cost analysis and control hero.docx
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The document discusses cost analysis and control with reference to Hero Motocorp Pvt Ltd. It defines key terms like cost, cost-benefit analysis, and the need for cost reduction strategies. The scope of the study is restricted to analyzing Hero Motocorp's cost systems and evaluating ways to modify the current system. Data will be collected from Hero Motocorp officers, journals, accounting records, books, and statistical records. The objectives are to provide a framework for cost and cost control analysis, examine Hero Motocorp's cost system and objectives, and evaluate and propose modifications to the existing cost system with regards to different cost types and performance cost formulation.
cost analysis and control hero.docx
- 1. A STUDY ON COST ANALYSIS & CONTROL (With reference to Hero Motocorp Pvt Ltd) . ABSTRACT
- 2. The total cost of producing a specific level of output is the cost of all the factors of input used. Conventionally economist use models with two inputs capital, K. and labor, L. Capital is assumed to be the fixed input meaning that the amount of capital used does not vary with the level of production. The rental price per unit of capital is denoted r. Thus the total fixed costs equal Kr. Labor is the variable input meaning that the amount of labor used varies with the level of output. In fact in the short run the only way to vary output is by varying the amount of the variable input. Labor is denoted L and the per unit cost or wage rate is denoted w so the total variable costs is Lw. Consequently total cost is fixed costs (FC) plus variable cost (VC) Valuation in terms of money of (1) effort, (2) material, (3) resources, (4) time and utilities consumed, (5) risks incurred, and (6) opportunity forgone in production and delivery of a good or service. All expenses are costs, but not all costs (such as those incurred in acquisition of an income-generating asset) are expenses. The profession places itself at the service of the nation, government, industry, and the society to realize the objectives of a welfare state resulting in the prosperity and the well being of its people - a fact increasingly realized with the opening up of the country's economy and change in the economic scenario of the world. In today's world, the profession of conventional accounting and auditing has taken a back seat and accountants increasingly contribute towards the management of scarce resources like funds, land and apply strategic decisions. This has opened up further scope and tremendous opportunities Cost and Works accountants to shoulder responsibility as Cost and Management Accountants in accordance with new dimensions and vision here in India and abroad. Members of this profession will be the driving force in the team of management while in employment and a key consultant, an effective Cost and Management Auditor and an appropriate advisor in place. This is why Cost Accountants in India are called Management Accountants all over the world. It’s our other name. We invite you to browse through our web site. Complete Information on our working, history and professional accreditation are all available.
- 3. INDEX CHAPTER-1 PAGES INTRODUCTION Introduction about Project 01---03 Scope of the Study 04----- Objectives of the Study 05----- Methodology of the Study 06----- CHAPTER-2 INDUSTRY PROFILE &COMPANY PROFILE Automobile Industry in India 07----- History of the Two Wheelers 08---12 Corporate Profile 13---18 Key Milestones of Hero Honda 19---24 Corporate Social Responsibility 25---28 Introduction about Phonix Dealer Profile 29---34 Customer Relationshiop 03---05 CHAPTER-3 REVIEW OF LITERATURE Determination of Cost & Cost Control 37---45 Types Of Costs & Classifications 46---56 Review Of Project Costs 57---64 CHAPTER-4 DATA ANALYSIS AND INTERPRETATION (Data Reporting by Tables) 65---81 CHAPTER-5 FINDINGS & CONCLUSIONS 83----- SUGGESTIONS 84----- BIBLIOGRAPHY 85-----
- 5. INTRODUCTION COST: Cost is essential in every walk of our life – national, domestic and Business. A cost is prepared to have effective utilization of funds and for the realization of objective as efficiently as possible. Costing is a powerful tool to the management for performing its functions i.e., formulation plans, coordination activities and controlling operations etc., efficiently. For efficient and effective management planning and control are tow highly essential functions. Costing and cost control provide a set of basic techniques for planning and control. A cost fixes a target in terms of rupees or quantities against which the actual performance is measured. A cost is closely related to both the management function as well as the accounting function of an organization. As the size of the organization increases, the need for costing is correspondingly more because a cost is an effective tool of planning and control. Cost is helpful in coordinating the various activities (such as production, sales, purchase etc) of the organization with result that all the activities precede according to the objective. Costs are means of communication. Ideas of the top management are given the practical shape. As the activities of various department heads are coordinated at the much needed for the very success of an organization. Cost is necessary to future to motivate the staff associated, to coordinate the activities of different departments and to control the performance of various persons operating at different levels. Costs may be divided into two basic classes. Capital and operating costs. Capital cost is directed towards proposed expenditure for new projects and often require special financing.The operating costs are directed towards achieving short-term operational goals of the organization for instance, production or profit goals in a business firm. Operating costs may be sub-divided into various departmental of functional costs.
- 6. DEFINITION OF'COST-BENEFITANALYSIS' A process by which business` decisions are analyzed. The benefits of a given situation or business-related action are summed and then the costs associated with taking that action are subtracted. Some consultants or analysts also build the model to put a dollar value on intangible items, such as the benefits and costs associated with living in a certain town. Most analysts will also factor opportunity cost into such equations. You may have been intensely creative in generating solutions to a problem, and rigorous in your selection of the best one available. This solution may still not be worth implementing, as you may invest a lot of time and money in solving a problem that is not worthy of this effort. Cost Benefit Analysis or cba is a relatively simple and widely used technique for deciding whether to make a change. As its name suggests, to use the technique simply add up the value of the benefits of a course of action, and subtract the costs associated with it. Costs are either one-off, or may be ongoing. Benefits are most often received over time. We build this effect of time into our analysis by calculating a payback period. This is the time it takes for the benefits of a change to repay its costs. Many companies look for payback over a specified period of time – e.g. three years. In its simple form, cost-benefit analysis is carried out using only financial costs and financial benefits. For example, a simple cost/benefit analysis of a road scheme would measure the cost of building the road, and subtract this from the economic benefit of improving transport links. It would not measure either the cost of environmental damage or the benefit of quicker and easier travel to work.
- 7. NEED OF THE STUDY: The importance of cost reduction programs within a company cannot be overstated. Companies that are losing money, need to increase profits, or must become more competitive need to cut expenses in order to succeed. Knowing how to implement effective cost reduction strategies can be the determining factor in the survival of a business. When a company must generate more cash as fast as possible, management will have to decide which costs can be most effectively reduced. If the reduction is needed quickly, expenses cut first will normally be those that are not fixed or directly tied to production. It is not a good idea to drastically reduce expenses that produce the company product or service without careful evaluation. If your company understands the importance of cost reduction as a tool to increase profitability, the company will have a much better chance of remaining profitable no matter what stage of the economic cycle is occurring. That is because cost reduction is an effective tool that can be responsive to a company's need. Managing expenses is just as important as managing revenue. Keeping the competitive edge means keeping the company razor sharp. There is no room for laxness which dulls the ability of a company to be responsive to market trends. Changes can occur rapidly, and a company that cannot respond with new methods, new material usage, service efficiency changes, or technological adaptability will be quickly outperformed by other businesses. The importance of cost reduction strategies lies in its contribution to a company's honing of performance. SCOPE OF THE STUDY: Since it will not be possible to conduct a micro level study of all type industries in Andhra Pradesh, the study is restricted to Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) (Phoenix Motors Pvt. Ltd).only.
- 8. NEED OF THE STUDY: THE STUDY HAS THE FOLLOWING: ? To provide the material frame work of cost and Cost Control Analysis ? To describe the profit of the organization as a backdrop for undertaking a study of Cost Benefit Analysis. ? To analyze the cost system in practice in Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) (Phoenix Motors Pvt. Ltd)with particular reference to their objectives and phases of organizational and re-appropriation. ? In addition to the analysis of the conventional cost system in practice in Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) (Phoenix Motors Pvt. Ltd) The study aims at evaluation and modification to the current cost system with reference to the various types of costs. The scope in the formulation of performance cost is also studied. SOURCES OF DATA: The data of Hero MotoCorp Ltd have been collected mainly from secondary sources viz., ? Form the concerned officers of the Hero MotoCorp Ltd ? Hero MotoCorp Ltd journals. ? Accounting books, records. ? Key books of concerned title. ? Statistical records ? Hero MotoCorp Ltd library.