COST CONCEPT

The term "cost" is synonymously used for the

term "expense", which refers to sacrifice. According to Committee of cost concepts-"Cost is foregoing, measured in monetary terms, incurred or potentially to be incurred to achieve a specific objective."

COSTING SYSTEM IN HAL

The system of cost accounting followed in HAL is "Batch Costing" which is a variation of job costing and is mainly designed to suit the work carried out in HAL. Some divisions of HAL have also work order schemes suitable for component costing.

In BATCH COSTING method, all the components, minor assemblies required for the aircraft equipment are manufactured on batch order. Jobs are carried out in batches. The cost of labour and material are booked on batch work only.

In batch costing method, cost of aircraft engine and its equipments, sub-assemblies related to an aircraft engine, its equipment in a completed batch is determined by dividing the total cost recorded on batch work order by the number of units produced in the batch.

ABOUT HAL

HAL was established as Hindustan Aircraft in Bangalore in 1940 by Walchand Hirachand to produce military aircraft for the Royal Indian Air Force but it came into existence on 1st October 1964. The principal activities of HAL involve manufacturing aircraft, aerospace, navigation, and instruments for communication purposes

CONTD…

HAL built the first military aircraft in South Asia and is currently involved in the design, fabrication and assembly of aircraft, jet engines, helicopters and their components and spares. It has several facilities throughout India including Nasik, Korwa, Kanpur, Koraput, Lucknow, and Hyderabad.

FINANCE DEPARTMENT IN HAL

The Finance Department occupies a very important position in any organisation as it has a role to play in almost all the activities right from conceptualisation of a project till its successful implementation from smooth running and thereafter.

It is the department having large number of customers inside as well outside the organisation.

OBJECTIVES

To ensure that the financial discipline is maintained in the division.

To ensure that all expenditure is incurred with due regard to principles of financial property.

To ensure that the funds are available in the approved capital and performance budget so as to cover the relevant proposals.

DIVISIONS OF FINANCE DEPARTMENT

BILLS PAYABLE FINANCE PAYROLL CASH OFFICE BILLS RECEIVABLE COST ACCOUNTS MATERIAL ACCOUNTS

CONTD…

BOOK KEEPING TIME OFFICE PROVIDENT FUND BUDGET SECTION

COST CONTROL

Cost control can be defined as comparative analysis of actual costs with appropriate standards or budgets to facilitate performance evaluation and formulation of corrective measures. It aims at accomplishing conformity between actual result and standards or budgets.

COST CONTROL TECHNIQUES

The cost control techniques are used to maintain cost efficiency. The cost control techniques, which are widely used, are as follows:

Standard costing Variance analysis Budgetary control

SUGGESTIONS

There should be facility of intranet so fax and such other things must be done through it that can reduce time and money.

Wages to direct workers should be given through piece rate system.

Efficiency of indirect workers should be measured so that slackness can be sorted out.

CONTD…

The time delay between rising of purchase order and preparation of RDR should be reduced.

For attendance finger print system should be adopted so that actual person’s attendance can be mentioned.

CONCLUSION

HAL is one of the largest PSU under the department of defense production, GOI and is a “NAVRATNA” company ranked 34th in the list of world’s top 100 defense companies. HAL with its wide spectrum of expertise in design, development and manufacture of aircrafts, helicopters, engines, accessories and avionics has emerged as major aeronautical complex in Asia.

 

CONTD…

As herein, the projects and items need huge investments than any other organization and confidential factor is also there too much extent but as much information is extracted shows that cost control is being performed quite good that’s why it is in so much profit.