Adeel A.

Siddiqui
Product Costing – Recipe Spice

2012

Shan Foods (Private) Ltd. was founded in 1981 in a

single room as Shan Masala. Later, due to its
popularity, the company was named Shan Foods. It
has presence in more than 50 countries today and
deals in several broad categories of offerings. Shan
Foods has capitalized on the changing market trends
and consumer tastes and through product trials, it has
made sure to churn out offerings that are best in line
with consumer tastes.

Shan Foods
Private Limited
Korangi Industrial Area,
Karachi, Pakistan
+ 92 – 21 – 3505 3196
+ 92 – 21 – 3505 3080
 Letter of Acknowledgement

To whom it may concern.

This Letter is to acknowledge the efforts and sincerity, offered by the course
instructor Mr. Muhammad Rizwan Siddiqui, to teach the subject and guide.
The accomplishment of this report is a result of a combine effort made by the
reported and the reporting individuals, during the term spring 2012. The
objective to write this report is to learn the method of product costing used
by an FMCG producer, in this case Shan Foods Private Limited. I hereby
acknowledge that I may not be able to understand and write the content of
this report without sincere guidance from Mr. Abdul Gaffar (CFO, Shan Foods
Private Limited) and his associates, as well.

Gracias,

Adeel A. Siddiqui
2010 – 1 – 27 – 11262
 Letter of Transmittal

To,
Muhammad Rizwan Siddiqui,
Institute of Business Management,

Dear Sir,

I am submitting this report along with a presentation on the Product Costing

method used by Shan Foods Private Limited, for Bombay Biryani, from Recipe
Mix, on Tuesday, dated 24th April 2012. The Purpose of this report is to provide
you content on the basis of which you are able to assess my understanding
and comprehension about the course title Introduction to Managerial and
Cost Accounting. The Content of this report is based on the information
provided by Shan Foods Private limited, for the purpose. Moreover the data
and information acquired from Shan Foods Private Limited has been
structured and elaborated so that it can deliver its intended objectives. The
Report also discusses the manufacturing process and its vitals, for the
selected product.

Gracias,

Adeel A. Siddiqui
2010 – 1 – 27 – 11262
List of Figures

Figure 1: Manufacturing Process Flow Chart ............................................................. 6

Figure 2: Product Flow (Bombay Biryani Masala)...................................................... 8

List of Tables

Table 1: COP Report RM Warehouse......................................................................... 10

Table 2: COP Report Grinding Facility ....................................................................... 11
Table 3: COP Report Packaging Facility ................................................................... 12
Table 4: COP Report Dispatch Teminal ..................................................................... 13
Table 5: Consolidated Cost of Goods Manufactured ........................................... 14

Table of Contents

Introduction ....................................................................................................................... 2
Product Range ................................................................................................................. 2
Organization Management .......................................................................................... 3
Planning and Reporting.................................................................................................. 3
Selected Product ............................................................................................................. 4
Manufacturing Process ................................................................................................... 4
Manufacturing Process (Flowchart)............................................................................. 6
Costing Method ............................................................................................................... 7
Costing ............................................................................................................................... 9
 Product Costing – Recipe Spice – Introduction

Introduction
Shan Foods (Private) Limited is a Food products Manufacturing and
Marketing Organization. It was founded in 1981 in a single room as Shan
Masala. Later, due to its popularity, the company was named Shan Foods. It
has presence in more than 50 countries today and deals in several broad
categories of offerings. Shan Foods has capitalized on the changing market
trends and consumer tastes and through product trials, it has made sure to
churn out offerings that are best in line with consumer tastes.

A huge part of their sales consist of Recipe Mix Category. Recipe Mix
Category consists of 64 variants, classified into 9 ranges. The share of products
from Biryani Range in the Recipe Mix Category Sales is significantly larger than
any other range, and it is due to the popularity of Shan Bombay Biryani
Masala.

This report is to understand the costing methods Shan Foods has adopted, for
the regular SKU (60 gm Pack), of Bombay Biryani Masala.

Product Range
Shan Foods have a brand portfolio of two brand names, Shan and Delve,
which are further sub divided into several categories and ranges of different
variants of products. Primarily, it is important to understand the broad
categories of offerings by Shan Foods. Following is a summarized list.

• Shan Variants
– Recipe Mix 64
– Plain Spices 16
– Oriental Recipe 10
– Arabic Recipe 7
– Salt 2
– Pickle 7
– Paste 3
– Sauces 5
– Rice 5
– Vermicelli 1
• Delve Deserts
– Jelly Crystals 4
– Custard Powders 3
– Pudding Mix 3

Page | 2
 Product Costing – Recipe Spice – Organization Management

Organization Management
Shan Foods strongly practice Kaizen approach for continuous improvement
and was able to reduce labor dependency by implementing technological
advancements, process automation, process re-engineering and strong BPR
Strategies. These activities have not resulted in any significant reduction in
their labor cost, as the sophistication of the process require skilled and
expensive labor, irrespective of the fact that the count of labor is reduced
remarkably, while it is benefiting them by controlling wastages and quality
standards. For few production processes they are able to achieve Six Sigma.
The Production Facilities are less labor intensive, while they are striving to
automate their warehousing as well. Shan Foods adheres to the Lean
Manufacturing philosophy, and still striving to completely implement JIT in the
production and delivery process. They are focused to find ways to limit the
warehousing costs, but due to several External factors, they have to keep
material and finish goods inventory. They have projected 20% reduction in
production cost, if JIT is completely implemented.

Planning and Reporting

Production budgeting and tentative planning is done annually, on the basis
of Sales forecast and SNOPs, considering possible working days, excluding
Preventive Maintenance Schedules, which is revised on quarterly basis and
monitored on daily basis. Shan Foods product costing is based on a mix of
estimated, evaluated (budgeted) and actually expenses. Production, SNOPs
and Costing report are generated and produced in management
committee meetings, every week on Monday, in which the management
also critically evaluates the effectiveness and efficiency of AOPs. Shan Foods
management strongly adheres to maintain the compliance of SNOPs, AOPs
and FY Objectives. They have an Oracle 11 g BI, Production Planning, EAM,
ERP, MRP, SCM + Inventory, HRM, Financials, SR, PM, CMMS, Strategist and
CRM, integrated and customized modules to support their reporting system.
All reports are auto generated and can be flexibly customized by the
reported, himself, according to his ease. They are focused to completely
deploy a paperless environment, which is a part of their Green Program. This
kind of reporting and analyzing support from MIS virtually helped them in
reducing administrative expenses as well.

Page | 3
 Product Costing – Recipe Spice – Selected Product

Selected Product
To understand the costing method, adopted by Shan Foods Private limited, I
selected a Regular SKU (60 gm Pack) of Bombay Biryani, from Recipe Mix
Range. Recipe Mix Range consists of 64 different variant with 4 to 8 different
SKU’s for each. All these products and SKU’s have different cost associations,
while the costing methods are the same, in this specific category. The Selling
Price of this Product is PKR 35, at a Net Income level of 35~40%.

Manufacturing Process
Significantly, Shan Foods operates a highly machinery intensive and
automatic processing facility. They claim that they have eliminated direct
human hand interfaces with the product, after sterilization process. The
Manufacturing process of the selected product is divided into twelve sub
processes, which are performed in four departments, listed as follows. The
following list also contains the percentage of COGM these departments
incur, for this particular product, if we don’t accumulate the cost.

Department Process(s) %age COGM

• RM Warehouse 52
– Quality Classification 10.4
– Sterilization 31.2
– Cold Storage and Warehousing 10.4
• Grinding Facility 21.75

– Chopping 1.81
– Cryogenic Grinding 9.06
– Sifting Classification 1.81
– Temp Regulated SILO Storage 3.63
– Recipe Batching 1.81
– Blending 3.363
• Packaging Facility 21.5
– Polly Filling 5.02
– Packaging & Cartooning 16.48
• Dispatch Terminal 4.75
– Finish Good Warehousing 4.75

Every unit production is conducted in a batch, sized at 15 tons, but the

costing unit is 1 unit of product, therefore total units of the selected product,
in a batch is 250,000 units. The departments have been optimized to produce
one batch a day, individually. Therefore entire Supply Chain’s normal

Page | 4
 Product Costing – Recipe Spice – Manufacturing Process

capacity is 250,000 units a day (8 continuous working hrs); weak links have
been strengthened by continuous Capacity Enhancement Programs and
OEE. On the basis of above evaluations, we can assume that the average
production period for a batch of 250,000 units is 4 working days, which is 32
working hrs, and 7,812.5 units are produced every hour. All Transportation of
goods is conducted during the night shift. All inventories are operated on
FIFO. They can’t practice JIT, due to the uncertain availability of Raw
Material, circumstantial uncertainty, economic, social and political
conditions.

There are five quality checks in the process. These checks are integrated
either in line or by automate sample delivery system (To QC and R&D), to
assess following standards.

Tests Methods Time Required (hr)

• Quality Manual Classification inline

• Classification Grinded Mesh Size Composites 0.25
• Contamination Microbiological/accelerated ageing Testing 24
• Ratio Chromatography 4
• Product Sensory Testing Penal 4
• Quantity Check ware system (Auto) inline
• Polly Leaks Pressure testing Conveyors (Auto) inline
• Packaging Manual inline

These standards are immediately checked after the setting process. If the
production doesn’t meet the required standards, there is a procedure for any
set of results, which is executed accordingly. Few may result in reprocessing,
other may in spoilage. The wastage of RM is negligible, while spoilage
comprises of packaging material, significantly, whereas, the reprocessing
costs are negligible and wastage costs are adjusted in the departmental
costs.

They have deployed an effective wastage control mechanism, which has

enabled them to reduce wastages to the levels, mentioned in the following
list.

Department Normal Spoilage (Wastage)

• RM Warehouse 0.1 ~ 0.5%

• Grinding Facility 0.01 ~ 0.1%
• Packing Facility 0.1 ~ 1%
• DT2 0 ~ 0.1%
• Total Wastage 0.2 ~ 1.7%

Page | 5
 Product Costing – Recipe Spice – Manufacturing Process (Flowchart)

Manufacturing Process (Flowchart)

Procurement of RM

Quality Classification and Sterilizing Process

Cold Storage and Warehousing

Primary Quality Check (QC 1) Fails

Mehrunisa Warehouse
Transportation to Grinding Facility

RM (S) Ingredients of Chopping, Cryogenic Grinding and Sifting

Compound X Classification Process

Mid Quality Check each Ingredient (QC 2) Fails

Temperature Regulated SILO Storage

RM (S) Compound Y Recipe Batching and Blending Process

Main Quality Check (QC 3) Fails

Grinding Facility
IBC Storage

Packaging Rolls Poly Filling Process

Pressure Testing (V lock method; QC 4) Fails

Hard Packets and Packaging and Cartooning Process

Cartoons

Packaging Quality Check (QC 5) Fails

Packaging Facility
Finish Good Warehousing

Dispatching Terminal

Figure 1: Manufacturing Process Flow Chart

Page | 6
 Product Costing – Recipe Spice – Costing Method

Costing Method
For Bombay Biryani Masala, Shan Foods uses Process costing accumulation
by department, with absorbing Fixed Overheads. The percentage distribution
of Various Costs with respect to COGM is as follows.

Cost of Goods Manufactured 100%

DM 35% of COGM
Compound X DM 1 60% of DM
Compound Y DM 1 35% of DM
Packaging Rolls DM 2 4% of DM
Hard Packaging DM 2 0.8% of DM
Cartoons DM 2 0.2% of DM
DL 20% of COGM
RM Warehouse 60% of DL
Grinding 20% of DL
Packaging 20% of DL

Prime Cost 55%

VFOH 5% of COGM
V. IDM 2% of VFOH
Spare Parts 1.5% of VFOH
Other Material 0.5% of VFOH
V. IDL 3% of VFOH
Material Handling 2.5% of VFOH
Floor Technicians 0.5% of VFOH
Others 95% of FOH
V. Energy 80% of VFOH
V. Maintenance 10% of VFOH
V. Staff/Exec Salaries 5% of VFOH
FFOH at Normal Capacity 40% of COGM

IDM 25% of FFOH

IDL 20% of FFOH
Admin & Security 15% of FFOH
Janitorial 5% of FFOH
Others 55% of FFOH
Land Cost 2% of FFOH
Taxes 17% of FFOH
Dep. 10% of FFOH
Maintenance 10% of FFOH
F. Energy 1% of FFOH
Staff/Exec Salaries 5% of FFOH
Misc Exp. 10% of FFOH

Manufacturing Cost 100%

These are rough percentages, as told by Abdul Gaffar, (CFO at Shan Foods).
The Product Flow through various processes and departments, materials

Page | 7
 Product Costing – Recipe Spice – Costing Method

addition and quality checks, according to costs incurred are explained in

Figure 2.

RM X RM Y PR HP & Cartoon
DM 0% 68% 74% 79%

Processes

QC 1 QC 2 QC 3 QC 4 QC 5
Qaul. Check 52% 65% 74% 79% 95%

Departmental

0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00%

RM Warehouse Quality Classification Sterilization
Cold Storage Grinding Facility Chopping
Cryogenic Grinding Sifting SILO
Recipe Batching Blending Packaging Facility
Polly Filling Packaging Cartooning
Dispatch Terminal FG WH
Figure 2: Product Flow (Bombay Biryani Masala)

FOH is 225% of DL. The FFOH, and VFOH, distribution by department is as

follows.

Department FFOH VFOH

• RM Warehouse 15% of FFOH 15% of VFOH

• Grinding 40% of FFOH 35% of VFOH
• Packaging 35% of FFOH 35% of VFOH
• Dispatching 10% of FFOH 15% of VFOH

Page | 8
 Product Costing – Recipe Spice – Costing

Costing
We are assuming the following to make a Cost of Production reports by
departments and a consolidated Cost of Goods Manufactured Statement,
separately.

• Period = March 2012

• 24 working days (192 machine hrs)
• Production level doesn’t meets the normal production capacity
• Units introduced in the process = 6,000,000 (at normal Capacity)
• Units Produced = 5,958,066
• Spoilage at maximum level of Normal Spoilage at all inspections
except QC 2 (No Spoilage at QC 2).
• All Departments completed their work by the end of the month
• Selling Price = PKR 35, Marketing and Admin Expense = 10% of Sales
• Profit Margin = 34.63%
• Therefore unit COGM = PKR 19.38
• Considering all the data mentioned earlier
• Opening and Closing inventories of FG at all departments are nil,
whereas the Opening Inventories of RM/CFPD at all department is the
production of the Previous Department.
• VFOH and FFOH for each department are as follows.
o Department FFOH VFOH
o RM Warehouse 6% of COGM 0.75% of COGM
o Grinding Facility 16% of COGM 1.75% of COGM
o Packaging Facility 14% of COGM 1.75% of COGM
o Dispatch Terminal 4% of COGM 0.75% of COGM
• Unit Manufacturing Cost Distribution for Process Costing, without taking
losses into account.

Unit Manufacturing Cost DM DL VFOH FFOH CC Total

RMWH 6.40 2.31 0.14 1.16 3.61 10.01

Grinding Facility 0.00 0.77 0.34 3.08 4.19 4.19
Packaging Facility 0.34 0.77 0.34 2.70 3.80 4.14
Dispatch Terminal 0.00 0.00 0.14 0.77 0.91 0.91

6.74 3.85 0.96 7.70 - 19.25

Page | 9
 Product Costing – Recipe Spice – Costing

• Following are Cost of Production Report for RM Warehouse, using

process costing method

Shan Foods Private Limited

Recipe Mix – Bombay Biryani
Cost of Production (RM Warehouse)
M a r c h ‘ 1 2
Table 1: COP Report RM Warehouse

Equivalent Production Units

DM 1 CC
Units Introduced 6,000,000 6,000,000
Units Transferred 5,970,000 5,970,000
Normal Spoilage 30,000 30,000
6,000,000 6,000,000

Cost Charged
Cost Units Rate
DM 1 38,403,750 6,000,000 6.40
CC 21,656,250 6,000,000 3.61
60,060,000 10.01

Cost Accounting for

Units Rate Total
Transferred Out 5,970,000 10.01 59,759,700
Losses
DM 1 30,000 6.40 192,019
CC 30,000 3.61 108,281
60,060,000

Page | 10
 Product Costing – Recipe Spice – Costing

• Following are Cost of Production Report for Grinding Facility, using

process costing method

Shan Foods Private Limited

Recipe Mix – Bombay Biryani
Cost of Production (Grinding Facility)
M a r c h ‘ 1 2

Table 2: COP Report Grinding Facility

Equivalent Production Units

CFPD CC
Units Introduced 5,970,000 5,970,000
Units Transferred 5,964,030 5,964,030
Normal Spoilage 5,970 5,970
5,970,000 5,970,000

Cost Charged
Cost Units Rate
CFPD 60,060,000 5,970,000 10.06
CC 24,995,644 5,970,000 4.19
85,055,644 14.25

Cost Accounting for

Units Rate Total
Transferred Out 5,964,030 14.25 84,970,588
Losses
CFPD 5,970 10.06 60,060
CC 5,970 4.19 24,996
85,055,644

Page | 11
 Product Costing – Recipe Spice – Costing

• Following are Cost of Production Report for Packaging Facility, using

process costing method

Shan Foods Private Limited

Recipe Mix – Bombay Biryani
Cost of Production (Packaging Facility)
M a r c h ‘ 1 2

Table 3: COP Report Packaging Facility

Equivalent Production Units

CFPD DM 2 CC
Units Introduced 5,964,030 6,023,670 6,023,670
Units Transferred 5,964,030 5,964,030 5,964,030
Normal Spoilage 0 59,640 59,640
5,964,030 6,023,670 6,023,670

Cost Charged
Cost Units Rate
CFPD 85,055,644 5,964,030 14.26
DM 2 2,029,224 6,023,670 0.34
CC 22,901,242 6,023,670 3.80
109,986,109 18.40

Cost Accounting for

Units Rate Total
Transferred Out 5,964,030 18.40 109,739,273
Losses
CFPD 0 14.26 0
DM 2 59,640 0.34 20,091
CC 59,640 3.80 226,745
109,986,109

Page | 12
 Product Costing – Recipe Spice – Costing

• Following are Cost of Production Report for Dispatch Terminal, using

process costing method

Shan Foods Private Limited

Recipe Mix – Bombay Biryani
Cost of Production (Dispatch Terminal)
M a r c h ‘ 1 2

Table 4: COP Report Dispatch Teminal

Equivalent Production Units

CFPD CC
Units
Introduced 5,964,030 5,964,030
Transferred out 5,958,066 5,958,066
Normal
Spoilage 5,964 5,964
5,964,030 5,964,030

Cost Charged
Cost Units Rate
CFPD 109,986,109 5,964,030 18.44
CC 5,453,360 5,964,030 0.91
115,439,469 19.36

Cost Accounting for

Units Rate Total
Transferred Out 5,958,066 19.36 115,324,030
Losses
CFPD 5,964 18.44 109,986
CC 5,964 0.91 5,453
115,439,469

Page | 13
 Product Costing – Recipe Spice – Costing

• Following are Cost of Production Report for Dispatch Terminal, using

process costing method

Shan Foods Private Limited

Recipe Mix – Bombay Biryani
Consolidated Cost of Goods Manufactured (Absorption)
M a r c h ‘ 1 2

Table 5: Consolidated Cost of Goods Manufactured

Cost of Goods Manufactured 100.00% PKR 19.38 PKR 115,439,470

DM 35.00% PKR 6.78 PKR 40,403,814
Compound X 21.00% PKR 4.07 PKR 24,242,289
Compound Y 12.25% PKR 2.37 PKR 14,141,335
Packaging Rolls 1.40% PKR 0.27 PKR 1,616,153
Hard Packaging 0.28% PKR 0.05 PKR 323,231
Cartoons 0.07% PKR 0.01 PKR 80,808
DL 20.00% PKR 3.88 PKR 23,087,894
RM Warehouse 12.00% PKR 2.33 PKR 13,852,736
Grinding 4.00% PKR 0.78 PKR 4,617,579
Packaging 4.00% PKR 0.78 PKR 4,617,579
Prime Cost 55.00% PKR 10.66 PKR 63,491,708

VFOH 5.00% PKR 0.97 PKR 5,771,973

V. IDM 0.10% PKR 0.02 PKR 115,439
V. IDL 0.15% PKR 0.03 PKR 173,159
Others 4.75% PKR 0.92 PKR 5,483,375
FFOH 40.00% PKR 7.75 PKR 46,175,788
IDM 10.00% PKR 1.94 PKR 11,543,947
IDL 8.00% PKR 1.55 PKR 9,235,158
Others 22.00% PKR 4.26 PKR 25,396,683
Total Manufacturing Cost 100.00% PKR 19.38 PKR 115,439,470
Opening WIP PKR 0
Closing WIP PKR 0
COGM PKR 115,439,470
Opening FG PKR 0
Closing FG PKR 0
COGM Available for Sale
Over & Under Applied (6,000,000-5,958,066) x 7.75 PKR 324,994

COGM at Actual PKR 115,764,464

Page | 14
 10/4/2012

• Shan Foods (Private) Limited is a Food products Manufacturing and 
Marketing Organization. 
• It has presence in more than 50 countries today and deals in several 
broad categories of offerings. 
• A huge part of their sales consist of Recipe Mix Category. Recipe 
Mix Category consists of 64 variants, classified into 9 ranges. 
• The share of products from Biryani Range in the Recipe Mix 
Category Sales is significantly larger than any other range, and it is 
due to the popularity of Shan Bombay Biryani Masala.
• This report is to understand the costing methods Shan Foods has 
adopted, for the regular SKU (60 gm Pack), of Bombay Biryani
Masala. 

1
 10/4/2012

5% 10%
22%
16%
33%

5%
32%
3% 8%
2%
4%
9% 10%
2% 10% 2%
12%
2% 5%
4% 4%
Quality Classification Sterilization Cold Storage and Warehousing
Chopping Cryogenic Grinding Sifting Classification
0%
0%
Temp Regulated SILO Storage Recipe Batching Blending DM 1 DM 2 DL RM WH DL Grinding DL Packaging V. IDM V. IDL V. Others F. IDM F. IDL F. Others
Polly Filling Packaging & Cartooning Finish Good Warehousing

Procurement of RM 

Quality Classification and Sterilizing Process

Cold Storage and Warehousing

Primary Quality Check (QC 1) Fails
Mehrunisa Warehouse
Transportation to Grinding Facility

RM (S) Ingredients of Compound X Chopping, Cryogenic Grinding and Sifting Classification Process

Mid Quality Check each Ingredient (QC 2) Fails

Temperature Regulated SILO Storage

RM (S) Compound Y Recipe Batching and Blending Process

Main Quality Check (QC 3) Fails
Grinding Facility
IBC Storage

Packaging Rolls Poly Filling Process

Pressure Testing (V lock method; QC 4) Fails

Hard Packets and Cartoons Packaging and Cartooning Process

Packaging Quality Check (QC 5) Fails
Packaging Facility
Finish Good Warehousing

Dispatching Terminal

RM X RM Y PR HP & Cartoon

0% 68% 74% 79%
DM

Processes

QC 1 52% QC 2 65% QC 3 74% QC 4 79% QC 5 95%

Qaul. Check

Departmental

0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00%

RM Warehouse Quality Classification Sterilization Cold Storage Grinding Facility

Chopping Cryogenic Grinding Sifting SILO Recipe Batching
Blending Packaging Facility Polly Filling Packaging Cartooning
Dispatch Terminal FG WH

2
 10/4/2012

Equivalent Production Units
DM 1 CC
Units  Introduced 6,000,000 6,000,000
Unit Manufacturing Cost DM DL VFOH FFOH CC Total Units  Transferred 5,970,000 5,970,000
Normal Spoilage 30,000 30,000
6,000,000 6,000,000
RMWH 6.40 2.31 0.14 1.16 3.61 10.01
Grinding Facility
Grinding Facility 0 00
0.00 0 77
0.77 0 34
0.34 3 08
3.08 4 19
4.19 4 19
4.19 Cost Charged
Cost Charged
Packaging Facility 0.34 0.77 0.34 2.70 3.80 4.14 Cost Units Rate
Dispatch Terminal 0.00 0.00 0.14 0.77 0.91 0.91 DM 1 38,403,750 6,000,000 6.40
CC 21,656,250 6,000,000 3.61
60,060,000 10.01
6.74 3.85 0.96 7.70 ‐ 19.25
Cost Accounting for
Units Rate Total
Transferred Out 5,970,000 10.01 59,759,700
Losses
DM 1 30,000 6.40 192,019
CC 30,000 3.61 108,281
60,060,000

Equivalent Production Units Equivalent Production Units
CFPD DM 2 CC
CFPD CC
Units  Introduced 5,964,030 6,023,670 6,023,670
Units  Introduced 5,970,000 5,970,000
Units  Transferred 5,964,030 5,964,030 Units  Transferred 5,964,030 5,964,030 5,964,030
Normal Spoilage 0 59,640 59,640
Normal Spoilage 5,970 5,970
5,970,000 5,970,000 5,964,030 6,023,670 6,023,670

Cost Charged
Cost Charged
Cost Charged Cost Units
i Rate
Cost Units Rate
CFPD 85,055,644 5,964,030 14.26
CFPD 60,060,000 5,970,000 10.06
DM 2 2,029,224 6,023,670 0.34
CC 24,995,644 5,970,000 4.19
CC 22,901,242 6,023,670 3.80
85,055,644 14.25
109,986,109 18.40

Cost Accounting for Cost Accounting for
Units Rate Total Units Rate Total
Transferred Out 5,964,030 14.25 84,970,588 Transferred Out 5,964,030 18.40 109,739,273
Losses Losses
CFPD 0 14.26 0
CFPD 5,970 10.06 60,060 DM 2 59,640 0.34 20,091
CC 5,970 4.19 24,996 CC 59,640 3.80 226,745
85,055,644 109,986,109

Equivalent Production Units Cost of Goods Manufactured 100.00% PKR 19.38 PKR 115,439,470

DM 35.00% PKR 6.78 PKR 40,403,814
CFPD CC Compound X 21.00% PKR 4.07 PKR 24,242,289
Compound Y 12.25% PKR 2.37 PKR 14,141,335
Units  Introduced 5,964,030 5,964,030 Packaging Rolls 1.40% PKR 0.27 PKR 1,616,153
Transferred out 5,958,066 5,958,066 Hard Packaging 0.28% PKR 0.05 PKR 323,231
Cartoons 0.07% PKR 0.01 PKR 80,808
Normal Spoilage 5,964 5,964 DL 20.00% PKR 3.88 PKR 23,087,894
5,964,030 5,964,030 RM Warehouse 12.00% PKR 2.33 PKR 13,852,736
Grinding 4.00% PKR 0.78 PKR 4,617,579
Packaging 4.00% PKR 0.78 PKR 4,617,579
Cost Charged Prime Cost 55.00% PKR 10.66 PKR 63,491,708
VFOH 5.00% PKR 0.97 PKR 5,771,973
Cost Units Rate V. IDM 0.10% PKR 0.02 PKR 115,439
CFPD 109,986,109 5,964,030 18.44 V. IDL 0.15% PKR 0.03 PKR 173,159
Others 4.75% PKR 0.92 PKR 5,483,375
CC 5,453,360 5,964,030 0.91 FFOH 40.00% PKR 7.75 PKR 46,175,788
IDM 10.00% PKR 1.94 PKR 11,543,947
115,439,469 19.36
IDL 8.00% PKR 1.55 PKR 9,235,158
Others 22.00% PKR 4.26 PKR 25,396,683
Cost Accounting for Total Manufacturing Cost 100.00% PKR 19.38 PKR 115,439,470
Opening WIP PKR 0
Units Rate Total Closing WIP PKR 0
Transferred Out 5,958,066 19.36 115,324,030 COGM PKR 115,439,470
Losses Opening FG PKR 0
Closing FG PKR 0
CFPD 5,964 18.44 109,986
CC 5,964 0.91 5,453 COGM Available for Sale
Over & Under Applied (6,000,000‐5,958,066) x 7.75 PKR 324,994
115 439 469 l

3
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