Costs and costing analysis of a cement factory : a case study

Abstract

This paper analyses the costing system for cement production. The cement industry in South Africa is under price control and the building of cement factories requires huge capital investments. To ensure a satisfactory rate of return on capital invested it is absolutely imperative that production costs are kept to the minimum. Chapter l The cement production process is discussed in this chapter to enable the reader to understand where the costs are originated in a cement factory. is attached. Chapter II A process flow sheet The principles of process costing are discussed in this chapter. Attention is also given to marginal costs in a process cost system, standards and budgets. Certain principles of a process cost system for a cement factory a.re suggested. Chapter III The costing system of a certain Factory A is discussed, including the limestone quarry system. Responsibility centres are shown on an organisation chart. Chapter IV Factory A's costing system is compared with the principles as laid down in Chapter II and certain suggestions are made. The conclusion reached i s that a logical process cost system is absolutely imperative in order to obtain a clear picture of the cement production costs.