Submitted to: Mr. Nirav Majmudar.Submitted by: Shruti Modi (43) Ruchit Doshi(26)

Hemant Industries was founded in 1971 by an entrepreneur Dr.P.T.Shah. The company served majority of the industries like IPCL, GSFC, IOC, L&T, Tata Chemicals Ltd., United Phosphorous Ltd., GACL, and many more industries in and around Baroda.

Hemant Industries apart from Import substitution items, the products manufactured were Ball valves - which were supplied to the Baroda Municipal Gas line project - first of its kind in Gujarat. And also supplied to many large and medium scale industries. Needle valves Vernier Manometers - for instrumentation applications in industries.

As the need rise, the company slowly switched over to the various products on safety and thus started manufacturing Air Movers, Flange Guards. The good reputation of providing quality service and good setup gained them the esteem approval of the Department of Explosives, Government of India, Nagpur, for the manufacturing of the safety fittings.

Hemind's Air Mover To dilute the general atmosphere at a

confined space with fresh air, enough to keep the concentration of toxic vapor in the confined area within safe limits and to remove contaminated air, replacing it with Air suitable for breathing.

HEMIND'S FLANGE GUARD It is a simple single joint strap, to be

used to fix on the flange joints. It is made of Polypropylene and is durable and has got

resistivity for high pressures and high temperature It can be used in acids..

Hemind's Safety Fittings Hemind's E-Kit Industrial Safety Helmet

All costs incurred by the firm must be accounted for in its financial statements

MANUFACTURING COSTSDirect Labor (DL)Direct Materials (DM)Overhead (OH)

Indirect MaterialsIndirect LaborOther

NON-MANUFACTURING COSTSMarketing or Selling CostsAdministrative Costs

Aggregate of all expenses relating to indirect material cost, indirect labor cost and indirect expenses is known as Overhead.

Advantages of overhead:• To Calculate the full cost of output or activities.• It manages and controls the costs of Output.• It gives report to internal and external

Stakeholders.

3. Inputs such as labor and capital equipment are also incurred to make the product. The costs of all the inputs used in the manufacturing facilities are recorded in WORK IN PROCESS INVENTORY

4. As products are finished, they are moved to finished goods warehouse and their costs are recorded in FINISHED GOODS (FG) INVENTORY

Overheads can be reduced by delaying purchases of new equipment.

Leasing new equipment rather than buying it outright.

Renegotiating the contracts with suppliers.

Staff costs can be reduced by restricting overtime or cutting staff hours.

Step 1 –Identify Direct/Indirect costs Step 2 –Organize “Cost Collection” by creating “Cost

Centers” and record expenses in that manner Step 3 –Identify costs that can be ‘allocated’ and those

that need to be ‘apportioned’ Step 4 –find suitable bases to relate the overheads

collected to the product/service delivery Step 5 –Calculate overhead absorption based on the rates

and measure product / service costs accordingly

In order to control costs it is necessary to trace them to the area responsible for the costs.

Production Cost Centres

2 types of Cost Centre

– these are involved in the manufacturing process such as machining and assembly Cost Centres.

Service Cost Centres

– these are not involved in the actual manufacturing process but provide services to the production Cost Centres such as the maintenance and stores departments.

Step 1

Direct Costs

– are ALLOCATED to a Cost Centre.

Power, Lighting and Heating (when separately metered), Repairs and Maintenance to a machine

Cost Allocation refers to the allotment of whole items of overhead costs to cost centres; that is, overhead costs can be allocated directly to a Cost Centre.

Overhead Cost Basis of Apportionment

Rent, rates, heating and lighting

Depreciation and insurance of plant and machinery

Canteen, factory administration costs

 Power

floor area, size of department

book value of the fixed assets

number of employees

  horse power of machines

Service Overhead Cost Basis of Apportionment

maintenance man hours or value of the capital equipment

cost of materials used or material requisitions

number of employeesCanteen, personnel and security guards' wages

 Maintenance

Cleaning

These departments exist for the whole business not just one department and therefore these Service Costs must be APPORTIONED among the other

Production Departments, again using a suitable basis.

ABSORPTION OF COSTS

This is often also referred to as Overhead Recovery.

Overhead Absorption refers to the method of charging a proportion of the final production cost centres' overheads onto a particular job on the basis of for example,

the number of labour hours or machine hours taken to complete the job.

Rate per Direct Labour Hour

Total Predetermined Overheads / Total Labour Hours

Machine Hour Rate: either

Total Predetermined Overheads / Total Machine Hours

when Labour Hours in the relevant factor

Area occupied by machine – rates, rent etc

Cost of operating – depreciation, power etc