PROFILE OF ORGANIZATION

'Parle Products Pvt Ltd based in Mumbai, India has been India's largest manufacturer of biscuits
and confectionery, for almost 80 years. Makers of the world's largest selling biscuit, Parle-G, and
a host of other very popular brands. Its reach spans even to the remotest villages of India. Many
of the Parle products - biscuits or confectioneries, are market leaders in their category and have
won acclaim at the Monde Selection, since 1971. With a 40% share of the total biscuit market
and a 15% share of the total confectionery market in India, Parle has grown to become a multimillion dollar company. Parle Agro is a food and beverage company based in Mumbai, India.
Parle Agro - a trusted name in the beverage industry for agro based drinks. Parle Agro is a
leading Indian Beverage Company, the only Indian transnational giant with the past experience
of having successfully launched leading soft drink brands like 'Frooti, Appy Classic,Appy- Fizz,
Bailley Packaged Drinking Water & Confectionery brands like Mintrox and Buttercup'. Parle
Agro strength is our people who have worked towards making our presence felt throughout the
country and all over the world through a strong franchisee network and well-developed strong
infrastructure. Parle Agro has its factories located in Silvassa, Patalganga, Bhopal, Chennai,
Ghaziabad and Hyderabad. At Parle Agro, success is a habit; where greater heights are achieved
through consumer insight, sound business practices, marketing and sales innovation, with the
focus on the consumer. 'Thinking consumer, Tasting success, Always' - that is what Parle Agro is
all about.

NATURE OF ORGANIZATION
"PARLE AGRO is a trusted name in the Indian beverage industry and has been refreshing India
since more than two decades with leading brands like Frooti, Apply Classic, Apply Fizz, Bailley,
Saint Juice, LMN & recently launched Grappo Fizz. Parle Agro Pvt., Ltd. manufactures,
distributes, sells, and exports fruit drinks in India and internationally. The company offers fruit
and milk drinks, packaged water, and apple and mango drinks in polyethylene terepthalate (PET)
bottles and containers, and tetra packs. The company also operates a health and fitness studio for
woman. The company distributes its products through franchisees. Parle Agro Pvt., Ltd. was
founded in 1985 and is based in Mumbai, India.
Parle Agro has been a trusted name in the beverage industry providing wholesome and healthy
agro-based drink brands. It has successfully launched some of India's leading beverages like
Frooti, Appy and N-Joi,
And packaged drinking water, Bailey, over the last two decades.In a country where health
consciousness is growing at a rapid pace, Parle Agro, with its numerous fruit-based drinks, has
struck a chord with the masses. It brings to the consumers the magic of premium quality fresh
fruit drinks conveniently packed and available all through the year. Fruit beverages are
wholesome, easy to digest, highly refreshing with natural nutritional values as compared to
synthetic and aerated drinks. Parle Agro's Frooti is India's first national mango drink. The mango
segment is 95% of the Indian fruit drink market and Frooti has 85% market share in the tetra
pack segment. Made from fresh and premium Indian mangoes, Frooti has grown to be one of
India's top 50 most trusted brands. When Parle Agro launched N-Joi with real fruits and fresh
milk, it not only launched a new healthy beverage, but also created a whole new category in
India. The milk shake claims to contain no preservatives and is full of nutritional goodness. It's a
delicious filler and an apt quick refreshing nourishment for today's hectic stressful life.

TYPE OF INDUSTRY AND BUSINESS

Food ,Beverages and Fast Moving Consumer Goods (FMCG)

VISION:To be the leaders in our business. We will stand apart from the competition by being the first in
the market to innovate.

MISSION:We will be the leaders in our business by maintaining high quality, introducing new and
innovative products, reaching every part of India, remaining customer-centric, constantly
upgrading our knowledge and skills..
To provide consumers superior, wholesome agro based food and drink brands through which
parle can build a profitable; growth oriented organization.
Parle is a leading Indian Food and Beverage Company, the only Indian transnational gaint with
the past exp[erience of having successfully launched leading soft drinks like Frooti, Appy, N-Joi
and Bailley. Toady its brand portfolio consists of No.1 brands like froti along with Appy, N-Joi
and Bailley.
TURNOVER :The Parle Group turnover is over 950 crore in 200

COSTING TECHNIQUE

I am familiar with Parle products. Today, Parle enjoys a 40% share of the total biscuit market and
a 15% share of the total confectionary market, in India. Parle Products has one factory at
Mumbai that manufactures biscuits & confectioneries while another factory at Bahadurgarh, in
Haryana manufactures biscuits. Apart from this, Parle has manufacturing facilities at Neemrana,
in Rajasthan and at Bangalore in Karnataka.
The technique of Marginal Costing is being used in the organization.
Marginal costing is not a system of costing like job costing, process costing, operating costing,
etc. but a special technique used for managerial decision making. The technique of marginal
costing is used to provide a basis for the interpretation of cost data to measure the profitability of
different products, processes and cost centres in the course of decision making. It can, therefore,
be used in conjunction with the different methods of costing such as job costing, process costing,
etc. or even with other techniques such as standard costing or budgetary control.

In marginal costing, cost ascertainment is made on the basis of the nature of cost. It gives
consideration to behaviour of costs. In other words, the technique has developed from a
particular conception and expression of the nature and behaviour of costs and their effect upon
the profitability of an understanding.

Theory of Marginal costing:

The theory of marginal costing may therefore be explained in three steps:
(i) The volume of output increases, the cost per unit will, in the normal circumstances, be
reduced. Conversely, if the output is reduced the cost per unit will go up. If the factory produces
1,000 units at a total cost of Rs. 3, 000 and if by increasing the output by one unit the cost goes
upto Rs. 3,002, therefore the marginal cost of the additional output is Rs. 2.
(ii) If the increase in output is more than one, the total increase in cost divided by the total
increase in output will give the average marginal cost per unit. If, for example, the output is
increased to 1,020 units and the total cost to produce these units is Rs. 1,045 the average
marginal cost per unit is Rs. 2.25 per unit as under:
Additional cost = Rs. 45 = Rs 2.25
Additional units

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(iii) The ascertainment of marginal cost is based on the classification and segregation of costs
into fixed and variable costs.

Advantages and limitations of Marginal Costing

Advantages:
1. The marginal cost remains constant per unit of output whereas the fixed cost remains constant
in total. Since marginal cost per unit is constant from period to period within a short span of time
firm decisions on pricing policy can be taken. If fixed cost is included, the unit cost will change
from day to day depending upon the volume of output. This will make decisions making task
difficult.
2. Overheads are recovered in marginal costing on the basis of pre-determined rates. If fixed
overheads are included on the basis of pre-determined rates, there will be under-recovery of
overheads if production is less or if overheads are more. There will be over-recovery of
overheads if production is more than the budget or actual expenses are less than the estimate.
This creates the problem of treatment of such under or over-recovery. Marginal costing avoids
such under or over-recovery of overheads.
3. Advocates of marginal costing argue that under the marginal costing technique, the stock of
finished goods and work in progress are carried on marginal cost basis and the fixed expenses are
written off to profit and loss account as period costs. This shows the true profit of the period.
4. Marginal costing helps in carrying out break-even analysis that shows the effect of increasing
or decreasing production activity on the profitability of the company.
5. Segregation of expenses as fixed and variable helps the management that shows the effect of
increasing or decreasing production activity on the profitability of the company.
6. Managerial costing helps the management in taking a number of business decisions like make
or buy, discontinuance of a particular product, replacement of machines, etc.

Limitations:
1. It is difficult to classify costs exactly into fixed and variable. Most of the expenses are neither
totally variable nor wholly fixed.
2. Contribution itself is not guide unless it is linked with the key factor.
3. Sales staff may mistake marginal cost for total cost and sell at a price, which will result in loss
or low profits. Hence, sales staff should be cautioned while giving marginal cost.
4. Overheads of fixed nature cannot altogether be excluded particularly in large contracts while
valuing the work-in-progress. In order to show the correct position fixed over heads should be
included in work-in-progress.
5. Some of the assumptions regarding the behaviour of various costs, etc. are not necessarily true
in the realistic situation. For example, the assumption that fixed cost will remain static
throughout is not correct.

UTILITY/USE OF MARGINAL COSTING IN DECISION MAKING

The technique of Marginal Costing is of immense use to the management in taking various
decisions, as explained below:
Helps in determining the volume of production: Marginal cost helps in determining the level of
output which is most profitable for a running concern. The production capacity, therefore,
therefore, can be utilized to the maximum possible extent. It helps in determining the most
profitable relationship between cost, price and volume in the business which helps the
management in fixing best selling price for its products. Thus, maximization of profit can be
achieved.
Helps in selecting production lines: The technique of Marginal Costing helps in determining the
most profitable production line by comparing line by comparing the profitability of different
products. Certain products or activities may turn out to be unprofitable with the passage of time.
Production of such products can be discontinued while production of those products and work as
a good guide for deciding the optimum mix of products keeping in mind the available capacity
and resources.
Helps in deciding whether to produce or procure: The decision whether a particular product
should be manufactured in the factory or procured from outside source can be taken by
comparing the price at which it can be had from outside. In case the procurement price is lower
than the marginal cost of production, it will be advisable to procure the product from outside
rather than manufacture it in the factory.
Helps in deciding method of manufacturing: In case a product can be manufactured by two or
more methods, ascertaining the marginal cost of manufacturing the product by each method will
be helpful in deciding as to which should be adopted.
Helps in deciding whether to shut down or continue: Marginal costing, particularly in periods of
trade depression, helps in deciding whether the production in the plant should be suspended
temporarily in spite of low demand for the firms products.