A
Synopsis
ON
“COST ANALYSIS AND CONTROL”
AT
“HYUNDAI MOTORS LIMITED”
Submitted in partial fulfillment of the requirement for the award
of the degree of
"MASTER OF BUSINESS ADMINISTRATION",
By
KAILASA SNEHA
Roll No: 1045-20-672-055
Under the guidance of
------------------------------
OU PG COLLEGE
(Affiliated to Osmania University)
Narsapur, medak district.
2020-2022
INTRODUCTION
Cost is essential in every walk of our life – national, domestic and Business. A cost is
prepared to have effective utilization of funds and for the realization of objective as
efficiently as possible. Costing is a powerful tool to the management for performing its
functions i.e., formulation plans, coordination activities and controlling operations etc.,
efficiently. For efficient and effective management planning and control are tow highly
essential functions. Costing and cost control provide a set of basic techniques for planning
and control.
A cost fixes a target in terms of rupees or quantities against which the actual performance is
measured. A cost is closely related to both the management function as well as the accounting
function of an organization.
As the size of the organization increases, the need for costing is correspondingly more
because a cost is an effective tool of planning and control. Cost is helpful in coordinating the
various activities (such as production, sales, purchase etc) of the organization with result that
all the activities precede according to the objective. Costs are means of communication. Ideas
of the top management are given the practical shape. As the activities of various department
heads are coordinated at the much needed for the very success of an organization. Cost is
necessary to future to motivate the staff associated, to coordinate the activities of different
departments and to control the performance of various persons operating at different levels.
Costs may be divided into two basic classes. Capital and operating costs. Capital cost is
directed towards proposed expenditure for new projects and often require special financing.
The operating costs are directed towards achieving short-term operational goals of the
organization for instance, production or profit goals in a business firm. Operating costs may
be sub-divided into various departmental of functional costs.
Definition of 'Cost-Benefit Analysis'
A process by which business decisions are analyzed. The benefits of a given situation or
business-related action are summed and then the costs associated with taking that action are
subtracted. Some consultants or analysts also build the model to put a dollar value on
intangible items, such as the benefits and costs associated with living in a certain town. Most
analysts will also factor opportunity cost into such equations.
You may have been intensely creative in generating solutions to a problem, and rigorous in
your selection of the best one available. This solution may still not be worth implementing, as
you may invest a lot of time and money in solving a problem that is not worthy of this effort.
Cost Benefit Analysis or cba is a relatively simple and widely used technique for deciding
whether to make a change. As its name suggests, to use the technique simply add up the value
of the benefits of a course of action, and subtract the costs associated with it.
Costs are either one-off, or may be ongoing. Benefits are most often received over time. We
build this effect of time into our analysis by calculating a payback period. This is the time it
takes for the benefits of a change to repay its costs. Many companies look for payback over a
specified period of time – e.g. three years.
In its simple form, cost-benefit analysis is carried out using only financial costs and financial
benefits. For example, a simple cost/benefit analysis of a road scheme would measure the
cost of building the road, and subtract this from the economic benefit of improving transport
links. It would not measure either the cost of environmental damage or the benefit of quicker
and easier travel to work.
OBJECTIVES OF STUDY
The study has the following:
To provide the material frame work of cost and Cost Control Analysis
To describe the profit of the organization as a backdrop for undertaking a study of
Cost Benefit Analysis.
To analyze the cost system in practice in HYUNDAI MOTORS with particular refer-
ence to their objectives and phases of organizational and re-appropriation.
In addition to the analysis of the conventional cost system in practice in HYUNDAI
MOTORS. The study aims at evaluation and modification to the current cost system
with reference to the various types of costs. The scope in the formulation of perfor-
mance cost is also studied.
To analyze the Cost system in practice in HYUNDAI MOTORS with particular ref-
erence to their objectives and phases of organizational and re-appropriation.
In addition to the analysis of the conventional Cost system in practice in HYUNDAI
MOTORS. The study aims at evaluation and modification to the current cost system
with reference to the various types of costs. The scope in the formulation of perfor-
mance budget is also studied.
To study the cost estimates and the revenue expenditure and revenue receipts.
To study the variations of the actual from the cost estimates.
To study the working of the financial department at HYUNDAI MOTORS.
SIGNIFICANCE OF THE STUDY
Since it will not be possible to conduct a micro level study of all type industries in Telangana,
the study is restricted to HYUNDAI MOTORS only.
NEED OF THE STUDY:
The importance of cost reduction programs within a company cannot be overstated.
Companies that are losing money, need to increase profits, or must become more competitive
need to cut expenses in order to succeed. Knowing how to implement effective cost reduction
strategies can be the determining factor in the survival of a business.
When a company must generate more cash as fast as possible, management will have to
decide which costs can be most effectively reduced. If the reduction is needed quickly,
expenses cut first will normally be those that are not fixed or directly tied to production. It is
not a good idea to drastically reduce expenses that produce the company product or service
without careful evaluation.
If your company understands the importance of cost reduction as a tool to increase
profitability, the company will have a much better chance of remaining profitable no matter
what stage of the economic cycle is occurring. That is because cost reduction is an effective
tool that can be responsive to a company's need. Managing expenses is just as important as
managing revenue.
Keeping the competitive edge means keeping the company razor sharp. There is no room for
laxness which dulls the ability of a company to be responsive to market trends. Changes can
occur rapidly, and a company that cannot respond with new methods, new material usage,
service efficiency changes, or technological adaptability will be quickly outperformed by
other businesses. The importance of cost reduction strategies lies in its contribution to a
company's honing of performance.
RESEARCH METHODOLOGY:
SOURCES OF DATA:
The data of HYUNDAI MOTORS have been collected mainly from secondary sources viz.,
Form the concerned officers of the HYUNDAI MOTORS
HYUNDAI MOTORS journals.
Accounting books, records.
Key books of concerned title.
Statistical records
HYUNDAI MOTORS library.
Research tools
METHODOLOGY:
The proposed study is carried with the help of both primary and secondary sources of
data.
PRIMARY DATA:
The primary data is collected by interacting with the finance manager and other concerned
executives at the administrative office of the company.
SECONDARY DATA:
All the secondary data used for the study has been extracted from the annual reports, manuals
and other published material of the company.
LIMITATIONS:
Estimates are used as basis for cost plan and estimates are based mostly on available
facts and best managerial judgment
Cost control cannot reduce the managerial function to a formula. It is only a manage-
rial.
Tool which increase effectiveness of managerial control.
The use of cost may be to restricted use of resources. Costs an often taken as limits.
Efforts may therefore not be made to exceed the performance beyond the cost targets.
Frequent changes may be called for in costs due to first changing industrial climate.
In order that a system may be successful, adequate costs education should be imparted
at least through the formative period. Sufficient training programs should be arranged
to make employees give positive response to cost activities.
The study is the limited up to the date and information provided by HYUNDAI MO-
TORS and its annual reports.
BIBLIOGRAPHY
Text Books:
Prasannachandra Investment Analysis and Portfolio Management TMH, 3 rd Edi-
tion
Charless.P.Jones Investment Analysis and Management, John Wiley and
Sons,Inc.9th Edition
Alexander G.J. Sharpe W.F and Balley. J.V. Fundamentals of investment, PHI,3 rd
Edition
ZviBodie,Alexkane, MarcusA.J,PitabasMohanty,investment,TMH,8th Edition
Journals:
weiss, neil s & yang, james g. s,The cash flow statement: problems with the cur-
rent rules published on 1995.
Cheng et al, the relevance of the reported cash flow statements to investors pub-
lished on 1997.
priyabrata adhikary , pankaj kumar roy , asis mazumdar,multi-dimensional fea-
sibility analysis of small hydropower project in india: a case study published on
January 2015.
James D. Stice, Teaching Operating Cash Flow: One Matrix for Analysis – Two
Methods for Presentation published on 4 January 2020.
Newspapers:
Times of economics
Business line
Business standard
Websites:
www.financeindia.com
www.cashflowstatement.com
