07-01-2014, 12:42 PM
Product costing in Prestige Industries PVT TLD
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Product Costing
Product costing is a type of costing A product cost is any cost that is associated with units of product for a particular purpose. Hence, the identification of product costs depends on the purpose for which it is done. For example, the factory manager is interested in manufacturing costs, whereas the merchandising manager might be interested in both manufacturing and nonmanufacturing costs, including research and development, marketing, and advertising costs.
Product cost are used in two different aspects: in Financial accounting and Managerial accounting. In financial accounting, product cost are used to value inventory and to compute cost of goods sold. Whereas in managerial accounting, product cost are used for planning, control, directing and management decision making. Therefore, this type of costing system is very efficient for a manufacturing company as in a manufacturing company, the products used are large in number and thus computing the cost of these product is a tedious work.
Introduction
PRESTIGE INDUSTRIES Pvt. Ltd. Company is promoted by MR Sanjay Agarwal. They are into manufacturing & Trading of Grey Fabrics along with Computerized Embroidery Work of Fabrics last 20 Years. They came with a new embroidery machine project in order to fulfill the customers needs efficiently and effectively . The group is having a diverse experience in textile industry and having an entire team to work as a cohesive whole focusing towards the development of our range and the organization as a whole .
The group has 145Computerized Embroidery machines of the unit to meet the demand of the group. The unit will not face any problem in getting Job work as they are presently in this field only. The group is having a rich and varied experience in textile industry. The cost of the project is around Rs 712 LAKHS. The director of the company takes all the financial decisions. Incepted in the year 1991, Prestige INDUSTRIES PVT LTD is a private limited Firm with their base in SURAT. It helps in targeting their domestic clients. Besides, their globe-covering network facilitates in meeting the demand of their global customers in an appropriate manner.
HISTORY OF EMBROIDERY
The use of embroidery is to brighten garments, which have been around since man, and women began to wear garments. It is a way of decorating and adorning vesture, adorned styles happened as results of labor and care. This journey began once primitive man discovered that he may use thread to affix items of fur to form garments. As a natural progression, he additionally discovered that a similar thread could be accustomed build ornamental patterns on the garments. He additionally used vibrant beads, stones and bones to feature to those decorations. Several wonderful samples of lovely embroidery work are still living until date. Samples are often found from Ancient Egypt, China, Persia, India and England. Every country has its own distinctive type of embroidery, which contains the culture and representational process from their history and tradition.
MANUFACTURING PROCESS
The manufacturing process is very simple. The design is prepared on the computer and then design is loaded on the USB Drive and put in the on board computer of Embroidery Machine. The cloth, either grey or finished is laid on the frame / Pantograph of the machine where thread for embroidery is already loaded in the shuttles. Since the total process is computerized the working knowledge of the machines is automatic. The unit will do job work of fabric embroidery of the other units in the Surat textile market. The products are exported in mainly northern part of the India. These products are also exported outside India. The countries are Malaysia, Singapore, USA, and LONDON.
BENEFITS OF THE PRODUCT
The usage of products of the unit i.e. “EMBROIDERED FABRICS’ is universal. It is the value addition product, which adds value to the product. The use of the products will be everywhere starting from kids, Teen Ages, young and even older people. Surat is largest manufacturer of Saris and dress materials, which also require embroidery work after dyeing, and printing of the Fabrics. Embroidery adds grace and elegance, life and style even into articles of everyday use. The product will have potential for exports also subject always to the price preference. The benefit of purchasing the product from this company is the best price offered by them and the new designs are available which are according to the consumer taste and preference.
Conclusion and recommendation
Company is trying to enter in the textile market. As it is a new player in the industry, it is not an issue that company is not a market leader. Company is earning quite a handsome amount of money i.e. 1,45,92,239 rupees in its starting years, which is good but it would be better that company could follow activity based costing system.
In activity based costing system overhead is charged according to each activity cost driver. As we can see in report company follow numerous activities such as cutting, designing, alteration, stretching, roll press, packaging etc. thus it would be helpful for the company if it adopts this method as they can easily identify and can allot the right cost at each level of activity which indeed will help them to setup right cost of the product.