e Mix – Bo m b a y Birya ni

C o nso lid a te d C o st o f G o o d s Ma nufa c ture d (Ab so rp tio n)

M a r c h ‘ 1 2

T able 5: Consolidate d Cost of Goods Manufac tur e d

Cost of Goods Manufac tur ed

100.00% PK R 19.38 PK R 115,439,470

DM

35.00% PK R 6.78 PK R 40,403,814 Co mpo und X

21.00%

PK R 4.07 PK R 24,242,289 Co mpo und Y

12.25%

PK R 2.37 PK R 14,141,335 Pa c ka g ing Ro lls

1.40%

PK R 0.27 PK R 1,616,153 Hard Pa c ka ging

0.28%

PK R 0.05 PK R 323,231 Ca rto o ns

0.07%

PK R 0.01 PK R 80,808

DL

20.00% PK R 3.88 PK R 23,087,894 RM Ware ho use

12.00%

PK R 2.33 PK R 13,852,736 Grinding

4.00%

PK R 0.78 PK R 4,617,579 Pa c ka g ing

4.00%

PK R 0.78 PK R 4,617,579

Pr ime Cost

55.00% PK R 10.66 PK R 63,491,708

VF OH

5.00% PK R 0.97 PK R 5,771,973

  • V. IDM

0.10%

PK R 0.02 PK R 115,439

  • V. IDL

0.15%

PK R 0.03 PK R 173,159 Othe rs

4.75%

PK R 0.92 PK R 5,483,375

F F OH

40.00% PK R 7.75 PK R 46,175,788 I DM

10.00%

PK R 1.94 PK R 11,543,947 I DL

8.00%

PK R 1.55 PK R 9,235,158 Othe rs

22.00%

PK R 4.26 PK R 25,396,683

T

  • tal Manufac tur

ing Cost

100.00% PK R 19.38 PK R 115,439,470 Op e ning WI P PK R 0 Clo sing WI P PK R 0

COGM

PKR 115,439,470

Op e ning F G PK R 0 Clo sing F G PK R 0

COGM Available for Sale

Ove r & Und e r Ap p lie d (6,000,000-5,958,066) x 7.75 PK R 324,994

COGM at Ac tual

PKR 115,764,464

slide-18
SLIDE 18

10/4/2012 1

  • Shan Foods (Private) Limited is a Food products Manufacturing and

Marketing Organization.

  • It has presence in more than 50 countries today and deals in several

broad categories of offerings.

  • A huge part of their sales consist of Recipe Mix Category. Recipe

Mix Category consists of 64 variants, classified into 9 ranges.

  • The share of products from Biryani Range in the Recipe Mix

Category Sales is significantly larger than any other range, and it is due to the popularity of Shan Bombay Biryani Masala.

  • This report is to understand the costing methods Shan Foods has

adopted, for the regular SKU (60 gm Pack), of Bombay Biryani Masala.

slide-19
SLIDE 19

10/4/2012 2

10% 32% 3% 5% 16% 5% 10% 2% 9% 2% 4% 2%

Quality Classification Sterilization Cold Storage and Warehousing Chopping Cryogenic Grinding Sifting Classification Temp Regulated SILO Storage Recipe Batching Blending Polly Filling Packaging & Cartooning Finish Good Warehousing

33% 8% 22% 2% 12% 4% 4% 0% 0% 5% 10%

DM 1 DM 2 DL RM WH DL Grinding DL Packaging
  • V. IDM
  • V. IDL
  • V. Others
  • F. IDM
  • F. IDL
  • F. Others
Procurement of RM Quality Classification and Sterilizing Process Transportation to Grinding Facility Chopping, Cryogenic Grinding and Sifting Classification Process Cold Storage and Warehousing Mehrunisa Warehouse Primary Quality Check (QC 1) Fails RM (S) Ingredients of Compound X IBC Storage Temperature Regulated SILO Storage Recipe Batching and Blending Process Poly Filling Process Packaging and Cartooning Process Finish Good Warehousing Grinding Facility Packaging Facility Dispatching Terminal Main Quality Check (QC 3) Mid Quality Check each Ingredient (QC 2) Pressure Testing (V lock method; QC 4) Packaging Quality Check (QC 5) Fails Fails Fails Fails RM (S) Compound Y Packaging Rolls Hard Packets and Cartoons Processes RM X 0% RM Y 68% PR 74% HP & Cartoon 79% DM 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% Departmental RM Warehouse Quality Classification Sterilization Cold Storage Grinding Facility Chopping Cryogenic Grinding Sifting SILO Recipe Batching Blending Packaging Facility Polly Filling Packaging Cartooning Dispatch Terminal FG WH QC 1 52% QC 2 65% QC 3 74% QC 4 79% QC 5 95%
  • Qaul. Check
slide-20
SLIDE 20

10/4/2012 3

Unit Manufacturing Cost DM DL VFOH FFOH CC Total

RMWH 6.40 2.31 0.14 1.16 3.61 10.01 Grinding Facility 0 00 0 77 0 34 3 08 4 19 4 19 Grinding Facility 0.00 0.77 0.34 3.08 4.19 4.19 Packaging Facility 0.34 0.77 0.34 2.70 3.80 4.14 Dispatch Terminal 0.00 0.00 0.14 0.77 0.91 0.91

6.74 3.85 0.96 7.70 ‐

19.25

Equivalent Production Units

DM 1 CC Units Introduced

6,000,000 6,000,000

Units Transferred

5,970,000 5,970,000

Normal Spoilage

30,000 30,000 6,000,000 6,000,000

Cost Charged Cost Charged

Cost Units Rate DM 1

38,403,750 6,000,000 6.40

CC

21,656,250 6,000,000 3.61 60,060,000 10.01

Cost Accounting for

Units Rate Total Transferred Out

5,970,000 10.01 59,759,700

Losses

DM 1 30,000 6.40 192,019 CC 30,000 3.61 108,281

60,060,000 Equivalent Production Units CFPD CC Units Introduced

5,970,000 5,970,000

Units Transferred

5,964,030 5,964,030

Normal Spoilage

5,970 5,970 5,970,000 5,970,000

Cost Charged Cost Charged Cost Units Rate CFPD

60,060,000 5,970,000 10.06

CC

24,995,644 5,970,000 4.19 85,055,644 14.25

Cost Accounting for Units Rate Total Transferred Out

5,964,030 14.25 84,970,588

Losses

CFPD 5,970 10.06 60,060 CC 5,970 4.19 24,996

85,055,644

Equivalent Production Units CFPD DM 2 CC Units Introduced 5,964,030 6,023,670 6,023,670 Units Transferred 5,964,030 5,964,030 5,964,030 Normal Spoilage 59,640 59,640 5,964,030 6,023,670 6,023,670 Cost Charged i Cost Units Rate CFPD 85,055,644 5,964,030 14.26 DM 2 2,029,224 6,023,670 0.34 CC 22,901,242 6,023,670 3.80 109,986,109 18.40 Cost Accounting for Units Rate Total Transferred Out 5,964,030 18.40 109,739,273 Losses CFPD 14.26 DM 2 59,640 0.34 20,091 CC 59,640 3.80 226,745 109,986,109

Equivalent Production Units CFPD CC Units Introduced

5,964,030 5,964,030

Transferred out

5,958,066 5,958,066

Normal Spoilage

5,964 5,964 5,964,030 5,964,030

Cost Charged Cost Units Rate CFPD

109,986,109 5,964,030 18.44

CC

5,453,360 5,964,030 0.91 115,439,469 19.36

Cost Accounting for Units Rate Total Transferred Out

5,958,066 19.36 115,324,030

Losses

CFPD 5,964 18.44 109,986 CC 5,964 0.91 5,453

115 439 469

Cost of Goods Manufactured 100.00% PKR 19.38 PKR 115,439,470 DM 35.00% PKR 6.78 PKR 40,403,814 Compound X 21.00% PKR 4.07 PKR 24,242,289 Compound Y 12.25% PKR 2.37 PKR 14,141,335 Packaging Rolls 1.40% PKR 0.27 PKR 1,616,153 Hard Packaging 0.28% PKR 0.05 PKR 323,231 Cartoons 0.07% PKR 0.01 PKR 80,808 DL 20.00% PKR 3.88 PKR 23,087,894 RM Warehouse 12.00% PKR 2.33 PKR 13,852,736 Grinding 4.00% PKR 0.78 PKR 4,617,579 Packaging 4.00% PKR 0.78 PKR 4,617,579 Prime Cost 55.00% PKR 10.66 PKR 63,491,708 VFOH 5.00% PKR 0.97 PKR 5,771,973
  • V. IDM
0.10% PKR 0.02 PKR 115,439
  • V. IDL
0.15% PKR 0.03 PKR 173,159 Others 4.75% PKR 0.92 PKR 5,483,375 FFOH 40.00% PKR 7.75 PKR 46,175,788 IDM 10.00% PKR 1.94 PKR 11,543,947 IDL 8.00% PKR 1.55 PKR 9,235,158 Others 22.00% PKR 4.26 PKR 25,396,683 Total Manufacturing Cost 100.00% PKR 19.38 PKR 115,439,470 Opening WIP PKR 0 Closing WIP PKR 0 COGM PKR 115,439,470 Opening FG PKR 0 Closing FG PKR 0 COGM Available for Sale Over & Under Applied (6,000,000‐5,958,066) x 7.75 PKR 324,994 l
slide-21
SLIDE 21

10/4/2012 4