2. Company
profile
Started its production on March 2002.
Largest cement manufacturing plant, 5.2 million MT
per annum.
Highest selling brand in country.
100% Local owned cement company.
Nation’s leading supplier of Ready mix-concrete.
The cement plant situated at Mukterpur, Munsigonj.
Shah Cement has its own power plant with the capacity
of 17 megawatt.
3. How is Cost of Goods Sold (COGS) identified ?
Opening Stock of Raw & Packing Materials XXX
Add: Purchase XXX
XXX
Less: Closing Stock of Raw & Packing Materials XXX
Raw and Packing materials consumed XXX
Add: Manufacturing Expenses/Factory Overhead XXX
XXX
Add: Opening stock of finished products XXX
Finished product available XXX
Less: Closing stock of finished products XXX
Cost of Goods Sold XXX
COGS identification format is described below :
4. Which method is used for recording cost ?
Oracle ERP Software under Weighted Average method is
used for recording cost.
5. Cost Classification
91.13% Raw material Cost
1.16% labor Cost
7.71% Factory Overhead Cost
Raw Material
91%
Labor
1% FOH
8%
Raw Material Labor FOH
6. Raw Materials Cost
Clinker Cost- 61.97%percent of raw material
cost
Fly Ash – 3.64% of raw material cost
Gypsum-15.49% of raw material cost
Slag -5.47% of raw material cost
Lime Stone-4.56% of raw material cost Clinker
68%
Fly Ash
4%
Gypsum
17%
Slag
6%
Lime stone
5%
Clinker
Fly Ash
Gypsum
Slag
Lime stone
7. Economic order Quantity (EOQ) is used for
ordering raw material.
Some other factors are also considered:
Which method is used for ordering raw materials?
Price competitiveness
Quality
Secure source
Minimum lead time.
8. Which is the major cost centre?
Raw-material cost
Labor cost
Factory overhead cost
9. Purchase department & Issue department
Both department exists.
Purchase is controlled from the head office.
Issue is maintained by the firm.
10. Ledger & Bin Card
Used in the office Used in the store
11. Which Inventory Valuation method is used?
First IN First Out.
Last IN First Out
Weighted average method
12. Material Expense Calculation
Annual Material Expense = Ordering Cost+ Carrying Cost +Material Purchase Cost
Which system is used for inventory management?
Oracle Inventory Management Module.
13. Lead time for Raw Material
Fly Ash
20 Days
Clinker
15 Days
Gypsum
20 Days
Slag
20 Days
Lime Stone
25 days
14. Is there any safety Stock?
Yes
15 Days safety stock for all raw
materials.
15. Control of labor cost
• Increase the Productivity
of the labor
• Means to labor cost per
unit.
16. Labor cost calculation
• Total Expenses = Monthly
Basis Payment + Overtime
• (labor for a particular
period is consider as the
labor cost)
17. Method of Labor/Employees Are Paid
• Paid in monthly basis.
• In case of extra working
hour is consider for
calculation.
18. Incentives/Bonus
• Higher management fix a
monthly production or
achievement target at
the beginning of the
month.
• Based on that target
achievement, incentive
or bonus is given.
19. How direct/indirect labor is measured
• Labor which is related to
production is considered
as direct
• Which is related to
process other than
production is treated as
indirect.
24. Way of Factory Overhead Allocation:
Primary Distribution (Allocation & Apportionment)
Secondary Distribution (Re-apportionment)
Absorption
25. Way of Absorption
On the basis of ‘Production units
As a % of Direct Labour Cost
As a % of Direct Material Cost
As a % of Prime Cost
On the basis of Direct Labour Hours
On the basis of Machine Hours