A PROJECT REPORT ON

A STUDY OF COST AUDIT,COST ACCOUNTING RECORD RULES

WITH THE SPECIAL
REFERENCE OF
NATURALIS PRIVATE LIMITED.

SUBMITTED BY
Mr. MAHESH SITARAM BENDAL.

IN PARTIAL FULFILLMENT OF THE MASTER DEGREE OF COMMERCE

IN THE SUBJECT
COST & WORKS ACCOUNTING

PROJECT GUIDE

Dr. Dakle S.P.

SUBMITTED TO
SAVITRIBAI PHULE PUNE UNIVERSITY

THROUGH
DEPARTMENT OF COMMERCE
MAMASAHEB MOHOL COLLEGE
PAUD ROAD, PUNE- 411038
ACADEMIC YEAR
2020-2021
 MAMASAHEB MOHOL COLLEGE
ARTS, SCIENCE, AND COMMERCE COLLEGE, PAUD ROAD, PUNE – 411038

DECLARATION

The understand here by declared that the project report presented in this
dissertation titled “ To study of Cost Sheet of NATURALIS PVT. LTD .” is an
outcome of my effort, under the guidance of DR. DAKLE S .P
and submitted the same requirement for the award of the degree of master of
commerce .
I also declared that no one has submitted this previously this dissertation or part there of any
degree of any university.

Place: Pune Researcher:

Date: (MAHESH SITARAM BENDAL)

 MAMASAHEB MOHOL COLLEGE
ARTS, SCIENCE, AND COMMERCE COLLEGE, PAUD ROAD, PUNE – 411038

Certificate of Research Guide

This is to certify that this dissertation title “To study of cost sheet of NATURALIS
PVT. LTD . is an original work of Mr. MAHESH SITARAM BENDAL . Done
under my guidance and supervision for the award the degree of master of
commerce of faculty of commerce as per the requirement of Savitribai Phule Pune
University.

I also certified that nobody has previously submitted this Master of Commerce
dissertation or part thereof for degree of any university.

Place – Pune
Research
Guide

Date - (DR. DAKLE S.P)

 MAMASAHEB MOHOL COLLEGE
ARTS, SCIENCE, AND COMMERCE COLLEGE, PAUD ROAD, PUNE – 411038

Certificate

This is certify that Mr. MAHESH SITARAM BENDAL student of M. Com. –

II year has completed his project on “To study of cost sheet of NATURALIS
PVT. LTD.” has submitted a satisfactory report as per the requirement of
Savitribai Phule University, in partial fulfilment of M.Com-II course in the
Academic year 2020-2021.

M.Com. In charge H.O.D.

Principal

Internal Examiner

External Examiner
Place – Pune

Date:-

ACKNOWLEDGEMENT

This project report “Cost sheet of NATURALIS PVT.LTD .” Would not have been
possible without the valuable numerous people on the outside. I would like to express
my sincere gratitude to Principal, Course – coordinator, department of commerce and
research centre of Mamasaheb Mohol College, Paud Road, Pune- 411038.
I extend my sincere attitude gratitude to the head of department for their
continuous encouragement and support. I will always remain in depth to them. I also my
sincere gratitude to my project guide Dr. Dakle S.P. he has given me suggestion in going
about the project. He also imparted is valuable inside and help me bring the project
report in this shape.
I also acknowledge thanking to Kumbhar Sanjay library at Mamasaheb Mohol
College he also help me in getting reference books and other useful material. I
also thankful to my classmate in clarify different ideas in report. I also wish to express
my sincere gratitude to the non-teaching staff of our college.
I also thank for the staff and special thanks for my friends. I wish to avail myself
of this opportunity, to express a sense of gratitude and love to my friends and my
beloved parents for their mutual support, strength, help for everything.

( MAHESH SITARAM BENDAL )

 INDEX

Sr. No. Title Page No.

Chapter No. 1 Introduction 8

Meaning and Definition 9
Objective of the study 10
Scope of the study 11
Importance of the study 11
Significance of the study 12
Advantage and Disadvantage 12
Chapter No.2 Research and Research Methodology 14 to 24
Research Method 17
Research Methodology 21
Primary data 22
Hypothesis 23
Limitation of study 24
Chapter No.3 Literature Review 17 to 24
Chapter No. 4 Profile of the Company 26
Cost Sheet 27 to 28
Chapter No. 5 Cost Sheet Analysis of Data 30 to 31
Chapter No.6 Conclusion and Suggestion
1)Conclusion 33 to 34
Chapter No.7 Appendices
1) Bibliography 36
 CHAPTER NO. 1

INDEX

Sr. No. Title Page No.

Chapter No. 1 Introduction 8
Meaning and Definition 9
Objective of the study 10
Scope of the study 11
Importance of the study 11
Significance of the study 12
Advantage and Disadvantage 12
 CHAPTER -1

INTRODUCTION

1.1 INTRODUCTION:-

The concept of costing is stated to have originated from engineers. But putting
the costing information in a formal set of records amounts to „Cost Accounting‟
cost audit presupposes the existence of cost accounts. Cost accounting is process
of accounting by which relevant data are collected, classified, analysed and
interpreted with a view to present current and/or prospective cost of selected,
centre for costing. A system of cost accounting embraces identification,
ascertaining, allocation, apportionment and/or assignment of cost data to
respective centres.

The policies of our government are directed towards economic growth with social
justice, in this context, it is always necessary to examine whether the operation of
industrial ventures is contributing to the good of the society and does not in any
way harm the society, for this purpose, quantitative data should be generated
and should be authenticated to verify the fact.

The policies of our government are directed towards economic growth with social
justice. In this context, it is always necessary to examine whether the operation of
industrial ventures is ventures is to the good of the society and does not in any
way harm the society. For this purpose, quantitative data should be generated
and should be authenticated to verify the fact.
1.2 Cost Centre

Cost centre refers to a particular area of activity and there may be multiple cost centres
in an organization. Every cost centre adds some cost to the product and every cost
centre is responsible for all its activity and cost. A cost centre may also be called a
department or a sub-department. There are three types of cost centres:
 Personal and Impersonal Cost Centres - A group of persons in an organization
responsible as a whole for a group activity is called a personal cost centre. In case
of impersonal call centre, the activities are done with the help of plant and
machinery.

 Operation and Process Cost Centres - The same kind of activity is done in an
operation department. In a process cost centre, as the name suggests, different
kinds of processes are involved.

 Product and Service Cost Centres - A department where all activities refer to
product is called a product department. When the centres render their services
to a product department for its smooth functioning, they are called service cost
centres

1.3 MEANING:-
Cost Audit represents the verification of cost accounts and check on the adherence to
cost accounting plan. Cost Audit ascertains the accuracy of cost accounting records to
ensure that they are in conformity with Cost Accounting principles, plans, procedures
and objective. Cost Audit comprises following;

 Verification of the cost accounting records such as the accuracy of the

 cost accounts, cost reports, cost statements, cost data and costing
, technique and
 Examination of these records to ensure that they adhere to the cost
 accounting principles, plans, procedures and objective.
1.4 DEFINITION:-

1) SMIT AND DAY :-

Cost Audit means “Detailed checking of costing system, technique and accounts to
verify their correctness and to ensure adherence to the objective of accounting”.

2) THE INSTITUTE OF COST AND WORKS ACCOUNTANS OF INDIA:-

“Cost Audit can be defined as verification of the correctness of cost accounts and
adherence of the cost accounting principles, plans and procedures.”

1.5 Objectives of Cost Audit:-

 To establish the accuracy of costing data. This is done by verifying the
arithmetical accuracy of cost accounting entries in the books of accounts.
 To ensure that cost accounting principles are governed by the
management objectives and these are strictly adhered to in preparing
cost accounts.
 To ensure that cost accounts are correct and also to detect errors, frauds,
and wrong practice in the existing system.
 To check up the general working of the cost department of the
organization and to make suggestions for improvement.
 To help the management in taking correct decisions on certain important
matters
 To determine the actual cost of production when the goods are ready.
1.6 ADVANTAGES OF COST AUDIT:-

 Cost audit provides reliable cost data for managerial decisions.

 Cost audit helps management to regulate production

 Cost audit acts as an effective managerial tool for the detection of errors, frauds
and irregularities so that reliable and smooth functioning of the system is
continued.

 Cost audit reduces the cost of production through plugging loopholes relating to
wastage of material, labour and overheads.

 Cost audit can fix the responsibility of an individual wherever irregularities or

wastage are found.

 Cost audit improves efficiency of the organization as a whole and

costing system in particular by constant review, revision and checking or routine
, procedures and methods.

 Cost audit helps in comparing actual results with budgeted results and points out
the areas where management action is more needed.

 Cost audit also enables comparison among different units of the factory in order
to find out the profitability of the different units.

 Cost audit exercises moral influence on employees which keeps them efficient
and alert.

 Cost audit ensures that the cost accounts have been maintained in accordance
with the principles of costing employed in the industry concerned .
1.7 DISADVANTAGES OF COST AUDIT:

Expensive

One primary disadvantage associated with cost audits is the excessive fees.
Auditors are typically independent contractors who can charge relatively high
prices for services rendered.
In addition to initial charges, auditors may increase fees in the middle of the
project if companies fail to prohibit such action in the contract. A person or
corporation can essentially go from paying $4,000 to $6,000 for an audit.

Lengthy

Cost audits are also lengthy processes that require employee devotion.
Although the auditor may be an outside contractor, employees must provide
requested information and be accessible in case further explanation of documents
is necessary.

Lost Time

Although thorough, an auditor’s report is usually given three to five weeks after
the balance sheet is released. This means people who have been stealing from an
establishment have nearly a month to form an excuse or leave the company.

Uncertainty

Because a major part of the process involves estimating, there’s the possibility of
numerical figures being wrong.
 CHAPTER NO -2

PROFILE OF THE COMPANY

Chapter No.2 Research and Research Methodology 14 to 24

Research Method 17
Research Methodology 18-20
Primary data 21
Hypothesis 21-22
Limitation of study 22-24
 2.1 PROFILE OF THE

COMPANY:

ABOUT COMPANY:-

Established in the year 2019 we " NATURALIS SOAP co." is a

manufacturer of the wide spectrum Natural Soap Base And Herbal
Soaps. We are manufacturing these product using premium grade
row material that is procured from the authentic vendors of the
market. we offer these products at reasonable rates and deliver
these within the promised time-frame.

we have hired an adroit team of employees, which keeps themselves

abreast with advanced manufacturing techniques and designs.
Further, we check our entire range on defined parameters like
design, quality, and finish. All units and equipped with all the
essential tools, machine, and technology in order to manufacture a
high- quality range of product.

under the valuable guidance of our mentor, Mr. Shubham Sharma,

We are growing with a notable rate in the market. He has spent long
years in the industries experience enabling us to understand the
varied requirements of our clients.
 FORM-II
2.4 COST AUDIT REPORT
[See rule 2 and rule 6]

We, Vijay Mishra & Co. having been appointed as Cost Auditors under Section
233B of the Companies Act, 1956 (1of1956) of having its registered office at
212/32 Sadashiv peth,Tilak Road, pune . (hereinafter referred to as the
company), have audited the books of account prescribed under clause (d) of
subsection. (1) of section 209 of the said Act, and other relevant records in respect
of the Soap Manufacturing & Exporter for the financial year 2011-12
maintained by the company and report, in addition to our observations and
suggestions.

(i) We have obtained all the information and explanations, which to the best of
our knowledge and belief were necessary for the purpose of this audit.

(ii) In opinion, proper cost records, as per Companies (Cost Audit Report) Rules,
2011 prescribed under clause (d) of sub-section (1) of section 209 of the
Companies Act, 1956, have been maintained by the company so as to give a true
and fair view of the cost of production/operation, cost of sales and margin of the
product/activity groups under reference.

(iii) In our opinion, proper returns adequate for the purpose of the Cost Audit have
been received from the branches not visited by us.

(iv) In our opinion and to the best of our information, the said books and records
give the information required by the Companies Act, 1956, in the manner so
required.

(v) In our opinion, the said books and records are in conformity with the Cost
Accounting Standards issued by The Institute of Cost and Works Accountants of
India; to the extent these are found to be relevant and applicable.
(vi) In our opinion, company has adequate system of internal audit of cost records
which to our opinion is commensurate to its nature and size of its business.

(vii) Detailed unit-wise and product/activity-wise cost statements and schedules

there to in respect of the product groups/activities under reference of the company
duly audited and certified by us are kept in the company.

(viii) As required under the provisions of The Companies (Cost Audit Report)
Rules, 2011, we have furnished Performance Appraisal Report, to the company, on
the prescribed form.

2 Observations and suggestions, if any, of the Cost Auditor, relevant to the cost
audit.

Dated: this 15 days 25 may 2021

At Pune:

CHAPTER NO. 3
 RESEARCH AND RESEARCH METHODOLOGY

Chapter No.3 Literature Review 17 to 24

3.1 RESEARCH:-

INTRODUCTION:-
The word "research" originated from the old French word "recerchier" meaning to
search and search again. it literally implies repeating a search for something and
implicitly assume that the earlier search was not exhaustive and complete in the
sense that there is still scope for improvement. Research common parlance refers
to a specific topic/ area. Accumulation of the new knowledge is essential for
humanity’s survivaland progress and research provides the means for acquiring
such knowledge.

A) MEANING OF RESEARCH:-

Research in common parlance refers to a search for knowledge. Once

canalso define research as a scientific and systematic search for pertinent
information and a specific topic in fact, research is an art of scientific investigation.

Research is an academic activity and as such the term should be used

in atechnical sense. According to Clifford woody research comprises defining and
redefining problems, formulating hypothesis and suggested solutions, collecting,
organizing and evaluation data. It is the pursuit of truth with the help of study,
observation, comparison and systematic method of finding solutions to problems is
research.

Consisting of enunciating a problem, formulating of a hypothesis,

collecting the facts of data, analysing the facts and reaching certain generalization
for some theoretical formulation.

The purpose of research is to discover answer to question through the

application of scientific procedures. The main aim of research is to find out the
truth
which in hidden and which have not been discovered as yet. Though each research
study has its own specific purpose, we any think of research objectives as falling
into
a number of following broad groupings.

B) DEFINITION:-
i) “Research is considered to be the more formal, systematic, intensive
process of carrying on the scientific method of analysis. It involves a more
systematic structure of investigation usually resulting in some sort of formal record
of procedures a report of results or conclusions.”

ii) “The process used to collect information and data for the purpose of making
business decisions. The methodology may include publication research, interviews,
surveys and other techniques and could include both present and historical
information.

3.2 RESEARCH METHOD:-

a) HISTROICAL METHOD:-
a. The term history is the record of past events. It has been historical
which means learning or acquiring knowledge.

b. “Historical Method” is the induction of principles through research of

the past and social forces which have shaped the present.

b) COMPARATIVE METHOD:-
a. Comparative method is scientific method in which comparative data
analysis and specific conclusions are derived from its results.

c) STRUCTURAL METHOD:-
Under this method the significant features, the existence of a thing or it
outlines are focused on. Like studying anatomy is a structural study in Science.
4) FUNCTIONAL METHOD:-
This method studies the processes and their causes studies relating to
physiological functioning come under this category and finds out how they are a
thing functioning.
5) INDUCTIVE METHOD:-
This method of research is just the opposite of deductive method. In this
method the research arrives.

6) DEDUCTIVE METHOD:-
Under this method decisions are derived and they show a trend of deducted
from general to the particular inference made from general observation of the
earlier
studies.

3.4 RESEARCH METHODOLOGY:-

INTRODUCTION:-

“Methodology” implies more than simply the methods you intend to use to
collect data. It is often necessary to include a consideration of the concepts and
theories which underlie the methods. For instance, if you intend to highlight a
specific feature of a sociological theory or test an algorithm for some aspect of
information retrieval, or test the ions and/or hypotheses. The methods should be
described in enough detail for the study validity of a particular system; you have to
show that you understand the underlying concepts of the methodology.

When you describe your methods it is necessary to state how you have
addressed the research queues to be replicated, or at least repeated in a similar way
in another situation. Every stage should be explained and justified with clear
reasons for the choice of your particular methods and materials.

There are many different ways to approach the research that fulfils the
requirements of a dissertation. These may vary both within and between
disciplines. It is important to consider the expectations and possibilities concerning
research in your own field. You can do this by talking to your tutors and looking at
dissertations written by former students on your course.
 A) DEFINITION:-

“ Methodology „ is the systematic, theoretical analysis of the methods

applied to a field of study. It comprises the theoretical analysis of the body of
methods and principles associated with a branch of knowledge”.

3.5 PRIMERY DATA:-

Adequate records shall be maintained showing all receipts, issues and

balances in quantities of each item of raw materials and components required for
the
manufacture of electric fans. In respect of raw materials and components, where
only
quantitative records are maintained, rate cards shall also be maintained. In the case
of
materials the value of which is not significant, the company, May, if it so desires
maintain such records for the main groups of materials.

GSR 2298 -In exercise of the powers conferred by sub-section (1) of

Section 642, read with clause (d) of sub-section (1)of Section 209 of the
Companies
Act, 1956 (1 of 1956), the Central Government hereby makes the following rules,
Namely:

1. Short Title commencement: -

(1) These rules may be called the Cost Accounting Records (Electric Fans) Rules,
1969.

(2) They shall come into force on the 1st day of January, 1970.
2. Explanation –
For the purpose of this rule, the expression “small scale industrial undertaking”
means a company –
 A) HYPOTHESIS

 Financial Statements are fairly stated in all material respects for the period
examined.

 Recording, classifying, & summarizing of economic events in a logical

manner for the purpose of providing financial info for decision making

3.6 LIMITATION OF THE STUDY:-

 Rules and regulations regarding cost audit are not clearly described.

 Necessary records, publication may not be available.

 The cost audit information is not available in published financial statement

and
o is not disclosed to unauthorized persons.

 Efforts will be made to accomplish the study according to the objectives.

But as the research learns consist of only few members and they are
scattered that had made difficult to cover in detail.

3.7 OBJECTIVES OF THE STUDY:-

Following were the objective of the study:

1) To understanding the various provisions, rules, regulations regarding to Cost

Audit.

2) To evaluate the awareness level of the companies.

3) To examine various problems regarding Cost Audit.

4) To recommend suggestions to overcome current and potential problems

3.8 SCOPE OF THE STUDY:-

 The scope of cost audit varies widely and depends on the purpose of an
audit.

 The performance of cost audit work depends on the discretionary power on

this part of the auditor.

 Depends on the process of manufacturing and the data or information

maintained by the company.
 Customers may buy products at the most competitive price due to
effective cost control and cost reduction as a result of a cost audit.

3.9 SIGNIFICANCE OF THE STUDY:-

 Cost audit detects errors, frauds and misappropriation and hence

enhances efficiency. Companies become more cautious about keeping cost
data, in case where cost audits were mandatory.

 Cost audits conducted by external auditors detect the standard of

efficiency of management; hence it helps in the improvement of the standard of
utilization of material, labour and other resources.
 Customers may buy products at the most competitive price due to
effective cost control and cost reduction as a result of a cost audit.

3.10 IMPORTANCE OF STUDY:-

  Determination and allocation of cost of products.

 Help in proper valuation of inventory.

 Helps to identity wastage, inconsistency and irregularity in production

and, thus, take corrective measures.

 Cost audit exercises moral influence on employees which keeps them

Efficient and alert.

CHAPTER NO.4
 ANALYSIS AND INTERPRETATION OF DATA

Chapter No. 4 CONTENT of the 26

Company
Cost Sheet 27 To 29
 CONTENT:-

Naturalis private Limited incorporated with MCA on 05

september 2020. The Naturalis Private Limited is listed in the
class of company. This company and Registered at Registered of
companies (ROC), Gujarat with an Authorized share capital Rs.
1lac and with paid up capital is 1 lac.

The company has 0 directed/ key management personal

Naturalis Private Limited company registration number is
116227 and its corporate identification Number (CIN) provided
from MCA is U73200GJ2020PTC11627.

COST SHEET

UNITS OF PRODUCTION = 170000

PARTICULAR PER UNIT PRICE TOTAL
PRICE

DIRECT MATERIAL 5.8 1000000

Acids 1.76 300000

Speciality chemicals 1.47 250000

Ordinary chemicals 1.76 300000

Perfumes .21 35000

TOTAL 1.29 220000

Direct labour

Direct expense 3.11 530000

Prime cost 15.4 4134500

Factory overheads :

Fixed:
Depreciation 1.47 250000

Rent .58 100000

Power 1.02 175000

Insurance 0.88 150000

Supervisors salary 0.35 60000

Variable:

Electricity 0.41 70000

Running exp. Of machine .58 100000

Work cost/ factory cost 20.69 5039500

Office overheads:
Employee cost 5.8 1000000
Other exp.
Computer 0.71 120000

Telephone 0.06 10000

Taxes 0.24 40000

Carriage out ward 0.12 20000

Cost of production 27.62 6229500

opening stock of finished goods 2 200000

-Closing stock of finished goods 0 0

Cost of goods sold 29.62 6429500

Selling & distribution overheads:

Advertisement 2.35 400000

Delivery vehicles 2.06 350000

Petrol 1.03 175000

Packaging rates 0.3 50500

Cost of sales / total cost 35.36 7405000

Profit 18.51 3146700

Sales 53.87 10551700

 CHAPTER 5

FINDING AND SUGGESUTIONS

Chapter No. 5 COST SHEET 31 to 32

ANALYSIS
 COST SHEET ANALYSIS
Information:-

 Selling & distribution overheads:

 Advertisement 2.35 400000

 Delivery vehicles 2.06 350000

 Petrol 1.03 175000

  Packaging rates 0.3 50500

 Depreciation 1.47 250000

 Rent .58 100000

 Power 1.02 175000

With the help of factory overhead , administration overhead & selling and distribution

overhead we can characterise the cost sheet and the total sales of laxmi soap factory is
10551700.

With the help of this information we can easily identify :-

 Pvr

 Breakeven point in rupees

 Breakeven point in units

 CHAPTER NO 6

CONCLUSION

Chapter No.6 Conclusion and

Suggestion
1)Conclusion 34 to 35
 CONCLUSION :-

 PVR = Cost/ sales

= 7405000/ 10551700
= 0.70

Note:- to better understanding we can say that PVR is 70%.

 Breakeven point (rupees) = fixed cost/ PVR

= 735000/ 0.70
= 1050000

Fixed cost include :-

Depreciation 1.47 250000

Rent .58 100000

Power 1.02 175000

Insurance 0.88 150000

Supervisors salary 0.35 60000

 Breakeven point (Unites) = fixed cost/ cost

= 735000/7405000
= 0.099

 Margin of safety Ratio = profit/ PVR

= 3146700/0.70
= 4495285.7
 CHAPTER NO 7

BIBLIOGRAPHY

Chapter Appendices
No.7
 1) Bibliography 37

BIBLIOGRAPHY:-
 http://icabtutorial.com/costsheet-format/
 http://www.moneycontrol.com
 www.scribd.com
 www.google.com