Application of Costing to Indigenous Business Unit in Hubli

City
*Prof. Mahesh Bendigeri
**Mr. Satish Halannavar
***Mr. Santosh Nargund

An attempt has been made by students of Sem II of 2012-14 batch to align classroom teaching
into practical world. It is first of its find to bridge the gap between academic learning with
pratical knowledge by taking up mini project and trying to apply the concept of cost sheet to
local business units.
Mr. Satish Halannavar and Mr. Santosh Nargund of Sem II class have identified a Tailoring shop
for the purpose of this study. The name of Tailoring shop is Manjunath Tailors.
Brief Profile of Manjunath Tailors:
It is a sole proprietorship concern, started in the year 1983 by Mr. Manjunath. Initially he started
with Single Sewing machine. Because of hardwork and good customer relation, the business
improved and today the work force size has increased to 6 people. Mr. Manjunath started this
career at the age of 12, wherein initially he worked as a helper, after 5 years he started with his
own shop with initial investment of Rs. 2000. He has done his education upto 4th Standard. Now
he is famous tailor in Hubli.
Cost Sheet:
Cost sheet is a statement, which shows various components of total cost of a product/service. It
classifies and analyses the components of cost of a product. It is a statement which shows per
unit cost in addition to Total Cost. Selling price is ascertained with the help of cost sheet. The
details of total cost presented in the form of a statement is termed as Cost sheet.
It is interesting to know in tailoring industry, how tailors ascertain the cost of stitching a shirt or
trousers. Most of us feel that the cost of stitching a shirt or trouser depend on some rough
estimate or based on competitor price for stitching. But after conducting this mini project it was
found that even tailor apply the concept of cost sheet in ascertaining the cost of stitching the shirt
or trouser.
Data collection and Analysis
Following is the information collected from Mr. Manjunath Tailor with respect to stitching of
trousers on annual basis. This is based on no. of trousers he had stitched during the year 2011-12.
Even though he has not maintained formal system of accounting. Yet the information provided
by him is taken as basis for preparation of cost sheet.

Cost Sheet for Stitching Trouser

1440 Trouser Stitched in the Year 2012
Amount
Total
Cost Per Trouser
Direct Materials
67680
47
Pocketing Cloth 28800
Hooks, Button, Chain and Thread 24480
Canvas 14400
Particulars

Direct Wages
Direct Expenses

172800
240480

120
167

13160

9.14

253640

176.14

2160
255800

1.5
177.64

3000
258800
245200
504000

2.08
179.72
170.28
350

Prime Cost

Factory Overhead
Machine Repairs
Current Bill
Rent of Shop
Depreciation on Scissor, Measuring Tapes,
Scales

2000
6000
3500
1480

Chalk Pieces

180
Works Cost

Administative Overhead
Receipt & Bill Book
Cost of Production
Selling & Distrubution Overhead
Plastic Bag for Packing
Total Cost
Profit
Amt charges for Stitching per Trousers

Analysis:
From the analysis of Cost sheet it is found that total cost incurred for stitching 1440 trousers was
Rs. 258800, and cost per trouser comes to Rs. 179.72 rounded off to Rs. 180. But the tailor
charges Rs. 350 for stitching per trousers. And this accounts to Rs. 170 profit per trouser.
Conclusion:
From this study it is found that we can apply the concept of cost sheet to indigenous business
unit and ascertain the probable cost of manufacturing a given product/ service. We conclude that
small business unit can also make huge amount of profit if cost are properly accounted for, at the
time of manufacturing a product/service.