ACKNOWLEDGEMENT
This project is a pure effort, I thank ALLAH ALMIGHTY that he gave us strength and ability to
perform our duties in a proper manner. We dedicate this effort to my extremely dedicating
teacher SIR ADNAN
TABLE OF CONTENTS

i.
ii.
INTRODUCTION
History
Company details

Cost of goods sold statement
i.
ii.

Formula
Calculations
Trends analysis
i.
ii.
iii.
iv.
WIP
FOH
Raw materials
Finished goods inventory
INTRODUCTION
Kohinoor textile mills
Kohinoor Textile Mills was established in 1953, initially with 25,000 spindles and 600 looms
with further expansion in 1954. The company embarked upon a program of modernization and in
the last decade, replacement and refurbishment has seen the installation of high technology
processing,
printing
and
finishing
facilities.
Commercial processing for customers, which was not originally envisioned, has also begun.
Presently the unit comprises Appx.150,000 spindles along with complete processing capabilities
for scouring and bleaching, mercerizing, dying printing and stitching. Weaving no longer exists
at the plant which has since been relocated to Kohinoor Raiwind Mills (A Division of Kohinoor
Textile Mills Limited).
Company Detail
Plant is located at Peshawar Road Rawalpindi. The Spinning plant has equipment from Cresol
U.K. and Toyota Japan. The company's products are sold in both local and export markets.
Regular exports sales to South East Asia UK / Europe U.S.A, Hong Kong, Japan and Australia is
a testimony to an ever growing list of satisfied customers who perceive KTML as a manufacturer
of quality textile. In 1992 the Company participated in the acquisition of Maple Leaf Cement
Factory
Limited
from
Privatization
Commission,
Government
of
Pakistan.
Kohinoor Textile Mills Limited was initially certified to ISO 9001 by Lipoids Register Quality
Assurance, UK on December 16, 1998. Now Kohinoor Textile Mills Limited is certified under
the revised ISO standards ISO 2000 from June 2003.
Cost of Goods Sold Statement of Manufacturing Companies:
Cost of goods sold of a manufacturing company is normally divided into five sections:
1. Direct Materials Section: This section comprises of beginning inventory, purchases, and
any purchases returns or allowances, and ending inventory
2. Direct Labor Section: This section indicates the cost of those employees whose work can
identified directly with the product manufactured.
3. Factory Overhead Section: Factory overhead section comprises of all those costs that
assist in an indirect manner in the manufacturing of the product, e.g., factory supplies and
depreciation of machinery. The factory overhead section does not indicate the amount of
fixed and variable factory overhead. It must be assumed that the items are stated at
actually experienced costs.
4. Work in process inventories section: This section represents costs in process at the
beginning and costs still in process at the end of the fiscal period.
5. Finished Goods Inventories: This section represents the finished goods inventory at the
beginning and at the end of the period.
FORMULA
Formula for calculating COGS is given below:
Cost of goods sold (COGS) = Cost of goods manufactured + Opening finished goods inventory Ending finished goods inventory
Or
Cost of goods sold = Direct materials cost + Direct labor cost + Factory overhead cost + Opening
work in process inventory - Ending work in process inventory + Opening finished goods
inventory - Ending finished goods inventory
Data & calculations
+ Direct Material
+ Direct Labor
+ Factory Overhead
Total Manufacturing Cost
+ WIP (Beginning Inventory)
+ WIP (Ending Inventory)
Cost of goods manufactured
+ Beginning finished goods inventory
Cost of goods available for sale
- Ending Finished goods inventory
Cost of goods sold
COGS Manufactured
Finished Goods Opening
Finished Goods Ending
WIP Opening
WIP Closing
Raw materials
FOH
2009
7191015
622,747
614,769
471,943
546,792
3192060
1824883
Cost of goods sold of year 2009 = 7198993
Cost of goods sold of year 2008 = 6395622
2008
6,437,011
581,358
622,747
458,329
471,943
2852417
1759089
TRENDS:
Work in process
years
WIP
2009
741849
2008
13614
80000
60000
Column3
40000
Column2
Column1
20000
0
2009
2008
As the graph shows for the year 2009 the WIP which is Units of product that are only
partially complete and will require further work before they are ready for sale to a customer is
more as compared to year 2008 .this shows a lot of number of items were unfinished in 2009 as
compared to 2008
Finished goods:
Years
Finished goods
2009
7978
2008
41389
50000
40000
Series 3
30000
Series 2
20000
Series 1
10000
0
2009
2008
A
reflection
of
the amount of
manufactured product in stock that
is
available
for customer purchase. On an income statement, the finished goods inventory is considered
an asset to the company. So considering that for the year 2009 its value has a marked decrease as
compared to 2008 which shows that their purchase has been increased.
Raw material
Year
Raw material
2009
3192060
2008
2852417
3300000
3200000
3100000
3000000
Series 3
2900000
Series 2
2800000
Series 1
2700000
2600000
2009
2008
It is the total cost of all component parts currently in stock that have not yet been used in workin-process or finished goods production. For year 2009 they are not properly utilized as
compared to raw material utilization in 2008
Factory over heads:
Years
FOH
2009
1824883
2008
1759089
1840000
1820000
1800000
Series 3
1780000
Series 2
1760000
Series 1
1740000
1720000
2009
2008
The rise in graph for the year 2009 as compared to 2008 is due to increase in inflation
Manufacturing overhead includes such things as the electricity used to operate the factory
equipment, depreciation on the factory equipment and building, factory supplies and factory
personnel (other than direct labor). Because of rising inflation its value is increased in 2009.
Cost of Production Report
Quantity Scheduling
Units applied
+ Completed Units
+ WIP Units
+ Loss Units
Cost Charge to production
+ Direct Material
+ Direct Labor
+ FOH
Total Cost
A
B
C
A+B+C=M
Cost Accounted for as fallow
Cost transferred Completed Units*K= N
Direct Material WIP*H=O
Direct Labor
WIP*I=P
FOH
WIP*J=Q
Additional Computations
Equivalent production: Materials, Labor, FOH = Completed + WIP
Unit Cost:
Materials (H) = A/Equivalent Production of Material
Labor (I) = B/Equivalent Production of Labor
FOH (J) = C/Equivalent Production of FOH
Cost per Unit
H
I
J
H+I+J=K