MANAGEMENT ACCOUNTING

CIA-1

Institute of Management

CHRIST (Deemed to be University)

2018

Submitted By

Vipul Srivastav (1827426)

Abhinav Sharma (1827401)

Nair Sabita Satish (182340)

Submitted to:

Prof. SreeLakshmi
The title: Increase Revenue Potentials of Prachin Art and Craft.

Abstract:

Prachin Art and Craft has made a name for itself in the list of top suppliers of God & Goddess
Statues, Handcrafted painting & Bottles in India. The manufacturing company is located in
Bangalore, Karnataka and is one of the leading sellers of listed products-Company
Manufacturing is listed in Trade India's list of verified sellers offering supreme quality of
Decorative Silver Idol, Pure Handcrafted, Jewelry Silver Casting etc.

Learning objectives:

 To understand the various aspects relating to the costs of a single product

 To study the impact of a change in the selling price on the various other costing aspects
 To understand how a Cost Accountant makes decisions for the best interest of the
company
 To study how to make a product more optimum by minimizing costs
 To develop an understanding of how inventory management can be improved further.

Key words:

Selling price, Cost of sales, Overheads, Cost of Sales, Cost Accountant

Company Profile:

Prachin Art and Craft Jayanagar Bengaluru, Karnataka

Industry Overview

Sculpture is the branch of the visual arts that operates in three dimensions. It is one of the plastic
arts. Durable sculptural processes originally used carving (the removal of material) and modelling
(the addition of material, as clay), in stone, metal, ceramics, wood and other materials but,
since Modernism, there has been an almost complete freedom of materials and process. A wide
variety of materials may be worked by removal such as carving, assembled by welding or modelling,
or molded or cast.

COMPANY OVERVIEW
Prachin Arts & Craft is wholesale supplier of unique Silver, Copper items, fashion accessories,
decor , paintings, wall decor, clocks and ethnic handicraft like God & Goddess Statues,
Sculpture, copper bottles. The company got its start in 1999 when the owner began selling
wholesale jewelry out of the trunk of his car and at local festivals. Currently, The Company gets
more than 10,000 orders a year from different parts of the country.

Vision
Prachin Arts & Craft is dedicated to supporting and empowering traditional (folk and tribal)
Indian artists and artisans through systematic and sustained development efforts. It seeks to
ensure the social and economic well-being, nurture creative community enterprises, foster global
recognition and collaboration for indigenous arts, and promote, protect and preserve the integrity
and diversity.
As the Silver, Copper market was highly fragmented, lacked branding, and allowed many
unethical practices to flourish, Prachin Arts & Craft worked hard on a two-pronged brand-
building strategy:

 Cultivate trust by educating retailers about the unethical practices in the business
 Change the perception of Sculpture as a high- priced purchase.
The company’s main focus is on whole-sale as well as on retail. Their customers are across the
globe and they export their product in large scale

PROBLEM STATEMENT: DECLINING PROFITS

Sculpture industry is facing a lot of issue because of decline in creative labour in market and
due to low demand of high priced sculpture which ultimately affects its profit margin, Prachin
arts & crafts also wants to increase its sales potential which is a cause of concern at present. Its
turnover for the financial year 2017-2018 was recorded to be 11159.78 lacs. Increase in net
sales from year 2016 to year 2017 has been only 1%. The expected increase in the year 2018 is
about 5%.

(in lacs)

Sales 2018 2019 2020(Estimated)

Net Sales 14,611,182 1,51,95,630 1,59,55,411
Growth in Sales (%) - 4% 5%
Growth in Sales - 5,84,447 7,59,781
(amount)

Due to this low growth in sales the already low profits are declining even more.
THE CHALLENGE
As a growing organization with its sights set on expansion. They are having a favorable
demographic profile, labor and skill shortage continues to be one of the key concerns for the
Indian industry.
Direct labour is the main challenge the company is facing through. As they are having difficulty
in finding labours, the company is facing problems, such as

Even after the company hires the labour, the company faces the issues such as
 Decline in Production
 Return of advances
 Change is preference of Customer
 Reduces the growth of the company
 Poor inventory control.
 Staff lacks knowledge about the products.
 No existing branches of the store.
 Unproductive labours

The store wants a comprehensive cost sheet and Strategic plan for the labour they would incur
after taking into consideration the various methods of hiring the labours as well as accommodate
for the change in their wages.

The cost sheet (approximate) has been attached below. As it is a private company their exact
figures.

Particulars Amount

Direct material consumed

Direct Labour: Productive wages
Direct expenses
Prime Cost

Add:
Factory Overheads

Indirect material:
Consumable stores
Wastage

Indirect Labour:
Unproductive wages
Salaries

Indirect Expenses:
Repair/returns
Electricity
Office supplies
Insurance

WORKS COST
Add: - Administration Overheads:
Office Rent
Asset Depreciation
General Charges
Audit Fees
Bank Charges
Other Office Expenses
COST OF PRODUCTION
Add: Opening Stock - Finished Goods
Less: Closing Stock - Finished Goods
COST OF GOODS SOLD
Add:- Selling and Distribution Overhead
Expenses:-
Salary - Sales
Travelling Expenses
Delivery Expenses
Taxes
COST OF SALES
ADD: PROFIT
SALES