production process of honda motor cyle..with cpr by students of university of gujrat

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Cost Accounting

Topic:

Production Process of Honda Motorcycle

Submitted to:

Mam Sadia Bint-a-Raza

Submitted by:

Mubeen Tahir (08020920-038)

Mehjabeen Malik (08020920-015)

Rabia Arshad (08020920-023)

Usama Asghar (08020920-098)

Ayaz Bhutta (08020920-087)

Date: 22-01-2010

University Of Gujrat

Hafiz Hyatt Campus



Honda Motor Company Limited is perhaps best known as an automaker. It is the third largest

automaker in Japan but the company has its roots in motorcycles, and is the world's top

motorcycle manufacturer.

History:

The 'Honda Motor Company' was founded on in 1948, by Soichiro Honda (1906²1991), a

mechanic and engineer/inventor who began as a blacksmith, working at his father, Gihei Honda's

bicycle repair shop. In 1938, at the age of 32, Soichiro Honda was working at an auto repair-shopin Tokyo, called Art Shokai, where he began using his self-taught mechanical and engineering

skills. Honda briefly studied mechanical engineering and design at Hamamatsu Technical High

School, where Honda perfected his new design for the piston ring.

During the Japanese reconstruction period of the early 1940s, Soichiro Honda began designing

motor-driven bicycles. Honda built his first motor-scooter, known simply as the "A-Type," in

1947.

Honda started to make an international name for itself with the introduction of the CB models.

Started by a CB72 (250cc) and the CB77 (305cc). The first series used the old press steel frames

and the better road handling came with the introduction of the steel tubular frames in the CB92.

The CB77 (super hawk) was excellent, reliable motorcycle which outperformed many similar

English models

One year later he started the 'Honda Motor Company' and began building small-displacement

'tiddler' style motor-scooters. Honda introduced his first motorcycle in 1949; the 'Dream D-Type'

with a 3 horsepower, 98cc engine. Hondas were also sold under the "Benly" name, with "Honda"

appearing on the engine case



Honda started building bigger engine bikes with the first model CB450 in 1965. The black

bomber / black hawk were an attack to the dominating English bikes in this area. Although the

CB450 didn't match the British motorcycles (yet) the competition had begun.

.Starting in the 1980s Honda developed a series of V-four engines which setup the model line of

Honda VFs ranging between 400cc and 1000cc. But due to mechanical problems the VF line

never really got going.

The Fire blade (also a CBR model) was a new chapter for Honda and motorcycle fans

worldwide. The introduction of the CBR900RR (893cc) in 1992 was a huge improvement from

what was then out on the market. This came largely because of the engine capacity in a smaller

light frame. The bike was redesigned a few times but only regained its original success with the

2000 model fire blade CBR929RR (929cc). Two years later the power was increased once again

to 954cc

The Manufacturing Process:

According to the need of the company for manufacturing of motorcycles the material is

requisitioned and a purchase order is sent to the suppliers by the purchase department and the

Honda industry purchases the material from outside the country as well as within country

through local costing. Raw materials which consist of parts and components arrive at the

manufacturing plant by truck or rail and the transportation charges are paid by the Honda

industry. The material is being received by the receiving department and the slips are made by

that department after matching the purchase order with the material list provided by the supplier.

Then there is the work of inspection department that works on when it receives the order from

receiving department to inspect the material. The defected materials and parts are returned to the

places from where they come after inspection. Different materials are sent to the different

departments for the further procedure.

The manufacturing process is completed in three major steps which are

Paint Shop.

Engine Assembling.

Frame Assembling.



Paint S hop:

The raw materials which consist of parts in the case of motorcycle are sent to the paint

shop for painting.

Powd er Coating:

Plastic and metal parts and components are painted in the paint department using a

process known as powder-coating (this is the same process by which automobiles are painted).

A powder-coating apparatus works like a large spray-painter, dispersing paint through a

pressurized system evenly across the metal frame.

C harg ed Particl es:

First of all the parts are negatively charged with the help of the electrons then the

positively charged particles in the form of color are sprayed to these charged parts. As we know

that the positive and negative charged particles attract each other so these charged particles

attract each other in the form of paint and thus the parts are painted. The numbers of the

negatively charged particles are equal to the number of the positive charged particles so we can

see smooth paints on the parts of the motorcycle. And this is the reason that the paints are not

spoiled by sun and

rain. The parts which

are painted in the a

single unit of

motorcycle are

Fuel Tank.

Side Cover set.

Swing Arm.

Hub Front.

Panel Front.

Magnet Front.

Top Bridge.

Handle Cover.These are the painted body parts of motorcycle



Clutch Plate.

Main Stand.

Side Stand.

Muffler Stand.

Battery Stand.

Step Bar.

Meter Bracket.

Head Top Cover.

Head Right Cover.

Tappit Covers set.

Labor Force:

There are 18 labors which are working in this department and we are giving hour wise

wages to our labors. We are offering Rs.25/- per hour to our each labor.

Dir ect Labor:

There are 10 people who are working in this department in the production process.

Labor Cost:

One labor cost = Rs25/-per hour

For 10 Labors = Rs250/-per hour

If the labors will work f or one month and 8 hours in a day then the cost will be Rs60000/-.

I ndir ect Labor:

The remaining 8 are working as indirect labors. These 6 people includes

3 Supervisors.

2 Sweepers.

3 people which are working on moving trail from one channel to another for the shifting

of materials.



Labor Cost:




Mat erial:

The above 21 parts which are mentioned above used as the material of this portion.

Dir ect Mat erial:

The materials which are using in this department as a direct material and their costs are:

Theses ar e t he cost for one unit:

Fuel Tank. Rs850/-

Side Cover set. Rs750/-

Swing Arm. Rs460/-

Hub Front. Rs140/-

Panel Front. Rs50/-

Magnet Front. Rs200/-

Top Bridge. Rs175/-

Handle Cover. Rs50/-

Clutch Plate. Rs325/-

Main Stand. Rs250/-

Side Stand. Rs150/-

Muffler Stand. Rs75/-

Battery Stand. Rs70/-

Step Bar. Rs125/-

Meter Bracket. Rs200/-

Head Top Cover. Rs40/-

Head Right Cover. Rs85/-

Tappit Covers set. Rs100/-



Total cost for direct material= Rs3887/-

If we are going to produce 150 units then the cost will be Rs583050/-

I ndir ect Mat erial:

The indirect material and their cost are

Theses ar e t he cost for one unit:

Paint Color Rs400/-

Alumininum Alloy Rs135/-

Total cost for the indirect material = Rs535/-


Factory Over H ead:

Factory Supplies. Rs8000/-

Repairs and Maintenance. Rs3500/-

Electric Power. Rs6000/-

Fuel. Rs4500/-

Depreciation Machinery. Rs2000/-

Insurance. (Fire) Rs3000/-

Water Rs1000/-

Factory Over Head = Rs28000/-

Cost for t his d e partment:

If we are going to produce 150 units and our labors work 8 hours in a day and they are

able to produce 150 units in one month then the cost for this department will be

Direct Material Rs583050/-

Direct Labor Rs60000/-

Factory Over H ead



Indirect Material Rs80250/-

Indirect Labor Rs48000/-




Fuel. Rs4500/-



Water Rs1000/-

Total Factory over head Rs156250/-

T otal Cost for t his d e partment Rs799300/- (for 150 units)

Cost of Production Re port:

Honda

Paint department

Cost of production report

Quantity schedul e:

Units started in process 150

Units completed and transferred out 130

Units still in process(all material-1/2 of labor and foh) 20 150

Cost charg ed to t he d e partment:

Cost added by department: Total cost Unit cost

Material 60000 400

Labor 583050 4164.6428



FOH. 156250 1116.07142

Total cost to be accounted for: 799300 5680.71422

Cost account ed for as follows:

Transferred to the next department (130*5680.71422) = 738492.8578

Work in process-ending inventory

Material (20*400) 8000

Labor(20*4164.6428*1/2) 41646.428

FOH(20*1116.07142*1/2) 11160.7142 60807.1422

Total cost accounted for: 799300

Additional computations:

Equivalent production: materials=130+(20*100%)=150

Labor=130+(20*1/2)=140

Factory overheads=130+(20*1/2)=140

U nit costs:

Material: 60000/150=400

Labor: 583050/140=4164.6428

FOH: 156250/140=1116.07142



E ngine Assembling:

Engine is the most important part

of the motorcycle. All working of the

motorcycle depends upon this part. There

are 17 steps which take place in

assembling of the engine. The parts of the

engine which are purchased in the form of

raw material are sent to the engine

assembling room.

Piston Connection:

The first step in the assembling of

engine is connecting the piston with push rod. A cylindrical piston, made of aluminum alloy

(preferred because it is lightweight and conducts heat well), is an essential component of the

engine.

Valve Lift er:

In second step, It is fitted with piston rings made of cast iron. Then the valve lifter is

placed below the piston and the push rod and spark lead is installed.

I nl et and Combustion C hamber:

In third step, the inlet part is established in the combustion chamber which is fitted with

the piston. The cooling fan is also placed which helps the piston to remain cool at time when the

motorcycle is driven more by the driver.

Crankcase:

Crankcase is plugged then the oil pump is installed with the engine mountain belt and oil

passage way is placed in the engine on the crankcase which circulates the oil in the whole engine



which helps the engine to be work more smoothly and efficiently. The crankshaft and crankcase

are made of aluminum.

T iming G ear wit h t he Piston:

The one of the important step in the assembling of the engine is the establishment of

timing gear with the piston through engine mountain belt hole. Crankshaft and Camshaft gear is

placed on the crankcase.. The engine also contains a cylinder barrel, typically made of cast iron

or light alloy.

Ex haust Port:

The exhaust port is placed at the mouth of combustion chamber which throws all the heat

out from the engine. Finally the rocker arm is placed and the screws are placed in the rocker arm.

These are the steps which are taken place in the assembling of the engine.

Labor Force:



Dir ect Labor:


Labor Cost:




I ndir ect Labor:




1 Supervisors.

2 Sweepers.

2 The people who are working on the rolling machine for shifting of material

Labor Cost:




Mat erial:

The above 21 parts which are mentioned above used as the material of this portion.

Cylinder head Rs525/-

Rocker Arm Rs325/-

Exhaust Port Rs150

Combustion Chamber Rs640/-

Piston Rs1200/-

Cooling Fan Rs200/-

Push Rod Rs670/-

Valva Lifter Rs325/-

Engine Mmountain Bolt Hole Rs100/-

Timing Gear Rs325/-

Crank Shaft Rs400/-

Nonwritten valva Rs50/-

Mounting Lug Rs450/-

Oil Pump Rs1000/-

CrankCase Rs550/-

Oil Pessageway Rs220/-

Camshaft Gear Rs1500/-

Spark Plug Lead Rs25/-

Inlet Port Rs150/-



Oil Feed Pipe Rs120/-

Screw and Lok Nut tappet adjuster Rs75/-

Total cost for direct material = Rs 9000/-



The indirect material and cost for this are

Nut Bolt Rs100/-

Screws Rs100/-

Total cost for indirect material= Rs200/-


Factory Over H ead:




Fuel. Rs4200/-



Water Rs1000/-









Factory Over H ead






Fuel. Rs4200/-



Water Rs1000/-




Honda

Engine department


Quantity schedul e:

Units received from previous dept. 130


Units still in process(all material-1/2 of labor and FOH)30

Units lost in process 10 130




Total cost Unit cost

Cost from prceeding department: 738492.8578 5680.714291

Cost added by department:

Material 1350,000 11250

Labor 90000 857.1428571

FOH 91700 873.3333333

Total cost to be accounted for 2270192.858 18661.19048

473.3928576

19134.58334


Transferred to the next department 90*19134.58334=1722112.501

W

ork in process-ending inventory

Adjusted cost from preceding department: 30*(5680.714291+473.3928576)=184623.2145

Material =30*11250*100%= 337500

Labor=30*857.1428571*1/2= 12857.14286

FOH.=30*873.3333333*1/2= 13100

Total cost accounted for 363457.1429 2270192.857


Equivalent production units: Materials=90+(30*100%)=120



Labor=90+(30*1/2)=105

Factory overheads=90+(30*1/2)=105

U nit costs:

Material 1350,000/120=11250

Labor 90000/105=857.1428571

FOH 91700/105=873.3333333

Loss adjustment:

unit lost*unit cost of previous dept/available number of units

10*5680.714291/120=473.3928576

Frame Assembling:

This is the last step in the manufacturing process of motorcycle. In this

process the framing of the motorcycle takes place and all the parts of the motorcycle are

combined by labor energy. The framing consists of 12 steps.

The motorcycle frame is composed almost completely of metal, as are the wheels. The frame may beoverlaid with plastic. The tires are composed of rubber. The seat is made from a synthetic

substance, such as polyurethane. The power system consists of a four-stroke engine, a carburetor

to transform incoming fuel into vapor, a choke to control the air-fuel ratio, transmission, and

drum brakes. The

transmission system

contains a clutch, consisting

of steel ball flyweights and

metal plates, a crankshaft,

gears, pulleys, rubber belts

or metal chains, and a

sprocket. The electrical

system contains a battery,



ignition wires and coils, diodes, spark plugs, head-lamps and taillights, turn signals and a horn.

Wheels, brakes, wiring cables, foot pegs, exhaust pipes, seats, saddlebags, lights, radios, and

hundreds of other parts are installed on the motorcycle frame.

Labor Force:



Dir ect Labor:


Labor Cost:




I ndir ect Labor:


6 Supervisors.

4 Sweepers.

5 The people who are working on the rolling machine for shifting of material.

Labor Cost:




Mat erial:



There materials for this department are

Tires Rs850/-

Four-stroke engine Rs10000/-

Carburetor Rs30/-

Choke Rs150/-

Air-fuel ratio Rs75/-

Drum Brakes. Rs650/-

Clutch. Rs150/-

Crankshaft. Rs400/-

Gears. Rs350/-

Pulleys. Rs250/-

Sprocket. Rs125/-

Rubber belts. Rs100

Metal chains. Rs800/-

Battery Rs320/-

Ignition wires. Rs80/-

Coils. Rs225/-

Diodes. Rs175/-

Spark plugs. Rs40/-

Head-lamps. Rs60/-

Taillights. Rs320/-

Turn signals. Rs80/-

Horn. Rs120/-

Brakes. Rs125/-

Wiring cables. Rs425/-

Foot pegs. Rs200/-

Exhaust pipes. Rs150/-

Seats. Rs600/-

Total Cost of the direct material= Rs16850/-





The indirect material and cost for this are

Seat and Paper Cover Rs50/-


Factory Over H ead:




Fuel. Rs4500/-



Water Rs1000/-







Factory Over H ead








Fuel. Rs4500/-



Water Rs1000/-

Factory over head Rs76500



HONDA

Assembling department


Quantity schedul e:

Units received from previous dept. 90


Units still in process (all material,2/3 of conversion cost) 35

Units lost in process (1/2 of material and conversion cost) 10 90


Total cost Unit cost

Transferred to the next department 1722112.501 19134.58334

Cost added by department:

Material 2527500 29735.29412

Labor 270000 3681.985545



FOH 76500 1043.229238

Total cost to be accounted for: 4596112.501 53595.09224


Transferred to the next department (45*53595.09224) =2411779.151

Loss adjustment = 363632.3779

Work in process-ending inventory:

Adjusted cost from preceding dept. (35*19134.58334) =669710.4169

Material (35*100%*29735.29412) =1040735.294

Labor (35*2/3*3681.985545) =85912.99605

FOH (35*2/3*1043.229238) =24342.01555

Total cost accounting for =1150990.306 4596112.501


Equival ent production:

Materials=45+ (35*100%) + (10*1/2)=85

Labor=45+ (35*2/3) + (10*1/2)=73.33

Factory over heads=45+ (35*2/3) +(10*1/2)=73.33

Loss adjustment:

Loss from previous dept. (10*19134.58334) =191345.8334

Material (10*1/2*29735.29412) =148676.4706

Labor (10*1/2*3681.985545) =18409.92773

FOH (10*1/2*1043.229238) =5216.14619

Total Loss adjustment =363632.3779

Pr e-Delivery I nspection (PD I):



At the end of the assembly line, the pre-delivery inspection takes place in which

inspectors undertake a visual inspection of the motorcycle's painted finish and fit of parts. The

inspectors also feel the motorcycles with gloved hands to detect any bumps or defects in the

finish. Each motorcycle is tested on a dynamometer. Inspectors accelerate the motorcycle from

0-60 mph. During the acceleration, the "dyno" tests for acceleration and braking, shifting, wheel

alignment, headlight and taillight alignment and function, horn function, and exhaust emissions.

After the dyno test, a final inspection is made of the completed motorcycle.

Stor e Room:

After inspection the finished goods are sent to the store room and then from there these

are shipped to the customers from where these are demanded.

Cost of Good Sold Stat ement:

Number of unit = 150

Honda

Cost of Good Sold Statement

Opening balance of raw material = 1525000/-

Purchases =225000/-

Local purchases =450000/-

Transportation in =150000/-

Net purchases =825000/-

Material available for use =2350000/-

Closing balance of raw material =714000/-

Direct Material Consumed =1636000/-

Direct Labor =100042.50/-



Factory Over Head =93957.50/-

Indirect Material (Paint) =10000/-

Indirect Labor =75044.50/-

Light and Power =69938/-

Machinery Deep. =60017.5/-

Total Production Cost =2045000/-

Opening balance of raw material =590000/-

Closing balance of raw material =945000/-

Opening balance of finished goods= 65891000

Closing balance of finished goods = 640000

COGs = 7941000

P er unit Cost:

Total number of unit produced = 150

COGs =7941000/-

Per Unit Cost =7941000/150

=52940/-

Re f er ences:

http://www.honda.com

www.madehow.com/Volume-4/ Motorcycl e.html



W e also visited metro industry to get in f ormation.

production process of honda motor cyle..with cpr by students of university of gujrat

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