Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 2K views

    Marginal Accounting of Maruti Udyog LTD

    Uploaded by

    reetikasharma_peacock
    Maruti Udyog Ltd is an automobile company formed as a joint venture between the Government of India and Suzuki Motor Company. The document analyzes Maruti's financial performance in 2008 compared to 2007 using marginal costing. It finds that while sales and profits increased, the contribution ratio and margin of safety decreased, indicating higher costs are cutting into profits. The break-even point increased substantially from 2007 to 2008 as a result of the lower contribution ratio. Overall, the analysis shows Maruti was able to increase sales and profits but profitability declined due to rising variable costs.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT or read online from Scribd

    Marginal Accounting of Maruti Udyog LTD

    Uploaded by

    reetikasharma_peacock
    2K views13 pages
    Maruti Udyog Ltd is an automobile company formed as a joint venture between the Government of India and Suzuki Motor Company. The document analyzes Maruti's financial performance in 2008 compared to 2007 using marginal costing. It finds that while sales and profits increased, the contribution ratio and margin of safety decreased, indicating higher costs are cutting into profits. The break-even point increased substantially from 2007 to 2008 as a result of the lower contribution ratio. Overall, the analysis shows Maruti was able to increase sales and profits but profitability declined due to rising variable costs.

    Original Title

    Marginal Accounting of Maruti Udyog Ltd

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PPT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Maruti Udyog Ltd is an automobile company formed as a joint venture between the Government of India and Suzuki Motor Company. The document analyzes Maruti's financial performance in 2008 compared to 2007 using marginal costing. It finds that while sales and profits increased, the contribution ratio and margin of safety decreased, indicating higher costs are cutting into profits. The break-even point increased substantially from 2007 to 2008 as a result of the lower contribution ratio. Overall, the analysis shows Maruti was able to increase sales and profits but profitability declined due to rising variable costs.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT or read online from Scribd
    Download as ppt
    2K views13 pages

    Marginal Accounting of Maruti Udyog LTD

    Uploaded by

    reetikasharma_peacock
    Maruti Udyog Ltd is an automobile company formed as a joint venture between the Government of India and Suzuki Motor Company. The document analyzes Maruti's financial performance in 2008 compared to 2007 using marginal costing. It finds that while sales and profits increased, the contribution ratio and margin of safety decreased, indicating higher costs are cutting into profits. The break-even point increased substantially from 2007 to 2008 as a result of the lower contribution ratio. Overall, the analysis shows Maruti was able to increase sales and profits but profitability declined due to rising variable costs.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT or read online from Scribd
    Download as ppt
    of 13

    MARGINAL COSTING ANALYSIS OF

    MARUTI UDYOG LTD.

    Topic : MARGINAL COSTING


    Compiled by:
    Reetika Sharma 77
    Sangeeta 87
    Smriti 97
    Sneha 98
    A Brief History….
     Maruti Udyog Ltd.- Formed to cater to the problem
    of insufficient public transport capability of the
    Government.
     The need for an alternative was becoming very
    necessary, when the Government of India through
    an Act of Parliament formed Maruti Udyog Ltd. in
    1981.
     A Joint Venture agreement was signed by the Govt.
    of India and Suzuki Motor Company in Oct 1982.
     307showrooms across 189 cities.
    History cont…
     Technologically, they have attained a benchmark.
     Their overall sales growth is of 15.8%. Hence,
    making it easier for Indians to buy cars.
     In 2001, Maruti Udyog Ltd became one of the first
    automobile companies anywhere in the world to get
    an ISO 9000:2000certification.
    SOME SUCCESS STORIES

     Rapid Expansion of Capacity: From 20,000 units (one


    plant) in 1983 to 3,50,000 units (three plants) in 199
     Productivity: Vehicles per employee increased from 15 in
    1984-85 to 70 in 1999-200
     Suggestions Scheme & Quality circles: Cost savings of
     Rs. 131.69 Cr. through 52,054 Suggestions in 1999-
    2000
     Innovative use of IT for increased efficiency,
     Effectiveness of communication and reduction of costs
    MARGINAL COSTING

    • The increase or decrease in one unit of output


    increases or decreases the total cost from the existing
    level to the new level.

    • The elements of cost are differentiated between fixed


    costs and variable costs.

    • Prices are based on marginal cost plus contribution.


    Cont……………..

    PROFIT/ VOLUME RATIO


    It expresses the relationship between contribution &
    sales.
    BREAK EVEN POINT
     It is the point at which total revenue is equal to total
    cost.
    MOS
    MOS is the excess of actual sale of production volume
    over the Break-even point
    TABLE 1
    PARTICULARS 2008 2007

    SALES 18,066.80 14,806.40


    VARIABLE COSTS

    Material Consumed 13,622 11,063.70


    Manufacturing Expenses 670.60 489.80
    Personal Expenses 356.20 288.40
    Selling Expenses 560.20 274.50
    Total 15,249 12,115.7
    FIXED COSTS

    Administrative Expenses 326.30 274.50


    Financial Expenses 59.60 37.60
    Depreciation 568.20 271.40
    Other write off - -
    Total 954.10 583.5
    Profit 1730.80 1561.60
    BRIEF ANALYSIS……..

    • Variable cost has increased from 12115.7 to


    15,249, a 25.86% increase
    • Fixed cost has increased from 583.5 to
    954.10, an increase of 63.5%
    • Sales increased from 14,806.40 to 18,066.80,
    an increase of 22.02%
    • Profit has increased from 1561.60 to 1730.80
    an increase of 10.8%
    BRIEF ANALYSIS….
    • CONTRIBUTION
     For 2008
    Contribution = 18066.80 – 15249 = 2817.80
     For 2007
    Contribution = 14806.40 – 12115.70 = 2691
     An increase of 4.7% from last year but if we analyze
    the figures the contribution is just enough to cover fixed
    cost indicating not much profit.
    BRIEF ANALYSIS…..
    • PROFIT AND VOLUME RATIO (PVR)
     For 2008
    PVR = ( 2817 / 18066.80 )*100 = 15.6%
     For 2007
    PVR = ( 2691 / 14806.7 )*100 = 18.17%
     A decrease of 14.14% in PVR from last year
    2007 as variable cost of the product is more
    than the increase in sales which led to a
    decrease in PVR
    BRIEF ANALYSIS……
    • BREAK EVEN POINT (BEP)
     For 2008
    BEP Rs. = ( 954.10 / 15.6) = Rs. 6116.02
     For 2007
    BEP Rs. = ( 583.5 / 18.17) = Rs. 3211.34
     An increase of 90% from last year, main
    reason behind being decrease in PVR which
    has led to an increase in BEP indicating that
    the company will now have to sell more in
    order to cover at least its fixed cost.
    BRIEF ANALYSIS……..
     MARGIN OF SAFETY
     For 2008
    MOS Rs. = ( 1730.80 / 15.6 ) = 11094.87
     For 2007
    MOS Rs. = ( 1561.61 / 18.17) = 8594.4
    A 29% increase in MOS from last year - good
    sign for the company - maintaining as well as
    increasing its MOS even in times of recession
    BRIEF ANALYSIS…..
    ACTUAL SALES

    y
    a fet
    S
    of
    BREAK EVEN POINT rgin
    Ma

    ss
    Lo

    You might also like