Analysis Cost Accounting

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MANAGEMENT ACCOUNTING AND CONTROLCOST SHEET ANALYSIS

SOFTWARE DEVELOPING COMPANIES(IT SECTOR)

MAC Assignment-2

Presented By : Khyati Patel(24), Manju

Mishra(28) and Saijeeth Vasudevan(46).

IPER PGDM, Trim-2 (2012-2014)

INSTITUTE OF PROFESSIONAL EDUCATION AND

RESEARCH


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FASTEST CHANGING INDUSTRY

The Software Industry include businesses for development, maintenance

and publication of software that are used in any business model. The

industry also includes software services such as training, documentation

and consulting.

Software Development includes research,new development,prototyping,modification, reuse, re-engineering, maintenance or any other activities

that result in software products utility minimizing use of man power.


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Companies Taken Under Analysis

INDIAN COMPANIES

Infosys

Tata Consultancy & Services (TCS)

Hexaware

FOREIGN COMPANIES IN INDIA

Mphasis

Oracle Finance


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COST & COSTING

Cost: - Cost can be defined as the expenditure (actual or notional) incurredon or attributable to a given thing. It can also be described as the resourcesthat have been sacrificed or must be sacrificed to attain a particularobjective.

Costing: - Costing may be defined as the technique and process of

ascertaining costs. According to Wheldon, Costing is classifying,recording, allocation and appropriation of expenses for the determinationof cost of products or services and for the presentation of suitably arrangeddata for the purpose of control and guidance of management.

Cost Accounting: - Cost Accounting primarily deals with collection,

analysis of relevant of cost data for interpretation and presentation forvarious problems of management. It is defined as, the establishment of

budgets, standard costs and actual costs of operations, processes, activitiesor products and the analysis of variances, profitability or the social use offunds.


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Absorption Costing. Marginal Costing

Standard Costing

Costing Information

Unit Costing

Job

Costing

Batch

Costing

Specific Order

Costing

Contract

Costing

OUTPUT

COSTING

Process

Costing

Service

Costing

CostingTechniques

CostingMethods


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Cost Sheet of Oracle Financial Services Software Ltd


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Vertical Analysis Of Oracle Financial Services Software Ltd


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Vertical Analysis Of Oracle Financial Services

Software Ltd Compensation to employees is increasing from the year 2003 to 2011 with

respect to total expenses, then it decreased . Significant fluctuations in Outsourced professional jobs from the year 2003

to 2012.

Significant fluctuations in Travel expenses from the year 2003 to 2012.

Significant fluctuations in Miscellaneous expenditure from the year 2003 to2012.

Significant fluctuations in Provision for direct tax from the year 2003 to2012.


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Cost Sheet of Mphasis Ltd


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Vertical Analysis Of Mphasis Ltd


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Vertical Analysis Of Mphasis Ltd

Repairs and maintenance kept reducing year on year and seen to be reducedexcessively in 2012.

Insurance premium paid by the company reduced very significantly in 2005 may bebecause of change or withdrawal of few policy and thus took up next but againdecreased in 2008 and kept the same sequence on next.

Particular decrease in Outsourced professional jobs has been seen in consecutiveyears.

Advertising expenses remains nil over all years.

Marketing expenses seen to be increased marginally as company now may be

concerned about marketing of softwares designed.

Communication expenses decreased by a significant amount in the year 2012although it kept fluctuating all over the earlier years.


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Recent year (2012) admitted a significant decrease in miscellaneousexpenditures.

Other operational expenses of industrial enterprises came to Zero marking asignificant expense reduction in the year 2005 and thus maintained to thesame.

A significant increase was admitted in the year 2005 as other operational

expenses of non-financial services enterprises took up from zero to 0.606908% of the total expenses which was a big expense added.

Provisional expenses fall to Zero in the year 2011 and was accounted to besurplus even in the next year was a good reduce in the expenses incurred bythe company.


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Cost Sheet of Infosys Ltd


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Trend Analysis of Infosys Ltd


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Trend Analysis of Infosys Ltd

There was a Significant increase in Non-executive directors' Fees from 2007till 2010, but was reduced by around 0.000100 % of total cost in 2011 butagain took up to the earlier dimensions in the next year.

Advertising expenses reduced highly to negligible amount in from the year2003 to 2010 but again took up in percentage to a significant amount in2011-2012.

Marketing expenses reduced majorly in the year 2009 thus kept onfluctuating within the same respective amount.

Miscellaneous expenditure kept on increasing from the year 2003 till 2012with a significant amount change as the unit taken here is crores.

Other operational expenses of industrial enterprises reduced to Zero in theyear 2006 and remained the same as now they have no such expenditures


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The other operational expenses of non-financial services enterprisesincreased to a significant amount as it was nil in 2005 and took up to0.026116 % of total cost in 2006 and kept on increasing further.

Provisional expenses fall to zero suddenly in the year 2010 but took up in2011 and kept on increasing.


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Trend Analysis of Hexaware Technologies Ltd


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Compensation to employees has been increasing from the year 2003 to 2005,but after that it has been fluctuating till 2012.

Indirect taxes has been constantly fluctuating from the year 2004 to 2012.

Rent & lease rent has been fluctuating from the year 2003 to 2012.

Sudden significant increase in the year 2004 in Outsourced professional jobsand then it has been fluctuating till 2012.

Travel expenses has been significantly decreased in the year 2004 from

2003, then till 2012 there are slight fluctuations in the expenses. Other operational expenses of industrial enterprises have been significantly

decreased from year 2003 to 2004 and then in 2005, it reduced to 0.00% i.e.no change in expenses occurred till 2012.

Significant fluctuations from the year 2005 to 2012 in other operationalexpenses of non-financial services enterprises.

Depreciation (net of transfer from revaluation reserves) has been decreasedfrom the year 2003 to 2008 and then fluctuating till 2012.

Significant fluctuation in Prior period and extra-ordinary expenses from the

year 2003 to 2012.


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Cost Sheet of Tata Consultancy Services Ltd


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Trend Analysis of Tata Consultancy Services Ltd



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Raw materials, stores & spares cost around 0.004414 % in the year 2006initially and thus kept reducing and reached to 0.00038% of total expense inthe year 2012.

TCS incurred a 0.14311 % of total cost as expenditure once in the year 2006and thus never after.

Insurance premium paid by the firm kept on reducing year on year from

2005 and educed significantly in 2102 to 0.00005% of the total cost.

Incurred a 0.07027% expense of the total only once in the year 2005 andthus reduced to zero for next all years.

The company incurred a expenditure involving other operational expensesof non-financial services enterprises consecutively from 2006 till recent yearunder observation.

Provisional expenses were reduced significantly in the year 2012

T d A l i


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Trend Analysis1) Oracle Financial Services Software Ltd

Rate of increase of total expenses was higher than the rate of sales throughoutthe years except the year 2011. In the year 2011 the rate of increase of sales washigher than the rate of increase of total expenses.

0.00%

100.00%

200.00%

300.00%

400.00%

500.00%

600.00%

Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

Total

expenses

Sales

2) Mphasis Ltd


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2) Mphasis LtdRate of increase of total expenses was much higher than the rate of increase ofsales throughout the years.

0.00%

500.00%

1000.00%

1500.00%

2000.00%

2500.00%


Totalexpenses

Sales

3) Infosys Ltd


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3) Infosys Ltd

Rate of increase of sales was slightly higher than rate of increase of totalexpenses from year 2003-2007.

Rate of increase of sales was lower than rate of increase of total expenses

from year 2008-2012.

0.00%

100.00%

200.00%

300.00%

400.00%

500.00%

600.00%

700.00%

800.00%

900.00%

1000.00%

Mar-03Mar-04Mar-05Mar-06Mar-07Mar-08Mar-09Mar-10Mar-11Mar-12

Total expenses

Sales

4) H T h l i Ltd


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4) Hexaware Technologies Ltd

Throughout the years, rate of increase of sales was higher than rate of increaseof total expense, except in the years 2008 and 2011 with respect to the baseyear 2003.

0.00%

100.00%

200.00%

300.00%

400.00%

500.00%

600.00%

700.00%

800.00%


Totalexpenses

Sales

5) Tata Consultancy Services Ltd


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Rate of increase of sales is much more than the rate of increase of totalexpenses throughout. The gap between both the rates is becoming wider whichshows that the company's profit is increasing year by year.

0

20000

40000

60000

80000

100000

120000

140000

160000

180000


Totalexpenses

Sales

C i b t C i


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Comparison between Companies

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60


Sales/totalExpense(Hexaware)

Sales/totalExpenses(Infosys)

Sales/TotalExpenses(Mphasis)

Sales/Total

Expenses (OracleFinancialSoftwareServices)Sales/TotalExpenses (TCS)

Analysis:


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Analysis:

In the year 2003 Sales/Total Expense Ratio of Mphasis was highest andlowest ratio was of TCS.

In the year 2004 Sales/Total Expense Ratio of Mphasis was again highestand lowest ratio was again of TCS.

In the year 2005 Sales/Total Expense Ratio of Infosys was highest andlowest ratio was of Hexaware

In the year 2006 Sales/Total Expense Ratio of Infosys was again highest andlowest ratio was of Mphasis.

In the year 2007 Sales/Total Expense Ratio of Infosys was again highest andlowest ratio was of Hexaware.

In the year 2008 Sales/Total Expense Ratio of Infosys was again highest andlowest ratio was again of Hexaware .

In the year 2009 Sales/Total Expense Ratio of Oracle financial SoftwareServices was highest and lowest ratio was again of Hexaware.

In the year 2010 Sales/Total Expense Ratio of Oracle financial Software


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In the year 2010 Sales/Total Expense Ratio of Oracle financial SoftwareServices was highest and lowest ratio was again of Hexaware.

In the year 2011 Sales/Total Expense Ratio of Oracle financial SoftwareServices was highest and lowest ratio was again of Hexaware

In the year 2012 Sales/Total Expense Ratio of Hexaware was highest andlowest ratio was again of Oracle financial Software Services.

From the year 2003 to 2012, Infosys can be considered to be stable as the

sales/total expense ratio was not fluctuating too much.

Mphasis was stable in year 2003 & 2004 but was not able to maintain theconsistency in the further years.

From the year 2003 to 2012, TCS has been growing.

Hexaware and Oracle Financial Software Services have been fluctuatingthroughout the years.

C i b t F i d I di C i


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Comparison between Foreign and Indian Companies The average sales/total expense ratio of Indian Companies was increasing

from the year 2003 to 2006, and then the ratio started fluctuating from theyear 2006 to 2012.

The average sales/total expense ratio of Foreign Companies was decreasingfrom the year 2003 to 2005, and then the ratio started fluctuating from theyear 2005 to 2012.

Both Foreign as well as Indian companies are running neck to neck.

0.00

0.20

0.40

0.600.80

1.00

1.20

1.40

1.60

Mar-03Mar-04Mar-05Mar-06Mar-07Mar-08Mar-09Mar-10Mar-11Mar-12

Averagesales/totalexpenseratio (IndianCompanies)

Averagesales/totalexpenseratio(ForeignCompanies)


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Forecasting of Sales and Total Expenses for all

Companies

We have used Linear Regression method for forecasting Expenses as well as

for Sales.

Y= a+bX

Where X= Year and Y= Sales

a= y (b*x)

b= xy(n*xy)

1) Oracle Financial Services Software Ltd

Forecasted Value of Total Expenses in

Rs. Crores for the year 2013 is 2261.8

Year Total expenses

2003 417.6

2004 550.212005 734.29

2006 945.61

2007 1234.8

2008 1468.8

2009 1685.2

2010 1674.3

2011 1554.7

2012 2219.2

Forecasted Value of Sales in Rs Crores for the year 2013 is 2941


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Forecasted Value of Sales in Rs. Crores for the year 2013 is 2941.

Year Sales

2003 568.432004 684.46

2005 902.86

2006 1153.8

2007 1552.3

2008 1793

2009 2212.6

2010 2243.5

2011 2360.5

2012 2589.9

2) Mphasis Ltd


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2) Mphasis Ltd.

Forecasted Value of Total Expenses in Rs. Crores for the year 2013 is3220.5

Forecasted Value of Sales in Rs. Crores for the year 2013 is 3997.9

Year Total expenses

2003 146.01

2004 182.56

2005 211.07

2006 313.69

2007 973.33

2008 1505.42009 1231.4

2010 2624.1

2011 2884.7

2012 2787.3

Year Sales

2003 207.99

2004 259.97

2005 247.77

2006 380.67

2007 1102.9

2008 1703.62009 1451.6

2010 3405

2011 3770.1

2012 3337.6

3) Infosys Ltd.


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3) Infosys Ltd.

Forecasted Value of Total Expenses in Rs. Crores for the year 2013 is 25194.

Forecasted Value of Sales in Rs. Crores for the year 2013 is 31806.

Year Total expenses

2003 2783.21

2004 3645.3

2005 5130

2006 6854

2007 9873

2008 121532009 15659

2010 16623

2011 20089

2012 25097

Year Sales

2003 3622.69

2004 4760.89

2005 6860

2006 9028

2007 13149

2008 156482009 20297

2010 21140

2011 25385

2012 31254

4) Hexaware Technologies Ltd.


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4) Hexaware Technologies Ltd.

Forecasted Value of Total Expenses in Rs. Crores for the year 2013 is605.983.

Forecasted Value of Sales in Rs. Crores for the year 2013 is 677.46.

Year Total expenses

2003 93.01

2004 150.14

2005 223.12

2006 292.56

2007 373.81

2008 535.092009 485.28

2010 396.7

2011 450.51

2012 525.5

Sales

2003 98.24

2004 154.76

2005 254.04

2006 355.79

2007 412.69

2008 468.82009 500.96

2010 490.04

2011 425.13

2012 680.2



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5) Tata Consultancy Services Ltd.

Forecasted Value of Total Expenses in Rs. Crores for the year 2013 is30574.9.

Forecasted Value of Sales in Rs. Crores for the year 2013 is 38828.9.

Year Total expenses

2003 0.95

2004 2.57

2005 6314.91

2006 8624.57

2007 11401.16

2008 14862.802009 18104.58

2010 17835.32

2011 22360.26

Year Sales

2003 0.25

2004 2.05

2005 8054.57

2006 11239.3

2007 14944.6

2008 18293.72009 22407.9

2010 23047.3

2011 29277

2012 38860 4

Analysis Cost Accounting

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