Denier based costing-Reliance Industries Ltd: Patalganga.

Abstract

This project report describes an attempt to arrive the cost of each denier of Polyester Filament Yarn (PFY) manufactured in the PFY at Reliance Industries Ltd. Patalganga. The Denier of the yarn signifies its thickness. The existing costing system computes the weighted average cost of the total product mix for any given month and the main cost driver used is the volume of production . This therefore, is an attempt to incorporate the non-volume driven costs such as costs of quality, costs of yield ,cost of market rejects and the cost of packing material consumed for each denier of production and develop a costing system which would be a decision support. The existing costing system was studied in order to understand the process of cost accumulation and allocation. The process flow description gives a detailed account of the manufacturing and describes the stages where raw materials, utilities, catalyst & chemicals and packing material consumption occurs. Denier changes entails setup costs and hence an accurate computation of cost of each denier produced would aid in reducing these costs. The constraints faced on account of non availability of areawise consumption figures of utilities, manpower utilization restricted the scope of this study. In view of these constraints only the non-volume driven costs as explained eariier were identified and quantified. The denier wise loss on account of yield, quality, market rejects and excess packing material consumption has been worked out and it is proposed to incorporate the same into cost per ton of the product. The impact of these on the costs of each denier and a comparison between the existing and the proposed costing system has been given. The month to month variation of the 4 elements of non-volume driven costs have been tabulated in the form of graphs .In the conclusion the benefits of denier based costing is highlighted and steps required to achieve the same as an action plan is given.