A

PROJECT REPORT ON
A STUDY OF PROCESS COSTING WITH SPECIAL REFERENCE TO
“JAHAGIRDAR FOODS PVT. LTD.”
SUBMITTED TO
SAVITRIBAI PHULE PUNE UNIVERSITY
FOR THE PARTIAL FULFILLMENT OF THE DEGREE
BACHELOR OF COMMERCE
(COST AND WORKS ACCOUNTING)
SUBMITTED BY
MUGDHA KIRAN SHEWALE
B.Y.K. (SINNAR) COLLEGE OF COMMERCE, NASHIK-5
T.Y. BCOM
ROLL NO: - 837
DIVISION: - H
GUIDED BY:
DR. MRS. INDIRA SINGH
ASSISTANT PROFESSOR
B.Y.K (SINNER) COLLEGE OF COMMERCE
YEAR 2022-23
 Acknowledgement

I have pleasure in successful completion of this work titled A study of Process Costing with
reference to Jahagirdar Foods Pvt. Ltd., Nashik. The special environment at B.Y.K. College of
Commerce, Nashik that always supports educational activities, facilitated my work on this
project.

I acknowledge the support and encouragement, extended for this study by principal
Dr. V.N. Suryavanshi.

I greatly appreciate the motivation and understanding extended for the project work, by
Mr. Prasad Raut, Manager, Jahagirdar Foods Pvt Ltd.and the staff of the surveyed business unit,
who, responded promptly and enthusiastically to my requests for frank comments despite their
congested schedules. I am indebted to all of them, who did the best to bring improvements
through their suggestions.

I am very much thankful to Dr. Mrs. Indira Singh for her encouragement and guidance for this
project work. It would not have been possible for me to complete this work without her
suggestion on every part of this work.

I acknowledge the authors, whose works gave me insight and information related to this subject.

I am thankful to Library staff and administrative staff of the BYK College who. directly, or
indirectly, have all been helpful in one way or another.

I thank my parents who encouraged me to extend my reach with their help and support, I have
been able to complete this work.

Date: Mugdha Kiran Shewale

 Index

CHAPTER TITLE PAGE

NO. NO.

1 INTRODUCTION 1

1.1 1.1 Introduction of project work

1.2 1.2 Concept of costing
1.3 1.3 Concept of process costing
1.4 1.4 Need and importance of process costing
1.5 1.5 Objectives of project work
1.6 1.6 Justification of objectives
1.7 1.7 Project methodology
2 ORGANIZATIONAL PROFILE 11
3 PRODUCTS AND SERVICE PROFILE 18
3.1 List of products produced or manufactured
4 THEORY RELATED TO PROCESS COSTING 27
4.1 Introduction to Process Costing
4.2 Meaning of Process Costing
4.3 Types of Process Costing
4.4 Terms used in Process Costing
4.5 Processes followed in Jahagirdar Industries
4.6 Format of Process Account

5 DATA ANALYSIS AND INTERPRETATION 34

5.1 Product wise sales
5.2 Expenses under different heads
5.3 Profit and loss analysis
5.4 Most sold products
5.5 Detailed analysis of Nagali Biscuits

6 FINDINGS AND RECOMMENDATIONS 42

7 CONCLUSION 45
7.1 Conclusion based on work
7.2 Conclusion based on learning benefits

ANNEXURE 47
Questionnaire
Bibliography
Photo gallery
 CHAPTER 1:

INTRODUCTION

1
1.1 INTRODUCTION TO PROJECT:

A project is a scientific and systematic study of real issue or a problem intended to

resolve the problem with application of commerce and management concepts and
skills. The study can deal with small or big issue in a division or an organization. The
problem can be from any discipline of commerce and management. It can even be
a case study where a problem has been dealt with through the process of
management.

1.2 CONCEPT OF COSTING:

Introduced in the previous century, Cost and Works Accountancy (CWA) is an

emerging field of study in Commerce. The role of a cost and works accountant
covers, allocation, assimilation, collation and analysis of financial information from
all areas of an organization. He plays a crucial role in the company as his quality of
information determines the success or failure of the organization.
Process Costing is a method of costing used mainly in manufacturing where units
are continuously mass-produced through one or more processes. Examples of this
include the manufacture of erasers, chemicals or processed food.

1.3 CONCEPT OF PROCESS COSTING:

Process costing help determination of cost in each process and of the final product
at short intervals. If overhead rates are predetermined, unit’s costs can be
computed very promptly even at weekly or monthly. Effective control can be
exercised on production very easily. The uses of process control over the
production process. It facilitates easy and accurate tracking of inventory. It does
not drain the organization time and resources. Process costing makes it easy to
obtain and predict the average cost of a product, allowing accurate estimates to
customers.

2
Under process costing, the procedure used to manufacture a product is divided into
well-defined processes. A separate account is opened for each process to which all
incurred costs are charged.

FOOD INDUSTRY SECTOR:

The bakery industry usually refers to the grain-based food industry. Grain -based
foods may include breads, cakes, pies, pastries, baked pet treats, and similar foods.
Along with bakeries, the industry consists of the equipment, supplies, and delivery
drivers used to support the industry.
Bakeries are the main component of the bakery industry, and produce the actual
goods. Bakery sales may be retail, wholesale, or a combination of both. The bakery
may produce goods for humans or pets. It may sell its products locally, distribute
them regionally or nationally, or export them to other countries.
Along with the bakeries, the bakery industry includes vendors for ingredients,
equipment, and supplies. Ingredients include flour, butter, eggs, and other food
items needed to produce baked goods. Equipment includes industrial ovens, scales,
mixers, and refrigerators. Bakery supplies are items such as food-grade packaging,
pans, and utensils

3
1.4 NEED AND IMPORTANCE OF PROJECT WORK:

Project is the part of curricular and degree program which provides students
opportunity to investigate problems applying knowledge in a scientific manner. It
gives them opportunities to learn in a particular situation and art of conducting a
study in a systematic way and presenting its findings in the project report. It is a
system of recording and analyzing the events for the purpose of gaining knowledge.
So, knowledge is a tool to solve the problems of individual institution and society
at large. It is beneficial for the students to impart certain skills. It develops the
punctuality, skill of interaction and observation. It also develops analytical mind,
skill of presentation, tact of taking interviews etc.
Project work provides an opportunity to investigate a problem applying commerce
and management concepts in a scientific manner. It enables to apply that their
conceptual knowledge in a practical situation and to learn the art of conducting a
study in a systematic way and presenting findings in a coherent report.
The aim of project work is gaining knowledge as a tool to solve the problems of
individual, institutions, and society at large. Apart from other practical education
like visits and guest lectures, project work is also necessary for the future
endeavors. Project work depends upon observation and experience. It consists of
careful procedure and patient activity. For project work, one has to collect
information and analyze data at the same time. Project work is helpful in providing
solutions to the problems.
It is a social activity. Project work will lead to results which are useful and beneficial
for the society. The general objective of the work is to fulfill the requirements of
the organizations and the industry and help the organizations by giving
recommendation related to cost control and reduction Project work provides an
opportunity to investigate a problem applying commerce and management
concepts in a scientific manner.

4
SELECTION OF TOPIC:
Process costing helps in determination of cost of each process and the final product
at short intervals. If overhead rates are predetermined, unit cost can be computed
very promptly even weekly or monthly. Effective control can be exercised on
production very easily.
The process costing helps in establishing the effective control over the production
process. It facilitates easy and accurate tracking of inventory. It does not drain the
organizations time and resources. Process costing makes it easy to obtain and
predict the average cost of production.
As one of the largest segments in the food processing sector in India, the bakery
industry offers huge opportunities for growth, innovation, and job generation.
Changing consumer habits and lifestyle are shaping the bakery industry in India. As
industry grow, they face many challenges, therefore it is important to study the
different aspects of a firm. One of the important aspect is finance and accounting
of firm, which can be understood and managed through costing. Therefore, the
bakery industry is undertaken to learn more about costing and process costing.

1.5 OBJECTIVES OF PROJECT WORK:

• To study the conceptual background of process costing.

• To study the organizational profile of Jahagirdar Industry.
• To study the product profile offered by Satpur Branch of Jahagirdar Industry.
• To study the process of Jahagirdar Industry.
• To study the issues involved in process costing.

5
1.5 JUSTIFICATION OF OBJECTIVES:

Any project is done to gain some knowledge also to give exposure to the student
to his or her branch of specialization. It gives an insight as to what really goes on in
the project is a continuous and systematic study of the topic under consideration.
The subject of process Costing is selected as the subject of my project. The basic
objectives of undergoing this project are as follows:

• For any study, the basic knowledge of the subject is essential. It enables to
undertake the study with more efficiency. Hence study of the conceptual
background is necessary.
• Having brief knowledge about the organization that I am visiting is necessary for
the project work.
• The basic knowledge of products manufactured is important for the project
work. Hence it is necessary to study the product profile offered by Satpur Branch
of Jahagirdar Industry.
• For analyzing the application of process costing, it is important to understand
the processes followed by Jahagirdar Industry.
• Understanding of issues involved in process costing will help in better
functioning of organization.

6
1.6 PROJECT METHODOLOGY:

Meaning of Project Methodology:

Project refers to systematic method consisting of enunciating the facts and reacting
certain conclusion either in the form of solution towards the concern problem or
in certain generalization for same theoretical formulation.
Research is conducted with the object of acquiring knowledge from the unknown
fields. Research help to add knowledge. Similarly, new facts, environment analysis,
technological upgradation also become possible. Research is systematic enquiry
seeking facts through objectives variable methods in order to discover the
relationship among them and to deduce from them board principle or laws.

Concept of Data Collection:

Data collection is the process of gathering and measuring information on variables
of interest, in an established systematic fashion that enables one to answer stated
research questions, test hypotheses, and evaluate outcomes. The data collection
component of research is common to all fields of study including physical and social
sciences, humanities, business, etc. While methods vary by discipline, the emphasis
on ensuring accurate and honest collection remains the same.

SOURCES OF DATA COLLECTION:

1. PRIMARY DATA:

Meaning-
As the name implies, this is original, first-hand data collected by the data
researchers. This process is the initial information gathering step, performed
before anyone carries out any further or related research. Primary data results are
highly accurate provided the researcher collects the information. However, there’s
a downside, as first-hand research is potentially time-consuming and expensive.

Advantages-

7
1. Primary data can be collected through various techniques. It allows the
researchers to explore effectively in almost every area where research is possible.
2. Primary data is applicable in many areas. including some special cases.
3. Researchers can also decide the length of study, location in which research is to
be carried out, time duration, etc., as per their requirement and convenience.
4. The collection of primary data is cost-effective.
5. As the information processed from the primary data is fresh and original, it can
be copyrighted.

Disadvantages-
1. Collecting primary data effectively takes more time.
2. Sometimes data collected through primary sources are in huge quantity. This
large volume of data leads confusion about the accuracy of the Information The
processing and analysis of the data becomes complex and cumbersome due to
large size.
3. Sometimes participants do not cooperate in data collection by showing
unwillingness to answer or by giving wrong information
4. While primary data collection might be desirable due to its accuracy and
reliability, it becomes unfeasible in some cases due to the time and effort involved
in conducting research.
5. There are numerous hassles involved in the collection of primary data like taking
a decision such as how, when, what and why to collect.

Methods of Primary Data Collection-

• Interview
• Questionnaire
• Schedules
• Observations

8
 2. SECONDARY DATA:
Meaning-

Secondary data is any data that is already available before the research begins.
Secondary data collection involves getting data that has already been produced or
recorded, instead of producing new data. More specifically, secondary data is
information originally created and used by a primary source for a specific purpose
that is then collected and analysed by a second party.

Advantages-
1. Data is available anywhere and anytime it can be in the form of periodicals,
magazines, or can be accessed anytime through the internet. People
generally use secondary data maximum nowadays to evaluate their studies.
2. The secondary data is of low cost as data are available at cheap rates, for
example, the internet access, newspaper, or periodicals are available at
cheaper rates.
3. Time taken to collect and analyse data is less than secondary data that is
quickly available. Therefore, it takes less time to take the source of data.
4. Secondary data is not only available through one source, but there are
multiple sources like books, magazines, the internet, periodicals, and many
more.
5. Since the data has been collected over years, thus a longitudinal analysis is
done by the researchers with the help of secondary data.

Disadvantages-
1. It is a limitation of secondary data that the data collected over the past few
years may be inaccurate.
2. The data provided through different sources may also be outdated as it has
been stored and managed for many years.

9
 3. Since data is related to past surveys and according to the needs of the
researchers of that time. It may happen that the present user of this data
may not need or not have topics relevant to his study or research.
4. Since data collected by the researcher is based on his/her opinion, therefore
data is biased.
5. There is no secrecy of data but the user of data cannot appeal their
possession or ownership of the data they accessed.
6. Data is already surveyed by researchers according to their relevant basis and
there may be changes in the surroundings and other factors that may lead to
the change in the data provided thus no proper quality can be controlled.

Methods of Secondary Data Collection-

• Encyclopedias,
• Essays,
• Newspaper opinion pieces,
• Reviews,
• Textbooks.

For the project work, both primary and secondary data is used.
Primary data was collected through questionnaire and secondary data was
collected with the help of books and website of Jahagirdar Foods Pvt. Ltd.

10
 CHAPTER 2:
ORGANISATIONAL PROFILE

11
ORGANISATIONAL PROFILE:
• Name of the firm:
Jahagirdar Foods Private Limited.

• Photo of Organization:

12
• Address:
Plot No. B33, Off Road A, Nice Industrial Area, MIDC, Satpur Colony, Nashik,
Maharashtra 422007.

• Contact Details:
Email- [email protected]
Contact No.- 0253 2352520 / 2353520
+ 91 88050 14323

13
• Owners/Partners:
Mr. Milind Jahagirdar is the owner of the Jahagirdar Foods. The company has
3directors and 1reported key management personnel. The longest serving
directors currently on board are Vandana Milind Jahagirdar, Saloni Mayur
Chindhade and Niharika Milind Jahagirdar who were appointed on 27December,
2016.They have been on the board for more than 5 years. Vandana Milind
Jahagirdar has the largest number of other directorship with a seat at a total of
1 company. In total, the company is connected to 0 other companies through
its directors.

• Brief History:
Jahagirdar Bakers was established in 1999with the view of bringing health and
taste together. ‘Bakery products-the healthy way’ has been our motto ever
since. Mr. Milind Jahagirdar, founder of the company started off his carrier as
an employee of Britannia Biscuits.

• Vision:
To provide wholesome food products of finest quality to everyone and
everywhere.

• Mission:
To develop and manufacture vegetarian, health-friendly food products, keeping
in mind the best quality and great taste with innovative methods, honest work
and a happy team.

14
• Organization Structure

1. General Manager: The work of general manager is to plan, schedule and

supervise bakery production.
2. Quality Manager: A Quality Manager is responsible for implementing and
executing inspection, testing, and evaluation methods to ensure that
products adhere closely to company standards.
3. Provisions Manager: The Provisioning Manager monitors the workload and
organizes the provisioning of additional capacity to systems when required.
4. Chef: A chef is the one who supervises and coordinates all pastry and
dessert preparation and presentation. Also checks the quality of raw and
cooked food products to ensure that standards are met.
5. Chef Assistant: A chef assistant assists in determining how food should be
presented and creates decorative food displays. Monitor stocks for baking
ingredients such as flour.
6. Cleaning Manager: Cleaning manager have to coordinate and monitor
cleaning schedule. And to create and distribute work schedules for the
cleaning workers.
7. Cleaning Crew: A cleaning crew is responsible for all basic cleaning in and
around the premises. This can entail dusting, mopping, sweeping,
vacuuming, and cleaning smudges off windows and doors.

15
• Achievements/Rewards/Goals:
1996- Establishment of Jahagirdar Bakers with regular bakery products.
1998- Introduced for the 1st time no maida biscuits made out of nagali/ragi
1999- Purchased own bakery space for 3000 sq. ft.
2000- Introduced a unique type of biscuits specially made for diabetic people
2002- Introduced range of healthcare products in Pune
2004- Introduced range of healthcare products in other cities of Maharashtra
2006- Marked the market “OURS” with huge range of health friendly products
2009- Launched 1st exclusive Jahagirdar baker’s showroom in Nashik and
started producing specialty fresh cream, eggless cakes
2011- Shifted to 7000 Sq Ft factory premises
2012- Business Expansion in Pune Market
2014- Captured market in Mumbai, Nagpur (Maharashtra), Surat (Gujarat) and
Goa
2016- Product range expanded to Namkeens
2017- The company converted into Private Limited Module
2018- Purchased new premises of 3033 sq mt
2019- Franchisee showroom number reached to 15 including cities Nashik,
Malegaon, Igatpuri, Shirpur, Dhule and started export to Singapore
2020- Provided exceptional door to door service to customers in the span of
Covid 19 without keeping factory shut for even a day

16
• Core Values:
1. Integrity- They will always strive to do what’s right…even when no one is
looking. They maintain 100% Purity, hygiene.
2. Adaptability- They retain long-term partnerships by continuously
reevaluating our products, processes and talent to meet changing market
demands with Innovation.
3. Respect- They conduct ourselves in a manner that values the individual
needs and contributions of our employees, suppliers, vendors, partners and
customers.
4. Empowerment- They trust our associates to make sound business decisions
and accept the need for taking prudent levels of risk. We proudly present our
company as one that empowers women as we have over 70% women staff.

• Infrastructure:

17
They have professionals, personally chosen by our CEO Mr. Milind Jahagirdar,
who himself is Bakery Technological from Gujarat Agriculture University. Their
is a young and willing team, committed to work according to company’s
ethics.They believe in thinking differently, acting strongly and achieving results
rapidly. The vision, dedication and determination of the team are shaping a
bright future for the company. They have state-of art ovens and other
machinery. The best R and D team provides the solutions to keep the “Promise
of Quality” of the company.

• Branches:
Nashik, Mumbai, Jalgaon, Dhule.
Branches in Nashik:
1. Jahagirdar Foods Factory, Satpur.
2. Jahagirdar Foods Sharanpur Road Shop.
3. Jahagirdar Foods MG Road Shop.
4. Jahagirdar Foods College Road Shop.
5. Jahagirdar Foods Gangapur Road Shop.
6. Jahagirdar Foods Indira Nagar Shop.
7. Jahagirdar Bakers Ashoka Marg Showroom.

• Staff:
Jahagirdar bakers was established in 1996with the view of bringing health and
taste together. Mr. Milind Jahagirdar, founder of the company – started off his
career as an employee of Britannia Biscuits. He worked with Britannia for almost
8 years during which he obtained the knowledge of Biscuit Manufacturing.
During this period, it occurred to Mr. Jahagirdar that though with the passing of
time the biscuit industry was becoming more and more automated and up to
date. The staff of Jahagirdar Industry is well organized. Satpur Branch of

18
Jahagirdar Foods Pvt. Ltd. Have the staff of approximately 200 people out of
which male and female staff is 120 and 80 respectively.

• Safety measures followed by Jahagirdar Industry for the staff:

There are several safety precautions that should be taken in a bakery to ensure
the safety of staff. Here are some of them followed by Jahagirdar Industry:

1. Personal Protective Equipment (PPE): Ensures that staff wear appropriate

PPE, including gloves, aprons, and hairnets, to protect themselves from
potential hazards in the bakery.
2. Training: All staff receives training on proper handling of equipment and
ingredients, as well as emergency procedures, such as what to do in case of
a fire or injury.
3. Sanitation: Regular cleaning and sanitation of equipment and work areas is
conducted in a bakery. This helps in prevention of cross-contamination and
the spreading of germs or bacteria.
4. Temperature control: Proper temperature is controlled for both food safety
and staff safety. Staff is well trained to monitor and maintain the
temperature of ovens, refrigerators, and other equipment to prevent injury
or illness.
5. Fire safety: Bakery staff is trained in fire safety procedures, including how to
use fire extinguishers and how to evacuate the building in case of a fire.
6. Chemical safety: Many bakery ingredients and cleaning products can be
hazardous if not handled properly. Staff is trained on the safe handling and
storage of these products.

19
 CHAPTER 3:
PRODUCT/SERVICE PROFILE:

20
 Product/Service Profile:
3.1 LIST OF PRODUCTS PRODUCED OR MANUFACTURED:

1. Biscuits:
Apart from being unique in the bakery industry, Jahagirdar also focuses on
how it has to be a nutritious choice for all. Biscuits are a hunger buster and
easy to eat the product. How about making these choices healthier? Yes!
We have a range of healthy biscuits made from Kanik, Nagali, Whole Wheat
etc. which will be a perfect pick for your healthy snacks.

Atta Biscuits

Pure whole wheat flour biscuits

Rich in fibres
Added ayurvedic herbs
Supports body in whole
₹60.00 - ₹190.00

Nagali Biscuits

Made from Ragi (Nagali) flour

Iron rich
Calcium rich
Chocolate flavor
₹60.00 - ₹190.00

21
Nagali Choco Chips Biscuits

No added Maida
Goodness of Ayurvedic Herbs
Easy on digestion
₹90.00 - ₹180.00

Fruits Biscuits

No added preservatives or colors added,

No trans fats
Loaded with tutty fruity
₹90.00 - ₹180.00

Dibicheck Biscuits

No added Maida
No added sugar
Goodness of Ayurvedic Herbs
Easy to digest
₹70.00 - ₹150.00

22
2. Namkeens
If Namkin is your weak point and if you just can’t get over a good taste, do visit
Jahagirdar once! Right from traditional tastes like Chakali, Chiwada, Shev, Khakra,
Puri, and Bakarwadi to some contemporary tastes like triangles, wafers, and
crunchy sticks, everything is super palatable.

Nashik Chiwda

Ready to eat snack.

No Artificial Colors Added
No preservatives Added
A deep fried poha puff chiwda with fried
coconut,coriander and unique blend of masalas
₹95.00

Special Mixture

Special mixture of papadi, shev, and

different types of namkeen
Ready to eat snack.
₹80.00

23
Chakali

Chakali is a maharatrian delicacy

made with special bhajani
Ready to eat product.
₹75.00

Garlic Bakarwadi

A twist of garlic to the crunchy bakarwadi.

A unique type in namkin
Manufactured in hygienic conditions
₹75.00

Soya Chips

A healthy munch with benefit of soya

A soya based healthy snack with choicest
of finest masalas
₹70.00

24
 3. Cookies

A joy packed in containers is cookies. Jahagirdar foods brings all the tasty,
delicious verities in cookies. This is just super delicious melting magic that you
can’t miss.

Coconut Cookies

No added preservatives or colours added

Loaded with coconut flavour
Mouth melting cookies
₹110.00

Multigrain cookies

No added preservatives or colours added

Rich in taste with added natural grains
₹110.00

25
Cashew butter cookies

Made from Ragi (Nagali) flour

Iron rich
Calcium rich
₹110.00

Soan Nankatai

No added preservatives
No colors added
₹110.00

Sweet and salt cookies

No added preservatives or colors added

Sweet and salty taste with a hint of ova
₹110.00

26
Bakery Products:
What makes a tea break special is a snack we have with it. Crunchy Surati butter,
crispy Toasts, and melting Khari is a companion to your cup of tea at any time of
day. But, what makes these special bakery products even more special are the
flavors we have created in it. Multigrain toasts, sugar-free toasts, high fiber Khari,
Surati butter are a few of them.

Jeera Khari

A goodness of jeera with the taste of khari

No artificial colors or preservatives
₹80.00

Swiss Khari

Cheese flavored khari sticks

No artificial colors or preservatives added
₹90.00

27
Whole wheat toast

100% atta toast, made with high quality

raw material.
No preservatives added
₹85.00

Toasteez

Made with high quality raw material

No extra flavors added
₹80.00

Surati jeera butter

28
 Made from Ragi (Nagali) flour
Iron rich
Calcium rich
₹60.00

CHAPTER 4:
THEORY RELATED TO PROCESS COSTING

29
4.1 INTRODUCTION TO PROCESS COSTING:

Process Costing is probably the most widely used costing system. Process Costing
is a method of costing under which all costs are accumulated for each stage of
production and the cost per unit of product is ascertained at each stage of
production by dividing the total cost of each process by the normal output of that
process.
It represents a type of costing procedure for mass production industries producing
standard products. Typically, in such industries all goods produced are for stock,
units produced are identical, goods move down the production line in a continuous
stream, and all factory procedures are standardized, costs are compiled for each
process or department by preparing a separate account for each process. Thus, it
is a method of costing used to ascertain the cost of product at each stage of
manufacturing.

4.2 MEANING OF PROCESS COSTING:

Manufacturing companies follows the Process Costing and the production process
is carried on in two or more centres continuously. It is a basic method of allocating
total costs to a unit of product in process wise. This system accumulates costs by
time period and associates them with the output produced during the same period.

Process pricing is an approach that involves putting the items through two or more
processes. A cost average across the number of units produced over the specified
period is applied to particular processes or operations.
Process costing is of three types. These include the average weighted method of
process costing, standard costs, and First-In-First-Out methods.

30
CHARACTERISTICS OF PROCESS COSTING:
Process Costing Method is applicable where the output results from a sequence of
continuous or repetitive operations or processes and products are identical and
cannot be segregated.

• The output consists of products which are homogenous.

• Production is carried on in different stages (each of which is called a process)
having a continuous flow.
• The output is uniform and all units are identical during each process.
• The input will pass through two or more processes before it takes the shape
of the output. The output of each process becomes the input of next process.
• Costs are calculated process wise.

FEATURES OF PROCESS COSTING:

Industries where Process Costing can be applied, have normally one or more of
the following features –

• Each plant or factory is divided into a number of processes, cost centres or

departments, and each such division is a stage of production or a process.
• Manufacturing activity is carried on continuously by means of one or more
process run sequentially, selectively or simultaneously.
• The output of one process becomes the input of one.
• The end product usually is of like units not distinguishable from one another.
• Process pricing is an approach that involves putting the items through two
or more processes. A cost average across the number of units produced over
the specified period is applied to particular processes or operations.
• Process costing is of three types. These include the average weighted
method of process costing, standard costs, and First-In-First-Out methods.

31
ADVANTAGES OF PROCESS COSTING:
• Process Costing helps determination of cost in each process and of the final
product at short intervals. If overhead rates are predetermined, unit costs
can be computed very promptly even at weekly or monthly.
• The average cost can be easily determined when the methods of production
are standardized. Price quotations can be submitted more promptly with
standardization of processes.
• It involves less clerical work and cost than job costing. Cost finding is simpler
and less expensive.
• Allocation of expenses can be easily made and the costs in each process
accurately determined.
• Use of standard costing system is very effective in Process Costing.

DISADVANTAGES OF PROCESS COSTING:

• Process Costing is based on historical cost. The available cost information
may not be useful for future managerial decision-making.
• Unfinished units (work in process) at the end of the period are expressed in
equivalent production units. This introduces subjective element in scientific
cost determination.
• If there is an error in cost determination in one process, it will affect the cost
estimation in subsequent processes as well as the cost of work in process
and finished products.
• Giving weightage in terms of points is a subjective decision, which will give
rise to approximate costs and cannot be taken as fully reliable. Absence of
scientific base makes the Process Costing inadequate for managerial
purposes.
• A process becomes a practical unit for purpose of supervision of production
and it is an unsatisfactory unit.

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TYPES OF PROCESS COSTING:

• Weighted Average: The weighted average method calculates the average

cost of all units produced during a period by dividing the total cost of
production by the total number of units produced. This method is helpful for
companies that make products with consistent expenses, as it allows for a
straightforward calculation of the cost of production.

• Standard Cost: The standard cost method assigns predetermined costs to the
different stages of production based on estimates of the cost of producing
one output unit. These predetermined costs are then compared to the actual
expenses incurred during the production process, and any differences
between the two are recorded as variances. This method is helpful for
companies that produce similar products regularly, as it allows for more
accurate cost tracking and variance analysis.

• First-In-First-Out: The FIFO method assumes that the costs of the first units
produced are assigned to the first units sold or transferred out of the
production process. As a result, the costs of the last units produced are given
to the units remaining in inventory. This method is helpful for companies that
make products with varying prices, as it allows for a more accurate
representation of the actual production costs.

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4.3 TERMS USED IN PROCESS COSTING:

• Normal loss:
Normal Process Loss represents the loss which is expected under normal
conditions. This type of loss is unavoidable and is inherent in the process of
manufacture. It is often caused by such factors as evaporation, chemical change,
withdrawals for test or sampling, unavoidable spoilage quantities or other physical
reasons. It often includes scrap and waste.
This type of losses can be estimated from the nature of materials, nature of
operation, previous experience or technical data. Normal loss is generally
calculated at a certain percentage of the input of units introduced in the respective
process.

• Abnormal loss:
Where the loss is caused by unexpected or abnormal conditions and if it is beyond
limit, it is called "Abnormal Loss" or unplanned loss. In other words, any wastage
arising in excess of the normal wastage is known as "Abnormal Wastage". It arises
due to abnormal causes or unforeseen factors. Use of defective materials,
carelessness, fire, machine breakdown, power failure, strike etc. may give rise to
abnormal process losses. Abnormal loss is avoidable. It can be controlled by the
management by taking proper care.
Accounting procedure for Abnormal Loss is different. Abnormal loss i.e. wastage is
valued at the end at which the good units would be valued if there were only
normal loss i.e. wastage. The amount of abnormal loss is credited to a process
concerned. A separate Abnormal Loss Account is opened and the scrap value, if any
is credited to Abnormal Loss Account and the balance on it ultimately transferred
to Costing Profit and Loss Account.

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 • Abnormal gain:
The normal loss is an estimated figure. The actual loss may be more or less than the
normal loss. If the actual loss is more than the normal loss, it is treated as Abnormal
Loss. But if the actual loss is less than the normal loss, it is known as Abnormal Gain
or Abnormal Effectives. The abnormal gain is calculated in a similar manner as an
abnormal loss. Units of Abnormal Gain.
Like Abnormal loss, Abnormal Gain also does not affect the cost of normal output
as this is also valued in the same manner as abnormal loss. The process account is
debited with the quantity and value of Abnormal Gain and Abnormal Gain Account
is credited. Finally, the Process account is credited with the quantity and value of
normal scrap, but the actual quantity is less, the difference is credited to Normal
Loss Account by debiting the Abnormal Gain Account. Finally, the balance to the
credit of Abnormal Gain Account is transferred to Costing Profit and Loss Account
as Abnormal Gain.

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4.4 PROCESSES FOLLOWED IN JAHAGIRDAR INDUSTRIES:

• RAW MATERIAL AND INGRIDENTS:

The first process is to make the raw material available for the production. Raw
materials are kept in stock in requested for manufacturing.

• MIXING AND MOULDING:

The second process is mixing of the dough to evenly distribute the yeast cells
throughout the dough the develop the gluten. After those products like biscuits,
cookies, khari goes through the process of moulding according to their
requirements.

• BAKING:
In the process of baking each product baked at temperature defined in the oven.
Intensity of baking is decided on the nature of product. Like biscuits goes through
one bake process and khari goes through two bake process.

• PACKING:
In this process the final products are packed according to specified quantity like
packets of 100g, 450g, 1kg.

• FINISHED PRODUCT:
In this process the products are made ready for shipping to the retail outlet.
Dispatchment is done after receiving the order letter and then billing process takes
place.

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FORMAT OF PROCESS ACCOUNT:

37
 CHAPTER 5:

DATA ANALYSIS

38
5.1 Data 1:
Product wise sales of Jahagirdar foods private limited for the year 2021-
22.
Table No. 5.1: Unit wise sales:

Products Unit wise sales

Biscuits 2,59,18,490
Bakery Products 1,57,45,050
Cookies 1,95,77,050
Namkeen 89,92,090
Ready to eat 87,30,270

Sales

8,730,270

8,992,090 25918490
Biscuits
Bakery
Cookies
Namkeen
Ready to eat
19,577,050

15,745,050

Interpretation:
In the chart given above, unit wise sales of various products of year 2021-2022 is
given. The sales of the various products viz Biscuits, Bakery, Cookies, Namkeen,
Bread are 2,59,18,490, 1,57,45,050, 1,95,77,050, 89,92,090 and 87,30,270
respectively. During discussions with the management it was seen that huge
demand was created for healthy food and healthy snacks which was reflected in
increased sales of healthy snacks.
39
5.2 Data 2:
Different heads of expenses of Jahagirdar Foods Pvt Ltd in the year 2021-22.
Table No.5.2: Head wise expenses:
Expenses Amount in Rs.

Direct Material 85,51,258

Direct Labor 62,90,047

Other Expenses 51,58,695

SALES

8,551,258

Direct Material
12058630
Direct Labour
Other Expenses

6,290,047

Interpretation:
In the chart above, expenses of different heads of Jahagirdar Industry for the
year 2021-22 are shown. The expenses of direct material, direct labour and
other expenses are 85,51,258, 62,90,047 and 51,58,695 respectively.
According to the management of the industry the prices of material has
increased due to the various reasons like inflation.

40
5.3 Data 3:
Profit and loss analysis of Jahagirdar Foods Pvt Ltd. for the preceding
three years.
Table No.5.3: Year wise profit:

Year 2019-20 2020-21 2021-22

Profit 1,43,50,800 2,79,47,650 3,62,85,180

Profit
40,000,000

35,000,000

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0
2019-20 2020-21 2021-22

Interpretation:
This chart represents the profit and loss of Jahagirdar foods private limited for the
period of three preceding years. During the year 2019-20 it was observed that there
was a profit of Rs. 1,43,50,800. Due to the Corona Virus demand of products
decreased and it affected the profit. While in year 2020-21 the company recorded
a profit of Rs. 2,79,47,650 and in year of 2021-22 due to increasing the number of
branches the company recorded a profit of Rs. 3,62,85,180. In course of the
discussion with the management it was noticed that the profit is increasing due to
increase in variety and range of healthy products.
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5.4 Data 4:
Most sold products in the year 2021-22.
Products Sales
Nagali Biscuits 150gm 1,59,18,490
Dibi Biscuits 150gm 60,35,607
Loose Khari 450gm 20,02,260

Sales

2,002,260

6,035,607

Nagali Bisccuits
15,918,490 Dibi Biscuits
Loose Khari

Interpretation:
This chart represents the sales of Jahagirdar specials in the last year. The sales
of Nagali Biscuits 150gm, Dibi Biscuits 150gm, Loose Khari 450gm are Rs.
1,59,18,490, Rs. 60,35,607, Rs. 20,02,260 respectively. It can be said that
Nagali Bicsuits are chosen by customers most often.

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5.5: DETAILED ANALYSIS OF NAGALI BISCUIT 150GM PRODUCED BY
JAHAGIRDAR INDUSTRY:

In case of biscuits in a bakery, the process costing method can be used to

determine the cost of producing biscuits by breaking down the production
process into a series of individual processes.
Here is how process costing is applied to the production of Nagali Biscuits in the
Jahagirdar Industry:

Process 1: Mixing the dough

The first step in the production process is mixing the dough. This involves mixing
together the flour, sugar, baking powder, salt, butter or shortening, milk or
buttermilk, and any additional ingredients like eggs or flavorings. The cost of the
ingredients used in this step is recorded.

Process 2: Rolling out the dough and cutting the biscuits

After the dough is mixed, it is rolled out on a floured surface and cut into biscuits
using a biscuit cutter or a glass. The cost of the labor and equipment used in this
step is recorded.

Step 3: Baking the biscuits

The biscuits are then placed on a baking sheet and baked in the oven. The cost of
the energy used to power the oven and the labor involved in monitoring the
baking process is recorded.

Step 4: Cooling and packaging the biscuits

Once the biscuits are baked, they are allowed to cool before being packaged for
sale. The cost of the packaging materials, labor, and equipment used in this step is
recorded.

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Step 5: Overhead costs
In addition to the direct costs of producing the biscuits, there are also indirect
costs associated with the production process, such as rent, utilities, and
administrative costs. These costs would be allocated to the production process
using an overhead rate, which is calculated by dividing the total indirect costs by
the total number of units produced.

The expenses incurred for producing 100 tonnes of Nagali Biscuits 150gm for the
month of January 2022:
Direct Material: 3,00,000
Direct Labour: 1,50,000
Manufacturing Expenses: 70,000
Cost per unit :
Cost of unit ÷ output = Rs. 6,20,000 ÷ 100 tonnes
= Rs. 6200 per ton

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 Chapter 6:

FINDINGS AND RECOMMENDATIONS

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FINDINGS:

1. Considering the vast varieties of the products, which are manufactured by

the organization, the company is very well organized as well as controlled.
2. Proper measures are taken for the safety of workers.
3. There is good organizational structure to oversee the functions of the
organization.
4. Through enough number of employees, the company is maintaining the
high standard of quality.
5. Friendly environment is maintained in the organization.
6. Jahagirdar foods private limited also provides all the products in different
packaging as per market need, i.e.in 200gm, 500gm, 1kg, and so on.
7. By maintaining variety of products, Jahagirdar Foods Private Limited has
maintained the position in the market.

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RECOMMENDATIONS:

1. Profit margin of the company can be increased if some measures are taken
carefully by organization.
2. Products can be made easily available to outlets with the help of good
transportation facility.
3. Frequent training programs should be organized for the staff.
4. All the resources should be utilized properly for the better efficiency in the
management.
5. The firm should invest more time and money in the firm to network outside
their current area and achieve more profit and sales.

47
 Chapter 7:

CONCLUSION

48
 7.1 CONCLUSION BASED ON WORK:
Jahagirdar Foods Private Ltd is a well reputed and organized industry in Nashik. This
project has helped me to understand that Process Costing is a vital part of business
operations. Picking the costing method that best reflects the firm’s manufacturing
process is necessary to understand the cost structure. I also learnt the different
processes followed in Jahagirdar Foods Pvt. Ltd.
It has helped me to understand that Process Costing is the most common cost
accounting method applied within manufacturing companies that produce larger
volumes of similar products.

7.2 CONCLUSION BASED ON LEARNING BENEFITS:

Costing also helps the industry to control its cost, findings, if any, and to take
preventive measures. I have learned various sourced of data collection. With the
help of these methods, I was able to complete my project. I also came to know
the meaning, features and concepts of Process Costing in detail. My
communication skills, observation and presentation skills were improved.
This project has helped me to understand that Process Costing is a vital part of
business operations. Picking the costing method that best reflects the firm’s
manufacturing process is necessary to understand the cost structure. I also learnt
the different processes followed in Jahagirdar Foods Pvt. Ltd.
It helps to assign accurate costs to the products. Therefore, it can be concluded
that Process Costing is a type of operation costing which is used to ascertain the
cost of a product at each process or stage of manufacturing. It also helps
organization by making their management and cost accounting simpler.

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ANNEXURE:

50
8.1 QUESTIONNAIRE:

1. What processes are involved in the production of products?

2. What was the amount of direct material, direct labour and other expenses
of the year 2021-22?
3. What was the profit or losses for the previous year?
4. Can you provide the product wise sales for the previous year?
5. Which are the most salable products according to previous year sales?
6. What safety measures do you provide to employees?
7. How much is the workforce of the organization?
8. Whether you have any branches?
9. What was the head wise expenses for the last year?
10. Can you provide the detailed analysis of Nagali Biscuit?
11. What is the organizational structure of your industry?

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8.2 BIBLIOGRAPHY:

• Books:
1. Dr. Suhas Mahajan and
Dr. Mahesh Kulkarni
“Cost and Works Accounting “
Nirali Publication 1st Edition.

2. ICAI
“Cost and Management Accounting”
Study material applicable for May, 2022 examination onward.

3. Dr. Kirti Gupta

“Research and Methodology for business”
Nirali Publication.

• Websites:

- www.jahagirdarfoods.com

- https://en.wikipedia.org/wiki/Process_costing

- Homepage | Your Article Library

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8.3 PHOTO GALLERY:

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