PROJECT REPORT ON

PROCESS COSTING ON PARLE G

UNIVERSITY OF MUMBAI

MASTER OF COMMERCE
(Accountancy)
SEMESTER I
2015-16

SUBMITTED BY
Name: VIRAJ V. BALSARA

Roll No.: 32

PROJECT GUIDE
Subject Teacher name
DR. NISHIKANT JHA
K.P.B HINDUJA COLLEGE OF COMMERCE
315, NEW CHARNI ROAD, MUMBAI-400 004

M.Com (Accountancy)
1st SEMESTER

PROCESS COSTING ON PARLE G

SUBMITTED BY
VIRAJ BALSARA
Roll No.: 32

008

Smt. P.D. Hinduja Trusts

K.P.B. HINDUJA COLLEGE OF COMMERCE

315, New Charni Road, Mumbai 400 004 Tel.: 022- 40989000 Fax: 2385 93 97. Email:

NAAC Re-Accredited A

THE BEST COLLEGE OF UNIVERSITY OF MUMBAI FOR THE ACADEMIC YEAR 2010-2
Prin. Dr. Minu Madlani (M. Com., Ph. D.)

CERTIFICATE
This is to certify that Ms. VIRAJ V. BALSARA

of

M.Com (Accountancy)

Semester 1st [2015-2016] has successfully completed the Project on

PROCESS COSTING ON PARLE G under the guidance of DR.
NISHIKANT JHA.

________________

________________

Project Guide

Co-coordinator

________________

________________

Internal Examiner

External Examiner

________________

________________
3

Principal

College Seal

DECLARATION
I Mr. VIRAJ V. BALSARA student of M.Com-Accountancy, 1st semester
(2015-2016), hereby declare that I have completed the project on PROCESS
COSTING ON PARLE G

The information submitted is true and original copy to the best of our
knowledge.

(Signature)
Student

INDEX
SR. No
1
2
3
4
5
6
7

TOPIC
Introduction to Process Costing
Distinction between job costing & process costing
Valuation of Work In Progress
Introduction to Parle G & Its Process
Practical sum
Conclusion
Bibliography

PAGES
6-15
16-17
18-22
23-34
35-37
38
39

CHAPTER: 1 PROCESS COSTING

1.1 INTRODUCTION OF PROCESS COSTING:
Process costing is an accounting methodology that traces and accumulates direct
costs, and allocates indirect costs of a manufacturing process. Costs are
assigned to products, usually in a large batch, which might include an entire
month's production. Eventually, costs have to be allocated to individual units of
product. It assigns average costs to each unit, and is the opposite extreme of Job
costing which attempts to measure individual costs of production of each unit.
Process costing is a type of operation costing which is used to ascertain the cost
of a product at each process or stage of manufacture.
Process costing is suitable for industries producing homogeneous products and
where production is a continuous flow. A process can be referred to as the subunit of an organization specifically defined for cost collection purpose. The
importance of process costing
Costing is an important process that many companies engage in to keep track of
where their money is being spent in the production and distribution processes.
Understanding these costs is the first step in being able to control them. It is
very important that a company chooses the appropriate type of costing system
for their product type and industry. One type of costing system that is used in
certain industries is process costing that varies from other types of costing (such
6

as job costing) in some ways. In Process costing unit costs are more like
averages, the process-costing system requires less bookkeeping than does a joborder costing system. So, a lot of companies prefer to use process-costing
system.
In process costing it is the process that is costed (unlike job costing where each
job is costed separately). The method used is to take the total cost of the process
and average it over the units of production.
Cost per unit = Cost of inputs
Expected output in units

1.2 DEFINITION OF PROCESS COSTING:

CIMA defines process costing as "The costing method applicable where goods
or services result from a sequence of continuous or repetitive operations or
processes. Costs are averaged over the units produced during the period".

1.3 WHEN PROCESS COSTING IS APPLIED?

Process costing is appropriate for companies that produce a continuous mass of
like units through series of operations or process. Also, when one order does not
affect the production process and a standardization of the process and product
exists. However, if there are significant differences among the costs of various
products, a process costing system would not provide adequate product-cost

information. Costing is generally used in such industries such as petroleum, coal

mining, chemicals, textiles, paper, plastic, glass, and food.

1.4 REASONS FOR USE OF PROCESS COSTING:

Companies need to allocate total product costs to units of product for the
following reasons:
a) A company may manufacture thousands or millions of units of product in
a given period of time.
b) Products are manufactured in large quantities, but products may be sold
in small quantities, sometimes one at a time (automobiles, loaves of
bread), a dozen or two at a time (eggs, cookies), etc.
c) Product costs must be transferred from Finished Goods to Cost of Goods
Sold as sales are made. This requires a correct and accurate accounting of
product costs per unit, to have a proper matching of product costs against
related sales revenue.
d) Managers need to maintain cost control over the manufacturing process.
Process costing provides managers with feedback that can be used to
compare similar product costs from one month to the next, keeping costs
in line with projected manufacturing budgets.

e) A fraction-of-a-cent cost change can represent a large dollar change in

overall profitability, when selling millions of units of product a month.
Managers must carefully watch per unit costs on a daily basis through the
production process, while at the same time dealing with materials and
output in huge quantities.
f) Materials part way through a process (e.g. chemicals) might need to be
given a value, process costing allows for this. By determining what cost
the part processed material has incurred such as labor or overhead an
"equivalent unit" relative to the value of a finished process can be
calculated.

1.5 ADVANTAGES OF PROCESS COSTING:

1. Costs are be computed periodically at the end of a particular period
2. It is simple and involves less clerical work that job costing
3. It is easy to allocate the expenses to processes in order to have accurate
costs.
4. Use of standard costing systems in very effective in process costing
situations.
5. Process costing helps in preparation of tender, quotations
6. Since cost data is available for each process, operation and department,
good managerial control is possible.

1.6 LIMITATIONS OF PROCESS COSTING:

1. Cost obtained at each process is only historical cost and are not very
useful for effective control.
2. Process costing is based on average cost method, which is not that
suitable for performance analysis, evaluation and managerial control.
3. Work-in-progress is generally done on estimated basis which leads to
inaccuracy in total cost calculations.
4. The computation of average cost is more difficult in those cases where
more than one type of products is manufactured and a division of the cost
element is necessary.
5. Where different products arise in the same process and common costs are
prorated to various costs units. Such individual products costs may be taken
as only approximation and hence not reliable.

1.7 PROCEDURE OF PROCESS COSTING:

For each process an individual process account is prepared. Each process of
production is treated as a distinct cost centre.

I. ITEMS ON DEBIT SIDE OF PROCESS A/C

Each process account is debited with
a) Cost of materials used in that process.
b) Cost of labour incurred in that process.
c) Direct expenses incurred in that process.
10

d) Overheads charged to that process on some pre determined.

e) Cost of ratification of normal defectives.
f) Cost of abnormal gain (if any arises in that process)

II. ITEMS ON CREDIT SIDE OF PROCESS A/C

Each process account is credited with
a) Scrap value of Normal Loss (if any) occurs in that process.
b) Cost of Abnormal Loss (if any occurs in that process)

1.8 COST OF PROCESS:

The cost of the output of the process (Total Cost less Sales value of scrap) is
transferred to the next process. The cost of each process is thus made up to cost
brought forward from the previous process and net cost of material, labour and
overhead added in that process after reducing the sales value of scrap. The net
cost of the finished process is transferred to the finished goods account. The net
cost is divided by the number of units produced to determine the average cost
per unit in that process. Specimen of Process Account when there are normal
loss and abnormal losses.
Dr.
Particulars
To Basic Material
To Direct Material
To Direct Wages
To Direct Expenses
To Production

Process I A/c.
Units
xxx

Rs.
xx
xx
xx
xx

Particulars
By Normal Loss
By Abnormal Loss
By Process II A/c.
(output

xx

transferred to
Next process)

11

Cr.
Units
xx
xx
xx

Rs.
Xx
Xx
Xx

Overheads
To Cost of

xx

Rectification of

By Process I

xx

Xx

xx

Xxx

Stock A/c.

Normal Defects
To Abnormal Gains
xx

xx
xxx

1.9 PROCESS LOSS:

In many process, some loss is inevitable. Certain production techniques
are of such a nature that some loss is inherent to the production. Wastages of
material, evaporation of material is unavoidable in some process. But
sometimes the Losses are also occurring due to negligence of Labourer, poor
quality raw material, poor technology etc. These are normally called as
avoidable losses. Basically process losses are classified into two categories
(a) Normal Loss
(b) Abnormal Loss

a. NORMAL LOSS:
Normal loss is an unavoidable loss which occurs due to the inherent nature of
the materials and production process under normal conditions. It is normally
estimated on the basis of past experience of the industry. It may be in the form

12

of normal wastage, normal scrap, normal spoilage, and normal defectiveness. It

may occur at any time of the process.
No of units of normal loss: Input x Expected percentage of Normal Loss.
The cost of normal loss is a process. If the normal loss units can be sold as a
crap then the sale value is credited with process account. If some rectification is
required before the sale of the Normal loss, then debit that cost in the process
account. After adjusting the normal loss the cost per unit is calculates with the
help of the following formula:
Cost of good unit: Total cost increased Sale Value of Scrap
Input Normal Loss units

b. ABNORMAL LOSS:
Any loss caused by unexpected abnormal conditions such as plant breakdown,
substandard material, carelessness, accident etc. such losses are in excess of predetermined normal losses. This loss is basically avoidable. Thus abnormal
losses arrive when actual losses are more than expected losses. The units of
abnormal losses in calculated as under:
Abnormal Losses = Actual Loss Normal Loss
The value of abnormal loss is done with the help of following formula:
Value of Abnormal Loss:
Total Cost increase Scrap Value of normal Loss x Units of abnormal loss
Input units Normal Loss Units

13

Abnormal Process loss should not be allowed to affect the cost of production as
it is caused by abnormal (or) unexpected conditions. Such loss representing the
cost of materials, labour and overhead charges called abnormal loss account.
The sales value of the abnormal loss is credited to Abnormal Loss Account and
the balance is written off to costing P & L A/c.
Dr.

Abnormal Loss A/c.

Cr.

Particulars

Units

Rs.

Particulars

Units

Rs.

To Process A/c.

xx

xx

By Bank A/c.
By Costing P & L

xx
xx

Xx
Xx

xx

xxx

A/c.
xx

xxx

ABNORMAL GAIN:
The margin allowed for normal loss is an estimate (i.e. on the basis of
expectation in process industries in normal conditions) and slight differences are
bound to occur between the actual output of a process and that anticipates. This
difference may be positive or negative. If it is negative it is called ad abnormal
Loss and if it is positive it is Abnormal gain i.e. if the actual loss is less than the
normal loss then it is called as abnormal gain. The value of the abnormal gain
calculated in the similar manner of abnormal loss.
The formula used for abnormal gain is:
Abnormal Gain
Total Cost incurred Scrap Value of Normal Loss x Abnormal Gain Unites
14

Input units Normal Loss Units

The sales values of abnormal gain units are transferred to Normal Loss Account
since it arrive out of the savings of Normal Loss. The difference is transferred to
Costing P & L A/c. as a Real Gain.
Dr.

Abnormal Gain A/c.

Cr.

Units

Rs.

Particulars

Units

Rs.

To Normal Loss

xx

xx

By Process A/c.

xx

xx

A/c.
To Costing P & L

xx

xx

xx

xx

xx

xx

Particulars

A/c.

CHAPTER 2: DISTINCTION BETWEEN JOB COSTING

AND PROCESS COSTING
Job order costing and process costing are two different systems. Both the
systems are used for cost calculation and attachment of cost to each unit
completed, but both the systems are suitable in different situations. The basic
difference between job costing and process costing are
Basis of
Distinction
1 Specific order
.
2 Nature
.
3 Cost determination

Job order costing

Performed
against
specific orders
Each job many be
different.

Process costing

Production
is
contentious
Product is homogeneous
and
Standardized.
Cost is determined for Costs are complied for
15

each job separately.

4 Cost calculations
.
5 Control
.

Cost is complied when a

job is completed.
Proper
control
is
comparatively difficult
as each product unit is
different
and
the
production is not
Continuous.
There is usually not
transfer from one job to
another unless there is
some surplus work.
There may or may not
be work-in-progress.

6 Transfer
.
7 Work-in-Progress
.
8 Suitability
.

each
process
for
department on time
basis i.e. for a given
Accounting period.
Cost is calculated at the
end of the cost period.
Proper
control
is
comparatively easier as
the
production
is
standardized and is
more suitable.
The output of one
process is transferred to
another process as input.

There is always some

Work-in-progress
because of continuous
production.
Suitable to industries Suitable, where goods
where production is are made for stock and
intermittent and
productions
is
Customer orders can be continuous.
identified in the value of
production.

2.1 INTER PROCESS PROFITS:

Normally the output of one process is transferred to another process at cost but
sometimes at a price showing a profit to the transfer process. The transfer price
may be made at a price corresponding to current wholesale market price or at
cost plus an agreed percentage. The advantage of the method is to find out
whether the particular process is making profit (or) loss. This will help the
management whether to process the product or to buy the product from the
market. If the transfer price is higher than the cost price then the process
16

account will show a profit. This problem arises only in respect of stock on hand
at the end of the period because goods sold must have realized the internal
profits. The unrealized profit in the closing stock is eliminated by creating a
stock reserve. The amount of stock reserve is calculated by the following
formula.
Stock Reserve = Transfer Value of stock x Profit included in transfer price
Transfer Price

CHAPTER 3: VALUATION OF WORK-IN-PROGRESS

3.1 MEANING OF WORK IN PROGRESS:
Since production is a continuous activity, there may be some incomplete
production at the end

of

an

accounting period.

Incomplete

units

mean those units on which percentage of completion with regular to all

elements of cost (i.e. material, labour and overhead) is not 100%. Such
incomplete production units are known as Work-in-Progress. Such Work-inProgress is valued in terms of equivalent or effective production units.
17

3.2 MEANING OF EQUIVALENT PRODUCTION UNIT:

This represents the production of a process in terms of complete units. In other
words, it means converting the incomplete production into its equivalent of
complete units. The term equivalent unit means a notional quantity of
completed units substituted for an actual quantity of incomplete physical units
in progress, when the aggregate work content of the incomplete units is deemed
to be equivalent to that of the substituted quantity. The principle applies when
operation costs are apportioned between work in progress and completed units.
Equivalent units of work in progress = Actual no. of units in progress x
Percentage of work completed.
Equivalent unit should be calculated separately for each element of cost (viz.
material, labour and overheads) because the percentage of completion of the
different cost component may be different.

3.3 ACCOUNTING PROCEDURE:

The following procedure is followed when there is Work-in Progress
i.

Find out equivalent production after taking into account of the

process losses, degree of completion of opening and / or closing
stock.

ii.

Find out net process cost according to elements of costs i.e.

material, labour and overheads.

18

iii.

Ascertain cost per unit of equivalent production of each element

of cost separately by dividing each element of costs by respective
equivalent production units.

iv.

Evaluate the cost of output finished and transferred work in

progress.

3.4 PROBLEMS ON EQUIVALENT PRODUCTION:

The problems are dividend in to four groups. They are:
I.

When there is only closing work-in-progress but without process

losses

II.

When there is only closing work-in-progress but with process

losses

III.

When there is only opening as well as closing work-in- progress

without process losses

IV.

When there is opening as well as closing work-in- progress with

process losses

Situation I: When there is only closing work-in-progress but

without process losses:
In this case, the existence of process loss is ignored. Closing work-inprogress is converted into equivalent units on the basis of estimates on degree
of completion of materials, labour and production overhead. Afterwards, the
19

cost per equivalent unit is calculated and the same is used to value the
finished output transferred and the closing work-in-progress.

Situation II: When there is closing work-in-progress with

process loss or gain:
If there are process losses the treatment is same as already discussed in this
chapter. In case of normal loss nothing should be added to equivalent
production. If abnormal loss is there, it should be considered as good units
completed during the period. If units scrapped (normal loss) have any
reliable value, the amount should be deducted from the cost of materials in
the cost statement before dividing by equivalent production units. Abnormal
gain will be deducted to obtain equivalent production.

Situation III: Opening and closing work-in-progress without

process losses.
Since the production is a continuous activity there is possibility of
opening as well as closing work-in-progress. The procedure of conversion
of opening work-in-progress will vary depending on the method of
apportionment of cost followed viz, FIFO, Average cost Method and LIFO.

3.5 METHODS OF VALUATION OF WORK IN PROGRESS:

(a)

FIFO METHOD:
The FIFO method of costing is based on the assumption of that
20

the opening work-in-progress units are the first to be completed.

Equivalent production of opening work-in-progress can be
calculated as follows:
Equivalent Production = Units of Opening WIP x Percentage of
Work needed to finish the units

(b) AVERAGE COST METHOD:

This method is useful when price Fluctuate from period to
period. The closing valuation of work-in-progress in the old
period is added to the cost of new period and an average rate
obtained. In calculating the equivalent production opening units
will not be shown separately as units of work-in-progress but
included in the units completed and transferred.

(c) WEIGHTED AVERAGE COST METHOD:

In this method no distinction is made between completed units
from

opening inventory and completed units from new

production. All units finished during the current accounting period

are treated as if they were started and finished during that period.
The weighted average cost per unit is determined by dividing the
total cost (opening work-in-progress cost + current cost) by
equivalent production.

(d) LIFO METHOD:

21

In LIFO method the assumption is that the units entering into the
process is the last one first to be completed. The cost of opening
work-in-progress is charged to the closing work-in-progress and thus the
closing work-in- progress appears cost of opening work-in-progress. The
completed units are at their current cost

CHAPTER 4: PROCESS COSTING OF PARLE G

4.1 HISTORY OF PARLE G:
A long time ago, when the British ruled India, a small factory was set up in the
suburbs of Mumbai city, to manufacture sweets and toffees. The year was 1929
and the market was dominated by famous international brands that were
22

imported freely. Despite the odds and unequal competition, this company
called Parle Products, survived and succeeded, by adhering to high quality and
improvising from time to time. A decade later, in 1939, Parle Products began
manufacturing biscuits, in addition to sweets and toffees. Having already
established a reputation for quality, the Parle brand name grew in strength with
this diversification. Parle Glucose and Parle Monaco were the first brands of
biscuits to be introduced, which later went on to become leading names for
great taste and quality.
Parle Biscuits Limited is a subsidiary of the Parle Products Limited, Mumbai,
which is a closely held company run by the Chauhans. Today Parle enjoys a
40% share of the total biscuit market and 15% share of the total confectionery
market in India.
Parle-G or Parle Glucose biscuits, manufactured by Parle Products Pvt. Ltd,
are one of the most popular biscuits in India. Parle-G is one of the oldest brand
names as well as the largest selling brand of biscuits in India. For decades, the
product was instantly recognized by its iconic white and yellow wax paper
wrapper with the depiction of a young girl on the front. Parle-G has been a
strong household name across India.
By the year 1949, Parle Glucose biscuits were available not just in Mumbai but
also across the state. It was also sold in parts of North India. The early 50s
produced over 150 tons of biscuits produced in the Mumbai factory. Looking
23

at the success of Parle-G, a lot of other me-too brands were introduced in the
market. And these brands had names that were similar to Parle Glucose
Biscuits. This forced Parle to change the name from Parle Glucose Biscuits to
Parle-G. Originally packed in the wax paper pack; today it is available in a
contemporary, premium BOPP pack with attractive side fins. The new airtight
pack helps to keep the biscuits fresh and tastier for a longer period. Parle-G
was the only biscuit brand that was always in short supply. It was heading
towards becoming an all-time great brand of biscuit. Parle-G started being
advertised in the 80's.
It was advertised mainly through press ads. The communication spoke about
the basic benefits of energy and nutrition. In 1989, Parle-G released its Dadaji
commercial, which went on to become one of the most popular commercials
for Parle G. The commercial was run for a period of 6 years.
The goal was to spread joy and cheer to children and adults alike, all over the
country with its sweets and candies. Since then, the Parle name has spread in
all directions and has won international fame. Parle has been sweetening the
lives of people all over India and abroad. Apart from the factories in Mumbai
and Bangalore, Parle also has factories in Bahadurgarh, Haryana and
Rajasthan. These are the largest biscuit and confectionery plants in the country.
Additionally, Parle Products also has 10 manufacturing units and 75
manufacturing units on contract.
24

The company's slogan is G means Genius. The name, "Parle-G", is derived

from the name of the suburban rail station, Vile Parle which in turn is based on
village Parle in olden days (there is also area called Irla nearby where the Parle
Agro production factory is based).
This popular biscuit is primarily eaten as a tea-time snack. Parle-G is the
largest selling biscuit in the world. It has 70% market share in India in the
glucose biscuit category followed by Britannia, Tiger (17-18%) and ITC's
Sunfeast (8-9%). The brand is estimated to be worth over Rs 2,000 crore (Rs
20 billion), and contributes more than 50 per cent of the company's turnover
(Parle Products is an unlisted company and its executives are not comfortable
disclosing exact numbers). Last fiscal, Parle had sales of Rs 3,500 crore (Rs 35
billion). It also is popular across the world and is starting to sell in Western
Europe and USA.

4.2 MANUFACTURING PROCESS OF PARLE G:

MANUFACTURING PROCESS FLOW CHART
.

RAW MATERIAL
TESTING

MIXING
25

MOULDING

BAKING

COOLING

PACKING

Actual process of production is divided into 6 steps. Following are the steps
of production process.

a. CHECKING OF RAW MATERIAL:

Before starting actual process of making biscuits all raw material checked in
laboratory if quality of raw material is not good then they return those of
raw material.

b. MIXING OF INGREDENTS:
26

After checking of raw material, raw materials are going for mixture. In
mixing department 3 big mixers are working known as Steven Mixers.
These mixers mix the all raw material in their appropriate ratio. Each
mixer has capacity of 500kg mixing at a time.

c. MOULDING SECTION:
In moulding section the ready mixture go from one big machine. This
machine cut this mixture in a perfect size & shape of glucose biscuit. And
stamp on that biscuit Parle-G.

d. BAKING SECTION:
In banking section biscuits are go from one big oven. These ovens are
categorized in eight parts. Parle agro has the biggest oven in Asia.

e. COOLING:
After the process of baking the biscuits are very hot it should be cool
before packing. For cooling, biscuits rolled through conveyer belt.

f. PACKING:
Ready biscuits are sent for packing in packing section. Packing process of
Parle-G biscuits is different for Domestic product and Export goods.
Packing process of product is fully automatic. There are 10 machine are
setup for packing biscuits quantity wise like 200g, 1.5 kg etc.
27

Out of 10 machines two machines are not convertible for packing

different types of goods. These two machines are made only for Family
Pack.
For Export goods they are using special Aluminium Foil pack because it
should be preserved for more than 1 year. The size of biscuits is small.
For cream biscuits, Packing of cream biscuits is done by quantity wise.

4.3 PROCESS LAYOUT OF PARLE PRODUCT LTD:

PROCESS LAYOUT CHART

STEPHA
N

STEPHAN
MIXER

CURVE
MOULDING

OVEN

COOLING
CURVE PLATE

CONVYER
28

PLATE

MULTI
STALKING

BOX
TAPPIN

PACK

SEALING
MACHINE

DEVIRSION BELT
CONVEYOR BELT

CONVEYOR BELT

DISPATCH SECTION

Following are the machinery used in manufacturing;

a. STEPHEN MIXER:
The Stephan TK Mixer is an ideal component to fully automatically feed the
down-stream make-up equipment for biscuits, bread, rolls, buns, cake, sweet
goods, cookies and crackers.

b. ROTARY MOULD:

29

i.

structure in corrosion-proof; anodized aluminum and Asia 304 stainless

steel

ii.

satin stainless steel paneling

iii.

swivel wheels and support feet

iv.

trays loader with automatic chain feed

v.

feeder roller anodized aluminum

vi.

1.00 kW speed validates

c. COOLING CONVEYOR:
The biscuit coming from stripping conveyor is directed on to the cooling
conveyor to transfer the heat in the biscuit to atmospheric air as it is passing
on it. The total travel of the cooling conveyor is 1.5 times the oven length. As
per need specifications it need the travel of 150 ft.

d. LAMINATOR:
Laminators are generally used for production of all kinds of hard biscuits,
crackers and cocktail snacks. With laminator it is possible to create a puffy
30

pastry-like structure, which is of decisive importance for the quality level and
consequently for the sales success. Laminating of Dough band improves the
weight/volume ratio considerably.

e. BISCUIT BAKING OVEN:

The oven body consists of steel steam tight
tunnel with equally divided zones of the
radiators. Stainless steel expansion joints are provided between these zones in
order to eliminate the expansion of the oven section. The inspection doors are
provided for inspection of the baking goods during the process.

f. BAKING SYSTEM:
The baking in the heating chamber takes place by radiators located under and
above the wire mesh band which distribute heat for uniform baking. The
recirculation heating gases of these radiators can
be controlled for each zone separately. The
closed recirculation system is having slight
vacuum so that combustion gases cannot enter
into the baking chamber. The ventilating fan is
for circulation of the heating gases through the recirculation system and
thermostatically controlled burners provide the set temperature of the heating
gases.
31

g. ROTARY CUTTER:
The single head rotary cutter prints fine design on a continuously fed dough
sheet and also cuts out the individual dough piece. The unit powered by
1.5KW helical geared motor and speed controlled by AC frequency
controller. Drive is given to cutting roller only to accommodate different sizes
of dies in this machine.

h. COUNTING UNIT:
The counting unit counts and see that the biscuit making process is going fine
or not, i.e. as per the program set in the machine, program is set as per the
grams required. Generally 16 biscuits are taken by the counting unit so that it
leads to 100 grams.

i. MULTIPACK WRAPPING MACHINE:

This machine helps in wrapping the biscuits on the particular wrapper fixed
on the roller of the machine. The wrapper is feed into the machine and the
sealing of the wrapper is done by four heater roller, which is fitted on the
machine. This heater roller heat up the plastic and seals the packet. And at the
32

same time the jaw cutter cut the packet on the cutting edge marked i.e. as per
the grams of the packet which is feed in the automatic machine. The packets
coming out from the wrapping machine in a minute is programmed in
computer and can be changed as per the need.

j. POLY BAGS:
Poly bags contain 24 packets of Parle G biscuits in
one poly bag. There are 4 workers employed on this
section who take care of the work by putting 24
packets of biscuits in the bag and forwarding it to
sealing machine section.

k. SEALING MACHINE:
The sealing machine has heater rod for sealing the poly bag in which 24 packet
of biscuit are placed, and it have a conveyer belt on other side so that when the
poly bag passes through the heater and get sealed then it is passed to the
tapping machine.

l. TAPPING MACHINE:
33

Six such poly bags are placed in one such corrugated box and the box is
passed through the tapping machine where are tapped and then sent through a
long diversion conveyer belt. This belt helps to transfer the box to the dispatch
section directly. 36 boxes are arranged on pallet in the dispatch section, from
where they are transferred to the various dealers all over the India and
worldwide.

CHAPTER 5: PRACITICAL SUM

The product of a company passes through 3 distinct process. The following
information is obtained from the accounts for the month. (All figures in lakhs)
Particulars
Direct Material
Direct Wages
Production

Process A
7800
6000
6000

Process B
5940
9000
9000

Process C
8886
12000
12000

overheads
3000 units @ Rs. 3 were introduced to process A. There was no opening stock
of materials or Work-in-progress. The output of each process passes directly to
the next process and finally to finished stock A/c.
The following additional data is obtained:
Process
A
B

Output
2850
2520

Percentage of Normal loss to input

5%
10%
34

Scrap Rs.
2
4

2250

15%

Solution: (All figures are in lakhs)

PROCESS A A/C

Dr

Cr

Particulars

Unit
s

Amt

To Input

3000 9000

Particulars
By Normal loss

Units
150

Amt
300

2850
To Direct materials

7800

To Direct wages

6000

To Factory overheads

6000

By Output transferred
to Process B A/c

3000 2880
0

Dr
Cr

Particulars

28500

3000

28800

PROCESS B A/C

Unit

Amt

Particulars

35

Unit

Amt

To Process A A/c

2850

28500 By Normal loss

To Direct materials

5940

By Abnormal loss

To Direct wages

9000

To Factory overheads

9000

By Output transferred
to process C A/c

2850

Dr
Cr

52440

285

1140

45

9000

2520

50400

2850

52440

Unit

Amt

378

1890

2250

85500

2628

87390

PROCESS C A/C

Particulars

Unit

Amt

Particulars

To Process B A/c

2520

50400 By Normal loss

To Direct materials

8886

To Direct wages

12000

By Output transferred
to Final stock A/c

108
To Factory overheads

12000

To Abnormal gain

4104
2628

87390

36

CHAPTER 7: CONCLUSION:
Process costing is a term used in cost accounting to describe one method
for collecting and assigning manufacturing costs to the units produced.
Processing cost is used when nearly identical units are mass produced.
Process costing is used to ascertain the cost of each stage, where material is
passed through various operations to obtain final results, with b- products in
many cases at different stages.

37

CHAPTER 8: BIBLOGRAPHY:
i.

http://en.wikipedia.org/wiki/Parle-G

ii.

http://www.parleproducts.com/

iii.

http://www.slideshare.net

iv.

http://archive.mu.ac.in/myweb_test/MCOM-Ac-%20Paper%20%20II.pdf

v.

https://www.scribd.com/doc/201165312/process-costing-of-ParleG

vi.

https://www.scribd.com/doc/174987872/Process-Costing#download

38