'Analysis of Divisional Performance of Asian Paints Ltd\r'

'DEPARTMENT OF art SCHOOL OF MANAGEMENT PONDICHERRY UNIVERSITY ASSIGNMENT ON modernistic COST ACCOUNTING ANALYSIS OF divisional murder OF ASIAN PAINTS LTD SUBMITTED TO: -SUBMITTED BY: †DR. G. SHANMUGHASUNDARAM A. PURUSHOTHAMAN ASSOCIATE PROFESSOR M. COM (BUSINESS FINANCE) DEPT. OF avocation 2nd YEAR PONDICHERRY UNIVERSITY REG. NUMBER: 11351059 INTRODUCTION DIVISIONAL PERFOMANCE OF COST CENTRE AND PROFIT CENTRE A network effect is a social building block of a caller that hand overs revenue in excess of its expenses. The chief(prenominal) aim of profit centre is to earn profit.The process of profit centre is evaluated in terms of whether the centre has been achieved its work outed profit A  damage centre is a business building block that is only responsible for the  be that it incurs. The manager of a terms centre is non responsible for revenue generation or plus usage. The deed of a cost centre is unremarkably evaluated through the comparison of budgeted to actual costs. The costs incurred by a cost centre whitethorn be aggregated into a cost pool and allocated to another(prenominal) business wholes. Investment centre is responsible for both(prenominal) profit and enthronization.The enthronement centre manager has swear oer revenue, expenses and the kernel invested in the current assets. The by-line are the techniques used to measure the divisional performance of cost centre and profit centre * segmentation analysis * Profit * Return on investment * Market voice COST PER UNIT: personify refers to the total cost incurred for the employment. So cost per unit of quantity refers to the cost incurred for producing 1 unit. Normally we used the under convention to calculate the cost per unit comprise/unit = total cost / No. of unit produced COST PER UNIT twelvemonth| Production| gibe expenses| COST PER UNIT| 008| 40946. 7| 559586| 0. 073173203| 2009| 50418. 7| 602922| 0. 083623918| 2010| 57937. 2| 7 32142| 0. 079133829| 2011| 72582. 9| 849056| 0. 085486587| Interpretation: The above give in and chart shows the cost per unit of Asian paints India ltd. They incurred highest cost per unit in the year 2011. This whitethorn because increasing the cost of raw material or other charges etcetera It is wear out to ease up get cost per unit because when cost per unit increases the total cost volition increase. That in turn reduces the favourableness of a immobile. In the 2008 the firms have got turn down cost per unit of production compared to other old age.So may be this year the profit is increased. The cost per unit is higher in the old age 2011 and 2009. COST VARIANCE exist variant (CV) is the amount of money that was actually spent on a project or a part of a project compared to the amount of work that was actually accomplished. Cost dissonance = Budgeted cost of work performed †The actual cost of work performed. YEAR| heart and soul COST| step| COST VARIANCE | DECISION| 2008| 40946. 7| 61276. 54| -20329. 84| A| 2009| 50418. 7| 61276. 54| -10857. 84| A| 2010| 57937. 2| 61276. 54| -3339. 34| A| 2011| 72582. 9| 61276. 54| 11306. 6| F| 2012| 84,497. 20| 61276. 54| 23220. 66| F| Interpretation: hither from 2008 to 2010 there is a tender situation because in these years actual cost is less than measuring cost. In 2011 and 2012 actual cost exceeds standard cost. That may be because of increase in the cost/unit in these years. cut-rate saleS VARIANCE Sales variance is the difference between actual gross revenue and budget gross revenue. It is used to measure the performance of a sales function, and/or analyze business results to better deduct market conditions. Sales variance = Actual sales †standard sales division 1= PaintYEAR| SALE| STANDARD| sales VARIANCE| DECISION| 2008| 39062. 2| 51731. 3| -12669. 1| A| 2009| 48641. 9| 51731. 3| -3089. 4| A| 2010| 56135| 51731. 3| 4403. 7| F| 2011| 63086. 1| 51731. 3| 11354. 8| F| Segment 2= O thers YEAR| SALE| STANDARD| gross sales VARIANCE| DECISION| 2008| 1731. 7| 1717. 375| 14. 325| F| 2009| 1634. 5| 1717. 375| -82. 875| A| 2010| 1774| 1717. 375| 56. 625| A| 2011| 1729. 3| 1717. 375| 11. 925| A| TOTAL SALES VARIANCE YEAR| TOTAL SALES| STANDARD| COST VARIANCE | DECISION| 2008| 40,946. 70| 62,655. 72| -21,709. 02| A| 2009| 50,418. 70| 62655. 72| -12,237. 02| A| 2010| 57,937. 0| 62655. 72| -4,718. 52| A| 2011| 72,582. 90| 62655. 72| 9,927. 18| F| 2012| 91,393. 10| 62655. 72| 28,737. 38| F| INTERPRETATION Sales variance is higher in the year 2012 which means that association sold to a greater extent than standard sales in the year 2012. And the 2011 too have the favorable judge but it is lower than 2012. From 2008 to 2010 companion plentynot sold much than standard sales. That is an unfavorable situation for the company. MARKET helping The percentage of an industry or markets total sales that is earned by a particular company over a specified time close is known as market share.Market share is measured by taking the companys sales over the plosive and dividing it by the total sales of the industry over the same period. This metric is used to give a general idea of the size of a company to its market and its competitors. Market share Year| jibe sales| Industrial sales| Market share | 2008| 40,946. 70| 348047| 11. 76| 2009| 50,418. 70| 393266| 12. 82| 2010| 57,937. 20| 260717| 22. 22| 2011| 72,582. 90| 834703| 8. 70| 2012| 91,393. 10| 868,234. 00| 10. 53| Interpretation: caller-out has highest market share in the year 2010. It is decreased in the subsequent years may be because of increased hurt of the products.WORKING hood numeral OVER proportion A measurement comparing the depletion of working capital to the generation of sales over a given period called as working capital turn over ration. This provides or so useful information as to how effectively a company is using its working capital to generate sales. WORKING CAPI TAL TURN OVER RATIO YEAR| TOTAL SALES| live ASSETS| CURRENT LIABILITIES| WC| WCTOR| 2008| 40,946. 70| 8,686. 30| 8018. 6| 667. 70| 61. 32| 2009| 50,418. 70| 10,403. 70| 7811. 4| 2,592. 30| 19. 45| 2010| 57,937. 20| 11,981. 00| 10588. 7| 1,392. 30| 41. 61| 2011| 72,582. 90| 15,475. 70| 11952. | 3,522. 90| 20. 60| 2012| 91,393. 10| 19,927. 70| 16008. 9| 3,918. 80| 23. 32| Interpretation: here(predicate) working capital ratio is higher in the year 2008. This means that company may have adequate working capital for their operation in 2008. Working capital to ratio is very lower in the subsequent years (i. e. 2009 to 2012), it shows that company is struggled with unequal to(predicate)ness of working capital in that years. INVENTORY TURN OVER RATIO Inventory Turnover proportionality is one of the skill ratios and measures the number of times, on average, the live impart is sold and replaced during the fiscal year.Inventory Turnover Ratio formula is: year| Total sales| opening stock | closing stock| Avg stock| ITOR| 2008| 40,946. 70| 40,946. 70 | 42,954. 70 | 41,950. 70 | 97. 61| 2009| 50,418. 70| 50,418. 70 | 52,427. 70 | 51,423. 20 | 98. 05| 2010| 57,937. 20| 57,937. 20 | 59,947. 20 | 58,942. 20 | 98. 29| 2011| 72,582. 90| 72,582. 90 | 74,593. 90 | 73,588. 40 | 98. 63| INTERPRETATIONA low inventorying disorder ratio is a signal of inefficiency, since inventory usually has a rate of return of zero. It in like manner implies all poor sales or excess inventory. A low swage rate can orient poor liquidity, possible overstocking, and obsolescence, but it may also reflect a planned inventory buildup in the case of material shortages or in prospicience of rapidly rising prices. In our case the 2008 has the lower turnover rate. A high inventory turnover ratio implies either strong sales or ineffective buying (the company buys too a lot in small quantities, therefore the buying price is higher).A high inventory turnover ratio can indicate better liquidity, but it can also indicate a shortage or inadequate inventory levels, which may lead to a injury in business. Here the years from 2009 to 2011 there is incessant turnover rate. RETURN ON INVESTMENT A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. The objective of every firm is to earn a satisfactory return on capital invested. This is the measure of success i. e. it shows the overall profitability of the firm. ROI = PAT/ cap. Employed YEAR| PBIT| CAPILAT EMPLOYED| ROI| 2008| 5925. | 9,285. 00| 63. 81583199| 2009| 6075. 9| 10,944. 70| 55. 51454128| 2010| 10526. 9| 15,572. 20| 67. 60059593| 2011| 11636. 7| 19,753. 20| 58. 91045501| 2012| 14,086. 30| 24,877. 80| 56. 62196818| INTERPRETATION The above table and chart implies us, The ROI is higher in the year 2008. The Company gets 63. 82% as return on investment. This may because; in this year company sold more than the standard sales. So return on investment is increased. Company received lowest ROI in the year 2009 CONCLUSION: The Asian paints ltd is having an indifferent performance levels, they have both positive and negative performance indicators.The sales variance is for the last two years is favorable for the company, and also all other indicators such as cost variance favorable for the firm. Another liaison is that market share of the company shows a diminish trend due to decrease in sales. The inventory and working capital of the company is also not good. So it is important for the company to focus on to improve sales volume with higher turnover, better maintenance of working capital. And to try to get more return on investment by hug necessary measure and techniques.\r\n'