Contents

Introduction ............................................................................................................................................ 2 Job Costing .............................................................................................................................................. 4 General Approach to Job Costing ....................................................................................................... 4 Element of Cost ................................................................................................................................... 5 Cost Sheet of Amul Ice Cream................................................................................................................. 7 Cost Sheet Analysis ................................................................................................................................. 9 Applicability of job costing ...................................................................................................................... 9 Conclusion ............................................................................................................................................. 10 References ............................................................................................................................................ 10

Introduction
Amul Ice Cream was launched on 10th March, 1996 in Gujarat. The portfolio consisted of impulse products like sticks, cones, cups as well as take home packs and institutional/catering packs. Amul ice cream was launched on the platform of Real Milk. Real Ice Cream given that it is a milk company and the wholesomeness of its products gives it a competitive advantage. In 1997, Amul ice creams entered Mumbai followed by Chennai in 1998 and Kolkata and Delhi in 2002. Nationally it was rolled out across the country in 1999. It has combated competition like Walls, Mother Dairy and achieved the No 1 position in the country. This position was achieved in 2001 and it has continued to remain at the top. Today the market share of Amul ice cream is 38% share against the 9% market share of HLL, thus making it 4 times larger than its closest competitor. Not only has it grown at a phenomenal rate but has added a vast variety of flavours to its ever growing range. Currently it offers a selection of 220 products. Amul has always brought newness in its products and the same applies for ice creams. In January 2007, Amul introduced SUGAR FREE & Prolife Probiotic Wellness Ice Cream, which was a first in India. This range of SUGAR FREE, LOW FAT Diabetic Delight & Prolife Probiotic Wellness Ice Cream is created for the health conscious. Amuls entry into ice creams is regarded as successful due to the large market share it was able to capture within a short period of time due to price differential, quality of products and of course the brand name. Amul Ice Cream was launched on 10th March, 1996 at Ahmedabad. Subsequently the distribution and marketing operations were rolled out across the country.

In a short span of 6 years Amul Ice Cream has become the No.1 ice cream brand in the country. It is now the only national brand and all other ice cream brands are regional. Amul Ice Cream has achieved 38% share against 9% market share of HLL making it 4 times larger than its closest competitor. Today the market share of Amul ice cream is 38% share against the 9% market share of HLL, thus making it 4 times larger than its closest competitor.

Not only has it grown at a phenomenal rate but has added a vast variety of flavours to its ever growing range. Currently it offers a selection of 220 products. Amul has always brought newness in its products and the same applies for ice creams. In January 2007, Amul introduced SUGAR FREE & Prolife Probiotic Wellness Ice Cream, which was a first in India. This range of SUGAR FREE, LOW FAT Diabetic Delight & Prolife Probiotic Wellness Ice Cream is created for the health conscious. Amul''s entry into ice creams is regarded as successful due to the large market share it was able to capture within a short period of time. The Indian ice cream industry is currently estimated to be worth Rs. 2,000 crores, growing at a rate of approximately 12%. RS Sodhi, Chief General Manager of Gujarat Co-operative Milk Marketing (GCMMF), the makers of Amul, explains, The ice cream market in India can be divided into: the branded market and the grey market. The branded market at present is 100 million litres per annum valued at Rs. 800 crores. The grey market consists of small local players and cottage industry players. In 2008-09, in the branded ice cream market, Amul held the number one spot, with a market share or 38%, followed by Kwality Walls at 14%, Vadilal at 12% and Mother Diary at 8%.

Job Costing

There are two basic systems used to assign costs to products or services: 1 Job costing In a job-costing system, the cost object is an individual unit, batch, or lot of a distinct product or service called a job. 2 Process costing In process costing, the cost object is masses of identical or similar units of a product or service. Process costing allocates costs among all the products manufactured during that period.

General Approach to Job Costing

The following seven-step approach is used to assign actual costs to individual jobs: 1 Identify the chosen cost object(s). 2 Identify the direct costs of the job. 3 Select the cost-allocation base(s). 4 Identify the indirect costs associated with each cost-allocation base 5 Compute the rate per unit of each cost-allocation base used to allocate indirect costs to the job. 6 Compute the indirect costs allocated to the job. 7 Compute the cost of the job by adding all direct and indirect costs assigned to it.

Element of Cost
Material Cost: i. Direct Materials - Materials which are present in the finished product or can be identified in the finished product are called direct materials. For eg. Coconuts in case of coconut oil or wood in a wooden cupboard. Indirect Materials - Indirect materials are those materials which do not normally form part of the finished products or which cannot be directly traced to the finished product. For eg. Stores, oil, grease, cotton wool etc.

ii.

Labour Cost: i. Direct Labour - Labour which can be attributed wholly to a particular product, process or job is called direct labour. It is the labour utilised in converting raw materials into finished products. For eg. Labour employed in the crushing department of an oil mill. Indirect Labour - Labour which cannot be identified with a particular product, process or job is called indirect labour. Indirect labour cost is apportioned to cost units or cost centres. For eg. Maintenance workers.

ii.

Expenses: i. Direct Expenses - Expenses incurred (except direct materials and direct labour) specifically for a product, process or job is known as direct expenses. They are also called "chargeable expenses". For eg. hiring charges for a machine specifically hired for a particular process, excise duty, royalty. Indirect Expenses - Expenses incurred other than direct expenses are called indirect expenses. For eg. Factory rent & insurance, power, general repairs.

ii.

Overheads: Overheads is the sum total of indirect materials, indirect labour and indirect expenses. Functionally overheads can be classified as under i. ii. iii. iv. Production / Works overheads Administrative overheads Selling overheads Distribution overheads

Cost Sheet of Amul Ice Cream

Unit Produced: 1,00,000

Particulars opening stock Raw materials Dry fruits Milk Flavors Other ingredients Sugar Cup Cutlery Seasonal fruits Waffle Cocoa Cost per unit 10.00 3.00 2.50 3.00 3.50 2.00 2.50 1.50 1.00 0.50 1.00 1.50 32.00 Carriage inward Raw materials Consumed Direct expenses Direct labour Prime cost Factory overheads Fixed Depreciation 2.50 250,000.00 1.85 Amount 1,000,000.00 300,000.00 250,000.00 300,000.00 350,000.00 200,000.00 250,000.00 150,000.00 100,000.00 50,000.00 100,000.00 150,000.00 3,200,000.00 184,500.00

33.85 2.20 5.30 40.05

3,384,500.00 220,000.00 530,000.00 750,000.00

Rent Power Insurance Supervisor's salary Variable: Electricity Running exp of machine work cost Office over head Employee cost Other expenditure computer Telephone Taxes Carriage outward cost of production

1.00 1.75 1.50 0.60 0.70 1.00 9.05

100,000.00 175,000.00 150,000.00 60,000.00 70,000.00 100,000.00 905,000.00

50.40

5,039,500.00

10.00

1,000,000.00

1.20 0.10 0.40 0.20 62.30

120,000.00 10,000.00 40,000.00 20,000.00 6,229,500.00

Opening stock Closing stock Cost of goods sold Selling and distribution expenses Advertisement Delivery Vehicles Petrol Packaging Cost of sales Profit Sales

2.00 64.30

200,000.00 6,429,500.00

4.00 3.50 1.75 0.51 74.05

400,000.00 350,000.00 175,000.00 50,500.00 7,405,000.00

18.50 92.56

1,851,250.00 9,256,250.00

Cost Sheet Analysis

The Company is producing 100000 units of ice cream at Rs. 74.05 Which the total cost incurred is Rs.7405000 and the total cost sales profit being made is Rs. 1851250. The Company is producing a single cup of ice cream at Rs .92.5625 which includes the cost of a cup ice cream at Rs. 74.05 Which again Implies that the Profit of Rs. 18.5125 is earned on a single unit of Amul Ice Cream. Since the company is earning some percentage of Profit above the cost, it means a slight increase in the cost will not have too much of an effect on the profit since there is a large margin of safety. Since the company is earning some amount of profit, the business is capable to expand and diversify over a period of time. PVR=C/S= 2671750/9256250=28.86% BEP (in Rs.) = FC/ PVR=2195000/28.86=Rs.7650568.26 BEP (In units)= FC/C=2195000/2.67175=821558.9=821559 MOS= Profit/ PVR= 476750/28.86=16519.404

Applicability of job costing

Helps optimum utilization of men, materials and machines Identifies areas requiring corrective action Identifies unprofitable activities, losses, inefficiencies Helps price fixation Facilitates cost control and cost reduction Facilitates use of various cost accounting techniques, like, variance analysis, value analysis etc. Helps management in formulation of policies (viii)Helps management in making strategic financial decisions. For eg: the technique of marginal costing helps the management in making various short term decisions. Helps in formation of cost centres and responsibility centres to exercise control Marginal Cost having a linear relationship with production volume enables in formulation and solution of "Linear Programming Problems".

Provides a data-base for reference by government, wage tribunals and trade unions etc.

Conclusion
From the study of the job cost sheet of Amul Ice-cream, we conclude that the firm can able to maintain its cost in best manner which helps the company to increase its profit margin. The main role of cost sheet is to manipulate the unnecessary cost in the production process.

References
1. www.amul.com/

2. www.iicma.in/index.php 3. Cost Management Accounting By Paresh Shah.