COST SHEET

ANALYSIS:
DABUR INDIA LIMITED
Introduction

■ Dabur ( Dabur India Ltd.) is one of the India's largest Ayurvedic medicine & natural
consumer products manufacturer.
■ Dabur demerged its Pharma business in 2003and hived it off into a separate
company, Dabur Pharma Ltd. German company Fresenius SE bought a 73.27%
equity stake in Dabur Pharma in June 2008 at Rs 76.50 a share.
■ Dabur's Healthcare Division has over 260 products for treating a range of ailments
and body conditions, from common cold to chronic paralysis. Dabur International, a
fully owned subsidiary of Dabur India formerly held shares in the UAE based
Weikfield International, which it sold in June 2012.
Objective of the Report
The balance sheet of a manufacturing company and carry out the following: Prepare Cost
Sheet Analyse the cost sheet Apply the concepts of marginal costing and CVP analysis To
achieve this purpose we have chosen Dabur India Ltd. and studied its annual report 2010-11.
Dabur At-a-Glance Dabur India Limited has marked its presence with significant
achievements and today commands a market leadership status.
The story of success is based on dedication to nature, corporate and process hygiene,
dynamic leadership and commitment to the partners and stakeholders. Dabur India Ltd is
considered as the leading consumer goods company in India with a turnover of Rs. 2834.11
Crore(FY09).
The three major strategic business units (SBU) - Consumer Care Division (CCD), Consumer
Health Division (CHD) and International Business Division (IBD). It has 17 ultra-modern
manufacturing units spread around the globe. Products marketed in over 60 countries.
The master brands are : Dabur-Ayurvedic healthcare products),Vatika - Premium hair care,
Hajmola – Tasty digestives, Réal - Fruit juices & beverages, Fem - Fairness bleaches & skin
care products.
COSTING
■ Costing is the technique of ascertaining cost. A cost sheet is a statement of cost
prepared at given interval of time showing various elements of cost of a product
produced, or service rendered during a particular period. This statement gives
details about total cost and cost per unit at different stages of production.
■ Important components of cost are: a) Prime Cost = Direct material cost + Direct
labour cost b) Works Cost = Prime cost + Factory overheads. c) Cost of production =
Works cost + Office & Administrative overheads. d) Total Cost (Cost of sales) = Cost
of production + Selling & Distribution overheads.
ANALYSIS OF COST SHEET
■ Freight and forwarding charges form about 12.018% of selling and distribution
overhead. Advertisement expense constitutes about 74.589% i.e the company
focuses more on advertisements. General expenses account to major portion of
Administrative overhead which is 52.1%. Direct material constitutes 5.91% of the
prime cost while Direct labour constitutes only 12.12 % The factory overhead
consists mainly of power and fuel which is 36.08%. and followed by processing
charges which is 17.86% . Depreciation forms the major part of the factory overhead
which is 24.87% Rent paid for the building constitutes 12.07%. Profit margin is
32.049 % of net sales. Factory OH as a % of Direct labour 65.25Administrative OH
as a % of works cost 11.14Selling OH as a % of Cost of production 29.71 The total
depreciation expense incurred during the year is Rs. 3496 crores out of which Rs.
2118 crore is towards plant and machinery and Rs.170 crore is only for office
furniture and fixtures. Depreciation on Plant and machinery is 71.18% of
depreciation on factory assets Overall deprecation constitute of 1.98 % of total cost
of production.
MARGINAL COSTING
Marginal costing is the ascertainment ,by differentiating between fixed cost and
variable cost of marginal costs and of the effect on profit of changes in volume or type
of output. It is not a system of ascertaining cost but a special technique which is
concerned with the changes in costs resulting from the changes in volume or range of
output.
The technique of marginal costing involves: Differentiation between fixed cost and
variable cost Ascertainment of marginal costs Ascertaining the effect on profit due to
changes in volume i.e cost volume profit analysis. Tools of marginal costing:
Contribution P/V Ratio Break even point Margin of safety
Depreciation on Building 727 Depreciation Plant & Machinery 2118 Depreciation lease
on land 10 Rates And Taxes 348 Depreciation Vehicle 196 Depreciation furniture &
fixtures 170 Depreciation computer 275 R&D 368
FIXED COSTS RS in Crore
Depreciation on Building 727
Depreciation Plant and Machinery 2118
Depreciation lease on land 10
Rates and Taxes 348
Depreciation Vehicles 196
Depreciation furniture 170
Depreciation Computer 275
R and D 368
Auditor’s Remuneration 76
General Expenses 9201
Security 446
Insurance 286
Director’s Fee 2192
Telephone and Fax 355
Legal and Professional 2159
Repair and Maintenance Building 281
Processing Charges 2098
Other repairs 678
Rent 2132
Advertisement 39019
Total Fixed Cost 63135
Variable Cost
Repairs To Machinery 423
Direct Labour 18000
Raw Material 77335
Primary Packing Material 50071
Power and Fuel 4239
Stores and Spares 1172
Excise Duty 3099
Sales Tax 289
Freight and Forwarding 6287
Travel and conveyance 3007
Commission and Discount 3166
Total Variable Costs 167088
TOTAL COST 230223
■ All the expenses have been classified under two categories of cost:-
Fixed Cost
Variable Cost

Fixed Cost as a % Of Total Cost 27.423

Major part of the expense is variable cost accounting to 27.423% while only 27.423% is
fixed cost. That means if variable cost per unit is controlled to some extent then cost
can be controlled. Though fixed cost seems to be low when compared to variable cost it
is also an indication that company has invested well in fixed assets as 27.423% is a
comparably high value.
The company has invested a considerable amount in advertisement and publicity which
accounts to around 63.13% of fixed cost.
Expense on raw materials and primary packing material together constitutes 76.25% of
variable cost. This depends mainly on the market demands as well the capacity of
production.
GROUP NAME

ABHINASH PATRA
AMIT KAPOOR
DISHARI PODDAR
OWAIS YOUSUF
ADITYA SHAW
MISBAH ALAM