APPAJIJ

COST VOLUME PROFIT ANALYSIS
CHAPTER- I
INTRODUCTION
P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri
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Introduction
Today most companies are operating in highly competitive global market. Such a competitive world demands business sector to utilize resources effectively. For long term survival and profitability, it needs to be cost competitive. So, every business organization has to get all information in optimizing the benefits from the use of scarce resources. All such information is highly necessary for reducing and controlling costs. In todays liberalized world, to be competitive on all fronts, companies have to make a continuous monitoring of the happenings on a day-to-day basis. This is necessary for comparing its own performance vis--vis its competitors. Cost volume- profit analysis provides some of such vital data. Cost volume profit analysis is one of the most important planning and evaluation tools available to managers. It provides management with useful information for decision making in several situations. CVP analysis provides knowledge of how cots and revenues will vary with different levels of output and helps in estimating them. CVP analysis systemically examines the relationship among selling prices, sales and production volume, cost and profits. Effects of cost on revenges, volume and profit can also be studied by using this tool.
Thus, CVP analysis is the study of the interrelationships of cost patterns, Level of activity and the results from each alternative combination of cost-volume-profit.
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Need for the study:
In decision making, management of any organization pays a great deal of attention to alternative courses of action. The alternatives involve changes in the level of business activity but profit does not usually vary in direct proportion to these Changes in volume. This is mainly due to varying cost behavior patterns. Better evaluation of the profit opportunities can be made by studying the relationship among cots, volume and profit. CVP analysis provides a sweeping overview of all kinds of changes in sales volume, expenses product mix and sales prices & establishes financial results if a specified level of activity or volume is selected. Thus, it helps in selecting the best alternative available. Sagun Copper Conductors (P) Ltd.., is one of the manufacturing units in the field of copper conductors industry. It is a small scale industrial unit which produces bare and insulated copper conductors. Since from the last decade, most SSI units, in most of the sectors, are facing several severe problems. Many of them have also become unable to compete with foreign companies and large MNCs. In such a situation, it becomes desirable on each SSI unit have each and every information relating to cost and other relevant aspects. IN this context, cost and quality aspects play import roles and this study, helps to analyses the present cost structure of the unit.
It is also important for an SSI limit its risk element downside. The study analyses the extent of risk involved and helps to take important decision.
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Keeping in view the aforesaid, the present study on analysis of cost volume profit relationship a case study of sagun copper conductors Pvt. Ltd has been taken under.
OBJECTIVES OF THE STUDY:

To analyze the present cost structure of Sagun copper conductors Pvt. Ltd. To identify the rate of contribution towards the recovery of fixed costs. To identify the breakeven point of the company and also the level of margin of safety during the study period To examine operating leverages factor and this impact on break even points and margin of safety To examine financial leverage and its impact on financial break even points To examine the effects of combined leverage of the company on its operating profit, To offer some useful suggestions.
Research Methodology:
P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri Page 4

This study is based on the data collected from the official records and other relevant information provided by the company. The primary data is collected through interview made with the commercial manger of the company. The secondary data is collected for five years I.e from 1999-2000. To 2003-2004. This data is from the records provided by the company and other relevant data is collected from different books, wed sites etc.
Research Design: Chapter I: Introduction

This chapter deals with the significance and need for the study objectives of the study research methodology and research designed used for the study.
Chapter II. Sagun copper conductors (P)Ltd. A profile.

This chapter provide details of the unit selected for study I.E sagun copper conductors (P)L:td.
Chapter III:C.-V-PN Analysis: A conceptual Framework

This chapter gives a conceptual framework of cost volume profit analysis it explains about CVP relations, Procedure and practical applications assumptions of CVP analysis.
Chapter IV- analysis and interpretation of data

This chapter contains a detailed analysis of the data collected. It throws light on the income statement under marginal costing approach profit volume ration ,break even sales margin of safety operating financial and combined leverage aspects and financial and combined leverage aspects and financial breakeven point, P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri Page 5

Chapter V: Finding and suggestions
This chapter provides the summary of finding of the study it also provides some suggestions for improvement.
CHAPTER- II
COMPANY PROFILE
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COMPANY PROFILE
SAGUN COPPER CONDUCTORS (P) LTD: A PROFILE

Sagun is a combination of two Sanskrit words sa- meaning Good and Gun meaning Quality.
Sagun copper conductors (P) Ltd. ,was founded by a team of profession and engineers to Manufacture the best quality of copper conduction. It was set up under technocrat scheme by its promoters director Sir Paras Nath. B. Yadav, in the year 1998 for the purpose of setting up a small scale unit for manufacture and sales of copper conductors. This unit was financed by the Sham roa Vithal Co-operative Bank Ltd. On liberal terms taking in to consideration the feasibility of the project & the competences of the promoter.
The unit with an initial capacity of 45 MTS per month went into production in the year 1998:Right from the beginning, the promoters have been able to make it a success & the unit has been able to have phenomenal progress the period.
The capacity has been gradually increased & as on date the unit is having a capacity of 50 MTSpm. The sales which were to the extent of Rs.196.10 lakhs during the first year, has gradually increased& for the year ended 31-03-2004.the Company had a business turnover of Rs.500.97 lakhs.
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The success of the company is mainly due to the emphasis laid on the quality of the management from the beginning of the set up. The company an ISO 9002 company in the year October 2000.
The promoter directors are continuing as full time directors looking after the day-to-day management of the company.
VISION IF THE COMPANY:* To manufacture the best range and quality insulated copper conductors. * To be the first choices & preferred supplier for the customers. * To be the number one manufacturer of quality copper conductors *To gain high reputation in the market.QUAL 11 . Y POLICY: * The quality policy of Sagun is to manufacture & market quality Products at competitive price & give customer satisfaction by providing zero defect their quality end products
QUALITY POLICY:The quality policy of sagun is to manufacture & market jollity products at competitive price & give customer satisfaction by providing zero material for their quality end products.
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ABOUT THE ORGANIZATION:

Sagun copper conductors (P) Ltd. Is located at gokul road. Industrial estate 2 Kms, away from national highway & nearest to the airport in the city of Hubli. The plant has a total area of 8190sq. With a build up area of 7000 sq feet. the available space is effectively utilized by providing all the basic facilities for production, testing and to the employees.
The unit being a SSI unit, manufacturing the best range of insulated copper conductors stared in January 1998 by a group industry in Hubli (Karnataka) in the line of manufacture copper conductors.
The company is managed by directors with vast experience in similar line for two and half decades of year of experiences and assisted by experienced shop floor personnel and offices staff.
In a span of two years, the company has been able to produce consisted quality product, Apart from the regular buyers, it also has gained Acceptance of a reliable source of bare/ insukated copper conductors for major original equipment manufacture of transformers and rotating electrical machine in the country.
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Major customers a of the company are:1. Crompton Grieves 2. UPS manufactures 3. Rewinder
Most of the valued customers are certified by ISO.

The company is well equipped with total set of machineries and in house testing facilities for entire range of product manufactured. Process quality is minutely and raw materials are procured from reputed, reliable sources only. All the supplies are accompanied by test reports.
The products manufactured and marketed are

BARE STRIPS & WIRES ENAMELLED STRIPS WIRES VARNISH BONED FIBRE GLASS COVERED STRIPS& WIRES ENAMELLED & VARNISH BONED FIBRE GLASS COVERED STRIPS&WIRES NOMEX/ PAPER/POLYESSTER FILM/ COTTON KAPTON COVERED STRIPS &WIRES These products are used in the in the winding of Electric machines.A.C./D.0 exciters, Dry type Transformers, Hydro generators, Traction motors, armature control coils, etc.
MANUFACTURING FACILITIES
Tandom bull block wire drawing machine with machine accessories including shaving Attaching, Die polishing machine etc. Vacuum Bright Annealing.
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Strip rolling mill
Horizontal Glass coving machine. Chess winding machine. Vertical Strip Enameling Machine for 2-Line operation in Dust proof atmosphere. Rewinding machine. 200KVA Generator set with A.M.F Panel (Automatic Changeover) Material Handing equipments Welding Equipments. Vertical Glass Lapping & Varnish Bonding machine.
TESTING TYPES: Hardness test Elongation Comer radius Resistively Conductivity Bread-Down voltage (BDV) Insulation thickness Adherences Heat Shock BDV at elevated temp Flexibility Cure test
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TAN DELTA (Dielectric Dissipation Factor) Thermal Endurance Springiness Heat Ageing
INFRASTRUCTURAL FACTIELS TO THE COMPANY

Since the factory is loading in industrial estate, it is in a position to get the required infrastructure like Power, water supply at confessionals rates or cost. As the national Highway4 is very nearer to the industry, it is easy for the transportation of raw material & the finished products. Electricity is supplied by Karnataka Power Transmission Corporation Limited. As the process need automatic switchover in case of failure, the automatic failure panel.
MARKETING OF THE PRODUCT

The success of the unit is due to professional management of the company. As the manufactured is an intermediate. The customers are mainly manufactured companies, Marketing is done through direct approach to the customers & also the company has appointed agents at Pune, Mumbai, and Baroda to look after the sales and sales promotion. The company pays the commission to the agents on the basis of quantity of sales of the copper conductors.
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ORGANIZATIONAL STRUCTURE:The organizational structure chart of sagun copper conductors P. Ltd. Is shown in Chart 2.1.
Chart 2.1 Organizational Structure
Chairman / Managing Director
Directors management Representative
Quality assurance
Quality assurance
Quality assurance
Quality assurance
Quality assurance
Quality assurance P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri Page 13
BOARD OF THE DIRECTORS

The project is being promoted by Shri Prashant. P.yaday and Mahendra P. Yayad, the directors of the company.
Shri. Prakash Rathod has vast experience in non-ferrous line for more than thirty five year. The promoters are totally aware of the technical, organizational & financial aspect of this line. They have actively involved in business and conversant with the working of this type of unit.
The promoter and directors are continuing as full time directors looking after the day to day affairs of the company.
RESPONDIBLITIES MANAGING DIRECTOR

Overall functioning of organization, financial matters and administration in the absences of M.D, the below responsibilities get shifted to director.
DIRECTOR: To conduct contract review, to hold review meeting with sales/ Purchase/ production/quality assurances-heads. To interact with HODS for achieving Desired quality standard To take care of training needs. P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri Page 14

In the absences of director, M.R/HODs will take the above responsibilities.
MANAGEMENT REPRESETATIVES:
To arrange for re meeting to communicate quality polices to HODs. To arrange for international quality assurances analysis take corrective & preventive actions. To reduces non- conformances. To interact with inter departments.
HEAD OF THE DEPARTMENT:

Approval, release and revision of department manual, scheduling and monitoring the activities. To take corrective and preventive actions.
SUPERVISOR:
To carry out the department activities as delighted. Maintaining the discipline. Maintaining the quality standards effectively. Issuing the work instructions. Co-ordination with the inter departments.
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FAINANCIAL HILIGHTS
Particulars Sales Share capital Profit after tax Retained earnings Net worth 2006-07 319.72 15.01 4.67 5.28 40.5 2007-08 335.13 30.00 11.94 17.22 67.79 2008-09 263.95 30.00 11.76 28.98 79.54 2009-10 373.18 30.00 11.21 40.20 90.76 2010-11 500.97 30.00 5.53 45.73 96.29
Source: Official records of the Company
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DEPARTMENTALIZATION:QUALITY ASSURANCE DEPARTMENT

QUALITY POLICY To release quality product through application of quality plan at each stage of inspection process.
OBJECTIVES OF THE DEPARTMENT

To control the quality of outgoing product there by minimizing the customers complaint level. To reduces inspection lead time for incoming materials and adhering to quality plans. To establish and maintain document procedure to ensure that the product confirmed to specification.
PROCESS CONTROL:
RESPONSIBILITY:
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Quality assurance has the overall responsibility for the process control and delegates the responsibility to supervisor other staff for charring out various process to meet the specified requirement.
TESTING EQUIPMENTS:
MICROMETERS. MICRO OHM METER, CONUCTMTY METER. TENSIBLE TESTER. HARDNESS TESTER. PROFILE PROJECTOR. BENDTESTING FIXTURES & MANDRELS. BREAKDOWN VOLATGE TESTER MANDRELS. HOT AIR OVENS
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INSPECTION TEST STATUS SL NO. 1 2 3 4 STATUS O. K REWORK A. 0. 13 REJECTED COLOUR GREEN ORANGE YELLOW RED
Control of inspection measuring and testing equipment is also carried out.
INSPECTION IS CARRIED OUT AT THE FOLLOWING STAGES

Incoming inspection and testing. In-process inspection and testing. Final inspection and testing.
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1. If vendor is not approved verify delivery challan or purchase order to ascertain whether the order is for approval is so take up supplies for inspection (wherever necessary) w\n. 2. If supplies are not from an approved vendor trial supply then return goods receipt note to stores with a remark non-conformances 7vender not approved (w/n). 3. Inspect products components as per quality plans. 4. Append the accepted, rejected quantity and non conformance details in goods note. 5. In case f review of non conformance, disposition is carried out per QSP based on quality assurance request from purchase. 6. Control of inspection measuring and testing equipment is also carried out.
CORRECTIVE ACTION PROCEDURE:1. Corrective action is arising out of customer complaints. 2. Whenever customer complaints are received from quality department will take corrective action procedure.
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3. Once in 6 months, the graphical analysis of customer complaints as per customer analysis procedure is received from 4. Quality assurance department. 5. During the meeting the causes of customer complaints are investigated based on the analysis made. 6. The quality assurance will implement corrective actions decided. 7. The HOD monitor the effectiveness of corrective action implemented. 8. The corrective action to reduce the non-conformances is identified and implementation action is initiated. 9. The quality assurances shall implement the corrective action and verified and monitor for defectiveness. 10. Corrective action arising out of product audits. 11. Product audits are conducted as scheduled by quality assurances. 12. The corrective action implemented resulting in improvements shall be incorporated in relevant producer/ book instruction/ other documents as documented. 13. The corrective action shall be maintained which normally would included data collections, analysis and implementation status. 14. The status of implementation of corrective actions will be reported in the forthcoming product corrective action review meeting. 15. The forthcoming product corrective action review meeting. 16. Amend the QSM suitable after obtaining the adequacy report from certifying agency. 17. Prepare draft QSP as per the element of ISO 9002-1994 in relevance to quality system manual (QSM), Policy & objective.
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18. Discuss the QSP in MRC to finalize. 19. Amend the as per the MRC review where ever necessary. 20. Communicate to departmental / sectional heads about the third level of documents with the basic format data.
21. Third level manual are prepaid taking into consideration the work, instruction, nature of work, skills & personnel to be trained. 22. Amend the third level manual suitability & correlate the QSP. 23. Finalize the QSP & department manual board on QSM. 24. Inform all department/sectional heads about the date implementation of the system. 25. Monitor he system implementation through internal quality audit-QSP-17. 26. Amend the QSP and department manuals where ever it is essential with due corrective action taken. 27. Monitor the system for continuous maintenance. 28. Minimize non-conformance report observed during outside agencys audit, 29. Organize pre-assessment of system from certifying agency. 30. Initiate and implement corrective action to reduce non-conformance report observed preaudit.
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SYSTEM PROCEDURE.
1. Appointment of management representatives. 2. Prepare draft of quality system (QSM) after discussion with MD taking into consideration of quality policy of organization. 3. Discuss the quality policy in MRM & finalize policy & necessary quality objectives. 4. Communicate quality policy & objective in the organization. 5. Arrange awareness of ISO 9000 system quality and objective to all employees. 6. Discuss the draft of QSM with all heads including organization chart, responsibility matrix and authority to key personnel. 7. Finalize the QSM in management review committee. 8. Approve QS manual. 9. Distribute the QSM as per the distribution list.
10. Amend the QSM suitable after obtaining, the Adequacy report from certifying agency. 11. Prepare draft QSP as per the element of ISO 9002-1994. 12. In relevance to quality system manual (QSM), policy and objective
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13. Discuss the QSP in MRC to finalize. 14. Amend the asp per the MRC review where ever necessary 15. Communicate to departmental/ sectional heads about the (documents with the basic format data.
16. Third level manual are prepared taking into consideration the work, instruction, nature of work, skills& personnel to be trained. 17. Amend the third level manual & correlate the QSP. 18. Finalize the QSP & department manual board on QSM 19. Inform all departmental/ sectional heads about the date implementation of the system of 20. Monitor the system implementation through internal quality audit QSP-
21. Amend the QSP and-department manuals where ever it is essential with due corrective
action taken.
22. Monitor the system for continuous maintenance.
23. Minimize non- conformance report observed during outside agency audit.
24. Organize pre assessment of system from certifying agency.
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25. Initiate and implement corrective action to reduce non-conformance report observed
during pre-audit.
26. Organize for initial of assessment by citifying agency.
INSPECTION AND DISPATCH OF PRODUST:Whenever customer inspection is involved in coordination with production Q.A, and customer Clear product for dispatch as per order acceptance/ purchase order
Obtain necessary document from transporters L .R copy/ from customers like G.R.N/ acceptance/ Invoice acknowledgement as per Quotation /rate contracts.
WARRANTY
SAGUN COPPER CONDUCTORS PVT.LTD. Has guarantee against defective materials. Goods returned by the customers are replaced with the new product after g testing by the product. The product will be sent according, to the specification of the customers.
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DISTRIBUTION The sales will be based on quality products. Efforts are made to improve the quality of the copper conductors. The sales of copper conductors according to state wise are as under Maharastra Gujarat Karnataka Others 35% 50% 05% 10%
From the above figures, we come to know that the maximum sales of as 4 gun copper conductors PVT .Ltd. is in Gujarat. Almost half of the sales are in Gujarat. However, the sales in Karnataka and other states are lowest. The directors and sales executives of the company are aggressively coming in market in recent days to give support to the distribution of the product and to increase the market shark of copper conductors.
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MATERIAL MANGEMENT DEPARTMENT QUALITY POLICY OF THE DEPARTMENT:

To handle, store, pack and transport the raw material/ finished product such that are least damages.
NATURE OF RAW MATERIALS:

The basic raw material of sagun conductors Pvt Ltd, is copper the raw material is used in the production copper conductors which is procured from various copper manufactures. Raw material availability available from following manufactures: 1. Sterlite industrial Ltd, Hyderabad. 2. Hindustan copper Ltd, Raigad. 3. Indo- Gulf Corporation, Dahej (Gujarat).
RESPONSIBILITIES: To specify the system of handling of product in order to prevent damgages and deterioration and To specify the control to be exercised on packing materials & purchase. Page 27
INSULATING MATERIAL:The insulating material mainly used is fiber glass yarn and enamel/varnishes. The insulating materials are purchased mainly from. The fiber yarn is purchased from: 1. M/S untica, Japan 2. MIS owens Corning U.S.A The enamel / Varnish are purchased from: 1. M/s dow coring U.S.A 2. MIS Dr.Beck & co. Pune.
PACKING MATERIALS:
The packing materials are mainly wooden reels, polythene plastic, etc.the wooden are mainly purchased from. 1. M/s Kaiser spools, Bangalore. 2. M/S ruby industries, Bangalore.
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STORAGE
The materials are to be stored in the specified location the storage facilities are in the form of racks, contains etc. The quality department specifies the method of storage to be adopted in order to prevent the copper conduction from damage. The materials at in process shall be kept damage.
PACKING
Packing responsibility is handed over to the dispatch department. packing process is continued out in accordance with document work instruction specified. Packing is maintained by making use of quality plans prescribing the order specification of the materials and also the recording of verification of the packing materials upon receipts. The recording formats used for packing materials upon recipts the recording format used for packing materials are referred in quality plan.
DELIVERY
The dispatch department has the overall responsibility of the delivery of the goods, which aqre agreed contractually .the dispatch is made through customer specified transporters. Before the dispatch of the product it is technically and commercially cleared it is ensured that the material are in line with the
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Contract review. A checklist. Is prepaid as per the contract and the product is verified as per the checklist all the necessary document are provide with the consignment. The customer is informed about the dispatch.
PRODUCTION DEPARTMENT
QUALITY POLICY To manufacture quality products, by utilizing best skills and follow the process, procedure at every stage of manufacture. SCOPE OF THE DEPARTMENT Activities carried out in production department for converting Raw continuous cost rod into finished product and maintaining level of specified quality requirements for the production to achieve the above objective the following finished product are produced. 1. BARE COPPER CONDUCTORS. 2. ENAMELED COPPER CONDUCTORS. 3. ENAMELED DOUBLE FIBRE GLASS COVERED COPPER CONDUCTORS. 4. DOUBLE FIBRE GLASS COVERED COPPER CONDUCTORS. 5. NOMEX COVEREDCOPPER CONDUCTORS. 6. POLYSTER FILM COVERED COPPER CONDUCTORS. 7. COTTON COVERED COPPER CONDUTORS. RESOURCES:
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1. Plant and machineries. 2. Required raw materials.
OBJECTIVES OF THE DEPARTMENT

1. To maximize planned production 2. To adhere to the give delivery schedules 3. To minimize product non conformance 4. To optimize utilization of process equipments 5. To maintain optimum inventory by proper indenting
RESPONSIBILITY
HOD (head of the department) of production has the overall responsibility for implementation and maintenance of various activities and functions of production and deletion of responsibility to delegation and other staff as appropriate.
FUNCTIONS
Wire drawing flattening annealing insulations as per is customer specification.
INTERACTIONS

Interacting with quality purchase marketing division and other department.
PROCESSING ACTIVITIES
The various processing activities of production areas under. 1. WIRE DRAWING PROCESS. Wire drawing is a process of converting the copper rod of higher sizes of copper wire through drawing in the bull block machine either the help of tungsten carbide dies. By redrawing the copper wire, repeat till to the required size also the shaving process is carried out through the bull block machinery.
2. FLATTENING PROCESS. The draw wire or wire rods pass through edge rolls in random strip rolling mill to get rectangular bare strip as per the required sizes.
3. ANNEALING. Bare copper wire and strips in steel bobbins are kept in the pot and in vacuum (to avoid oxidations) and passes through bright annealing electrical furnace for heat. There is a
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control panel and after proper annealing material is passed through another empty pit type pot for cooling.
4. BARE COPPER WIRE AND STRIPS After cooling at the pit type cooling pot the required annealed bare copper strips are obtained the bare copper wire strips sort then sent for quality tests. After obtaining satisfactory quality results the material is rewound on bobbins and weighed for dispatch.
5. ENAMELED WIRE AND STRIPS. To obtain enameled wire and strips the bare copper wire and strips obtained from cooling pit type pot are passed through the vertical enamellings plant through the heating zones where it is enameled. Then after coating of enamel they are rolled on wooden it is bobbin. Then the enameled department the bobbins wire are weighed and then packed for dispatch.
6. GLASS COVERED WIRE AND STRIPS The bare wire and strips obtained after cooling from the bright annealed pot are converted with as per the required specification and then material is lapped by fiber glass yarn and
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varnish for bonding is passed through horizontal glass yarn and varnish for bonding is passed through horizontal glass covering machines in two moveable ovens. After passing through the ovens material comes on wooden bobbins.
7. COTTON COVERED WIRE AND STRIPS. The bare wire and strips obtained after cooling from the bright annealed pot is covered with as per specification and the material is insulated by cotton yarn is passed and finally it comes as wooden bobbins then the insulated wire and stripes are tested the clearances of Q.A Department the bobbins wire weighed and packed for dispatch.
NQMEX/POLYESTER FILM COVERED WIRE AND STRIPS.

The procedure is same as above and covered with nomex pages (manufactured by dupont u.s.a)
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PRINCIPLE WORK ELEMENT IN PRODUCTION FOR BETTER COORDINATION IS AS FOLLOWS

SL NO. 1 RECEIVING OA/OAA/CUSTOMER/ PRODUCTION 2 RECEIVING NC REPORT 3 ISSUING JOB CARDS SUPERVISOR PRODUCTION PROGRAMS/ IS / CUSTOMER SPECIFICATION 4 RCORDING WORK OF SUPERVISOR OPERATIONS PRODUCTION CUM SUPERVISOR NC REPORT/QA SUPERVISOR ACTIVITIES PERFORMED BY REFERENCE DOCUMENTS PRODUCTION PROGRAM
INSPECTION REPORT
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5 RAISING CONCESSION SUPERVISOR DEVIATION REQUEST 6 CONDUCING ON CONFORMANCE REVIEW SUPERVISOR NON NC REPORT NC REPORT
PRODUCTION PROBLEMS:
The company has a problem of electric power. The company has a generator to overcome the problem of shortage of electricity. If there is a problem in the working of machinery, there arise several problems which will lead to stoppage of production process. Sometime there are labor problems, which will affect the smooth process. Sometime there are labor problems which will affect the smooth working of production department.
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FUNCTIONAL FLOW CHART

Receipt of enquires
Making proposals quotations
Receipt of purchase order
Amendment purchase order
Relies of quality assurance
Release of production program
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Dispatch and acknowledgement follow up wherever require necessary
Receipt of quality records non conformance. Corrective actions.
Approval release revision and distribution of department manual and quality records and interaction with co departments.
LIST OF VALUED CUSTOMERS OF SAGUN COPPER CONDUCTORS PVT. LTD.

1. L M/S. Ador powertron industries lTd. Puns 2. Mis advani oerlinkon Ltd. Puns. 3. M7s.AMAN transformers Ltde vadodare. 4. Mis amruta eneterprises Puns. 5. M/S autoparts & accessories Chennai. 6. M/s Bieccolawrie Ltd Calcutta. 7. M/S Bhel Bhopal. 8. Mis Bhel Hyderabad, Mumbai 9. M/s. Canara lighting industries Ltd. Mangalore 10. M/s D.B technologies Pvt Ltd. Satara 11. M/s delta electro trade controls pvt Ltd. Thane 12. M/s Crompton Greaves Pvt Ltd. Satara. 13. M/s Dynare system Puns
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14. M/s electro magnetic devices ,Hyderabad 15. M/S Electro Electro tech goa. 16. M/s Elgi electrical industries Ltd. Coimbatore 17. M/s Elmas Power System Hyderabad. 18. M/s Jyoti Ltd. Vadodare
AWARDS
1. ISO 9001-2008certificate 2. Commercial taxes department gold card holder 3. Exporter award from chamber of commerce and industry 4. Award of appreciation for obtaining iso certification from north Karnataka small scale industries association, Hubli 5. Award of excellence from Karnataka chamber of commerce and industry 6. Rajiv gandhi shiromani award.
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CHAPTER- III
CONCEPTUAL FRAME WORK
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Cost volume profit analysis (CVP)

A conceptual frame work
Profit of a business firm is the results of interaction of many factors. Such factory determine whether there are profit of losses and whether profit increase overtime among the many factors influencing the level of profits the following are considered the key factors Selling price Volume of sales Variable costs on per units basis Total fixed costs and Sales mix To do an effective job in planning and decision making the management must have detils which allow reasonably correct predictions of how profit will be affect by a change in any one of these factory also management needs an understanding of how revenues cots and volumes interact in providing profit all these analyses and information are provide by cost volume and analysis.
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Cost volume profit analysis is a systematic of examining the relation between selling price total sales revenue, volume of production expenses and profit this analysis simplifies the real worlds conditions that a business enterprise is likely to face, CVP analysis can play an important role of providing the management with information regarding financial results if a specified
level of activity or volume fluctuates information on relative profitability of its various products, information on relative profitable effect of changes in selling price and other variable such information can help the management to improve the relation such information can help can help the management to improve the relation between these variable for example an analysis of sales and cost data can be helpful in determining the level of sales volume necessary for the business to achieve a desired or target profit similar CVP analysis the effect of cost increases or decrease on the profitable of the business enterprise.
Techniques of CVP analysis

CVP analysis uses the following techniques while answering to many questions in the area of management planning and decision making:
1. Contribution margin concept 2. Profit volume (P/V)Ratio 3. Break even Analysis 4. Margin of safety.
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Contribution margin concept

Contribution margin concept the profit potential of a business enterprises and also highlights the relationship for planning and decision making by the management is the excess revenue over variable costs. Contribution = sales - variable costs. Under contribution margin concept, variable costs include all variable costs i.e variable production costs and variable administrative, selling and distribution expenses. From the contribution margin fixed costs are deducted giving finally operating income or loss contribution margin is thus used to recover fixed costs. Once the fixed costs are covered any remaining
contribution margin adds directly to operating income of the firm. Thus, Sales - variable costs = fixed cost + profit.
Profit volume ratio:
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The profit volume ration is the contribution expressed as a percentage of sale . this ration denotes the percent of each sales rupee evadible to cover the fixed costs and to provide operating income of the firm.
P.V. ratio may be expressed with the help of the following formula contribution.
P.V ratio = contribution/Sales x 100
OR = Fixed cost + profit/Sales x 100
OR = Change in contribution /Change in sales x 100
OR = Change in profit /change in sale x 100
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The P.V. ratio helps in knowing the effect on income of a firm due o increase or decreases in sales volume. Better P.V. ration is an index of sound financial health of companys product.
BREAK EVEN POINT The break even and expenses are equal. At this amount of sales the organization has no profit or loss break even analysis is an important technique used in profit planning and managerial decision making.
The breakeven point can be calculated in the following 2 way.
a. Contribution margin approach
The formulae used in this approach are as follows:
Break even points (units sold) =Fixed cost/Contribution per unit
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Break-even point (sales value) =Fixed cost/Pv ratio
B. EQUATION APPROACH:
An equivalent approach to finding the breakeven point is based on this equation.
Profit = sales costs

If costs are separated into variable and fixed components, this becomes Profit= sales variable costs-fixed costs Since profit is zero at break even points this equation leads to the same formula as in the case of contribution margin approach i.e dividing fixed cots by the contribution margin per units or PN ration .
MARGIN OF SAFETY
The margin of safety indicates by how much sales may decrease before a loss occurs, if refers to sales in excess of the break even volume. It is important there should be a reasonable margin of safety to run the operation of the company in profitable position. Alow margin of safety usually there provide strength and stability to a concern.
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The margin of safety is an important measure, especially in times of receding sales to know the real position to operate without incurring losses and to take steps to increase the margin of safety to improve profitability. Margin of safety is calculated by using the following formula Margin of safety (Rs) = Actual sales Break even sales.
Or =Profit/ PN ratio
Margin of safety as percentage of total sales = Margin of safety/X 100 Total sales
The higher the margin of safety, the better profitability of the product / product line.
PROCEDURE FOR CVP ANALYSIS

CVP Analysis follows the procedure given below: Establishing the fixed and variable costs related to product Calculating the relationship between sales volume and revenue
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Working out the profit volume ratio. Establishing the brake even ration Deducting from the breakeven point the margin of safety ration Determining the combined effect of each product on profitability
AREAS OF APPLICATIONS OF THE CVP ANALYSIS IN BUSINESS

CVP analysis is applied in the following situating Planning and forecasting of profit at various levels of activity Useful in developing flexible budgets Identification of the minimum volume of activity that the enterprise Must achieve to avoid incurring loss Identification of the minimum volume of activity that the enterprise Must achieve to attain its profit objective. Provision of data on relevant costs for special decision relating to pricing, keeping or dropping product lines accepting or rejecting particular orders, make or buy decision , etc.
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ASSUMPTIONS OF COST VOLUME- PROFIT ANALYSIS

The reliability of CVP analysis depends upon the validity of several assumptions. The primary Assumptions. The primary assumptions are as follow: 1. Total sales and total cost is represented by straight lines. 2. Costs can be accurately divided into fixed and variable compontes. 3. The efficiency of operation does not change. 4. The sales mix is constant 5. There is no change in the inventory quantities during the period
LEVERAGES
The employment of an asset or source of funds for which the firm has to pay a fixed return may be termed as leverage if earning less the variable costs exceed the fixed costs or earnings before interest and taxes exceed the fixed return requirement the leverage is Called favorable. When they do not the result is unfavorable leverage.
TYPE OF LEVERAGE
1. Operating leverage 2. Financial leverage 3. Combined leverage
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OPERTING LEVERAGE
Operating leverage results from The existences of fixed operating expenses in the firms income stream it may be defined as the firms ability to use fixed operating costs to magnify the effects of changes in sales on its earring before interest and taxes.
The operating leverage is greatest in firm with large proportion of fixed costs, low proportion of variable costs, and the resulting high profit volume ratio.
Operating Leverage factor is computed as followsOperating Leverage factor= Contribution/ EBIT
Manager can use operating leverage to measure the impact of changes in sales on income from operations (EBIT). A high operating leverage indicates that a small increase in sale sales will yield a large percentage increase in sales is necessary to significantly increase EBIT.
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A firms operating leverage also affects its break-even point and margin of safety. Since a firm with relatively high op [erasing leverage has proportionately high fixed expenses, the firm break even point will be relatively high which results in a low safety margin.
FINANCIAL LEVERAGE
Financial leverage relates to the financing Activities of a firm. It refers to the situation where a relatively `small increase in income can provide proportionately much larger increase in return to the equity shareholder it is the result of having a relatively large proportion of financing through debt or preference share, which pay interest or dividends at a fixed rate. When income increases, the interest and preference share dividends remain constant, leaving most of the increase in income to the equity shareholders.
Financial leverage is defined as the ability of a firm of a firm to use fixed financial charges to magnify the effects in EBIT on the earning per share.
Favorable or positive leverage occurs when the firm earns more on the assets purchased with the funds than the fixed cost of their use. UN favorable or negative leverage occurs when the firm does earn as much as the funds cost.
Financial leverage can be calculated as under
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Financial leverage=EBIT/ EBT
Where EBIT- Earnings Before interest and taxes. EBT- Earning before Tax.
Higher Financial Leverage Results into the possibility of great return to the equity holders, but it also increases risk.
COMBINED LEVERAGE.
Combined leverage refers to the extent to which a firm has fixed operating cots as well as fixed financing costs. It represents the effect of a given change in the sales revenue on the earning per share. Combined leverage can vibe computed by applying the following formula: DCL = DOL X DFL
Where DCL Degree of combine Leverage DOL dredge of Operating Leverage DFL- Degree Of financial leverage
Combined Leverage affects the total risk of the firm. To keep the risk with manageable limits, a firm which has degree of operating leverage will be well advise to have low financial leverage and vice versa.
FINANCIAL BREAK EVENT POINT (FBEP)
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Financial Break even points are the level of EBIT at which EPS would Be zero. In the other words it is the level OF EBIT at which the firm can satisfy all fixed financial charges
The financial Breakeven Point can be determined by the following equation: FBEP=I+PD/1-t Where, FBEP FINANICAL Breakeven point. I-Annual Interest Charges PD- Preferences Divides t- Tax Rate.
CHAPTER- IV
ANALYSIS AND INTERPRETATION OF DATA:
ANALYSIS AND INTERPRETION INCOME STATEMENT (MARGINAL COSTING APPROACH)

In this the income statements of the unit under marginal costing approach is studied. It contains information regarding the capacity utilization sales variable costs contribution fixed cost and operating profit (EBIT). TABLE 4.1 SHOWS INCOME STATEMENT TABLE 4.1 INCOME STATEMENT P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri Page 54

Particular 2006-2007 2007-2008 43.48 % 335.13% 2008-2009 38.98 % 263.95% 2009-2010 54.93% 2010-2011 63.06%
Capacity utilization 37.11 % Less: Variable cost 319.72%
373.18%
500.97%
Contribution Les Fixed cost EBIT
68.71 27.56 41.15
75.03 25.41 49.62
56.64 25.17 31.47
76.32 42.09 34.23
97.88 61.85 36.03
Source: Official Record of the company for the respective years.
MARGIN OF SAFTETY
Margin of safety (M.O.S) is the differences between the actual sales revenue and the break even sales revenue therefore the formula for calculating margin of safety is Margin of safety = sales-Break Even Sales Margin Of safety as percentage of total Sales = Margin of safety / Total sales*100
TABLE 4.4 SHOWS MARGIN OF SAFETY AND MARGIN OF SAFTETY. AS PERCENTAGE OF TOTAL SALES.

Margin of safety Year Sales B. E. Sales Margin of safety M. O. S/Total sales*100 (%) 2006-07 2007-08 2008-09 2009-10 2010-11 319.72 335.13 263.95 373.18 500.97 128.25 113.49 117.29 205.82 316.53 191.47 221.64 146.66 167.36 184.44 59.89 66.14 55.56 44.85 36.82
Sources: Official records of the company for the respective years
OPERATING LEVERAGE The extent to which an organization uses fixed costs in its costs structure is called operating leverage. Operating leverage at a particular sales volume can be measured using the operating leverage factor. operating leverage factor=Contribution/EBIT
Table 4.5 shows the operating leverage factor. Table 4.5
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Operating Leverage Factor
Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Contribution 68.71 75.03 56.64 76.32 97.88 EBIT 41.15 49.62 31.47 34.23 36.03 Operating leverage factor 1.67 1.51 1.80 2.23 2.72
Finical Leverage Financial Leverage refers to the extent to which the firm uses fixed financing costs arising from the use of debt capital for maximizing the earning evadible to shareholders. Financial leverage factor= EBIT/EBT
TABLE 4.6 SHOWS THE FINANCIAL LEVERAGE Financial Leverage factor Year EBIT EBT FINANICAL LEVERAGE FACTOR
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2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 41.15 49.62 31.47 34.23 36.03 4.67 11.93 2.8 10.85 15.11 8.81 4.16 11.24 3.15 2.38
COMBINED LEVERAGE The combine leverage or the total leverages the effect of a given change in the sales revenue on the earning per share. The degree of combined leverage, DCL is calculated by using the following formula. Where, DOL-Degree of Operating Leverage DFL- Degree of financial Leverage TABLE 4.7 SHOWS DEGREE OF COMBINED LEVERAGE TABLE 4.7 DEGREE OF COMBINED LEVERAGE
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Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 DOL 1.67 1.51 1.80 2.23 2.72 DFL 8.81 4.16 11.24 3.15 2.38 DCL 14.7 6.28 20.23 7.02 6.47
FINANCIAL BREAKEVEN POINT Financial Breakeven point is the level of EBIT at which the earning per share is equal to zero. Financial break even Points is obtained by solving the following equation for EBIT. EBIT Where, I -Annual Interest charges TABLE 4.8 SHOWS THE FINANCIAL BREAK EVENT POINT FINANCIAL BREAK EVEN POINT (Rs. In lakh) =I
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Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Interest 36.49 37.70 28.68 23.38 20.92 Financial break even points 36.49 37.70 28.68 23.38 20.92
NET INCOME Net income is the earning available after deducting the interest and other financial charge from EBIT.
Thus, the formula for calculating net income is Net income -= EBIT-I Where, EBIT- Earnings Before interest and taxes I-Interest. SHOWS THE NET INCOME OF THE COMPANY
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TABLE 4.9 NET INCOME Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 EBIT 41.15 49.62 31.47 34.27 36.03 INTERSET 36.49 37.70 28.68 23.38 20 .92 NET INCOME 4.66 11.92 2.79 10.89 15.11
Sources: Official records of the company for the respective years Note: Here Net income= earnings before tax
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CHAPTER V
FINDINGS, SUGGESTIONS & CONCLUSIONS
FINDINGS CVP analysis, being an important tool for planning and decision making, can be applied in several in several situations practically. For the unit under study thought it is caring profit from the year of its established. It is essential to know to know the trends in various aspects from year to year. It is also essential know the profitable and its the extent of risks involved. The main finding of the analysis is:
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1. Capacity utilization has increased from 37% in 99-00 to 63% in 2003-2004. However, the same is not followed 06-07by corresponding 10-11. Increases in EBIT due to more than corresponding increase in variable costs fixed costs. 2. PN ratio increased marginally during the first two year & went on decreasing during the remaining years for the study. This is mainly due to disproportionate increase in the Variable cost when compared with the increase in the sales. 3. Break even sales also witnessed an increasing trend , due to successive increasing trend due to successive increase in the sales. 4. Margin of safely witnessed a decline trend, due to increase in the B E P sales. 5. Degree of operating Leverage has been more than i during the study period. This is mainly due to successive increase in the fixed cost rather than favorable change in the contribution. 6. Degree of financial leverage has witnessed a noticeable downward trend mainly because of successive in the interest charges 7. Degree of combined Leverage reveals that total risk of the company has been fluctuating from year to year.
8. Financial break even point has come down to decline in the interest obligations. 9. Overall profitable of the company revels that company has been able to cover operating risk and financial risk. P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri Page 63
SUGGESTIONS
1. Cost reduction: Variable costs of the company are high sagun copper conduction (P) Ltd...m, must these costs considerably by efficient utilization of men machine and materials
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2. Risk management: For most small business limiting downside risk is more important than increasing potential profit so it is wise to keep fixed costs low wherever possible which reduces the operating risk 3. Utilization of unused capacity: The company has been able to increase the capacity utilization, still there is scope for increasing the capacity utilization up to 100%. This would help the company in reaping the benefits of economies of scale in operation. 4. Activity Based costing: The company should use the technique of ABC.ABC system providing more description of the company/s costs behavior and facilitates a deeper underscription of it. It can provide a much more complete picture of C-V-P relationship & thus can provide better information to management. 5. Value analysis: For the purpose of effective management of variable cost value analysis may understand so as to identify the redundant components of materials, operations of labor and also operating of conversion center. 6. Setting of standard: The standing for the different cost components may be set for the purpose of comparing with actual so as to ensure effective cost control.
CONCLUSION
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Sagun copper conductors Pvt Ltd. Is one of the enlightened and progressive company in the state of Karnataka. the management is taking keen interest in maintaining the quality of its product and keeping all its employees & workmen satisfied and placed them at a safer track. All the employees in this organization have good working experiences which is an integral part in achieving excellences. The employees in sagun copper conduct have been given with adequate freedom to do their job effectively in sagun copper conductor have made company to face its completion daringly. Communication is the blood stream of any origination, is very good in sagun copper conductors. It flows in all direction without making or crating any differences the employees and the management believes in the philosophy of team work & self management believes in the philosophy of team work and self management system which helps in achieving individual goals coupled with organizational golas. Sagun copper conductors PVT.LTD, is expected to capture a major share of the copper industry in the coming years. Since Sagun copper conductors PvtLtd.., have gained acceptances in the market, they are in a position to face competition in the exiting as well as new manufacture. The company will grow leaps and bounds in the coning years.
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COST VOLUME PROFIT ANALYSIS

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

OBJECTIVES OF THE STUDY:

COST VOLUME PROFIT ANALYSIS

Research Design: Chapter I: Introduction

Chapter II. Sagun copper conductors (P)Ltd. A profile.

Chapter III:C.-V-PN Analysis: A conceptual Framework

Chapter IV- analysis and interpretation of data

COST VOLUME PROFIT ANALYSIS

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

SAGUN COPPER CONDUCTORS (P) LTD: A PROFILE

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

ABOUT THE ORGANIZATION:

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

Most of the valued customers are certified by ISO.

The products manufactured and marketed are

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

INFRASTRUCTURAL FACTIELS TO THE COMPANY

MARKETING OF THE PRODUCT

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

Chart 2.1 Organizational Structure

Chairman / Managing Director

Directors management Representative

Quality assurance P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri Page 13

COST VOLUME PROFIT ANALYSIS

BOARD OF THE DIRECTORS

RESPONDIBLITIES MANAGING DIRECTOR

COST VOLUME PROFIT ANALYSIS

HEAD OF THE DEPARTMENT:

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

Source: Official records of the Company

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

DEPARTMENTALIZATION:QUALITY ASSURANCE DEPARTMENT

OBJECTIVES OF THE DEPARTMENT

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

Control of inspection measuring and testing equipment is also carried out.

INSPECTION IS CARRIED OUT AT THE FOLLOWING STAGES

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri

COST VOLUME PROFIT ANALYSIS

P. G. Dept. of Studies in Commerce, K.L.Es G. H. College, Haveri