Transcript
Costing of Apparel Products
Ladies Denim Jeans
COSTING• The technique and process of ascertaining /
defining / determining costs.
• “ It involves the classification , recording and appropriate allocation of expenditure for the determination of the costs of products or services; the relation of these costs to sales values; and the ascertainment of profit ability.”- Cost and Financial Accounting Terminology, published by Chartered Institute of management Accountants (CIMA) , London.
PRIME COST• Direct Costs: Costs which can be directly
identifiable with cost centers, processes or production units are known as direct costs.
Direct Material : Materials which enter into and form part of the product - woods in furniture, chemical in drug, leather in shoe.
Direct Labor : Employees are employed directly in making the product and their work can be easily identified.
Direct Expenses : Cost of special design, consultancy fee for improving productivity, hire charges of machinery.
DIRECT MATERIALDEPARTMENT COST PER
GARMENT(Rs.)
Cutting Department 203.735998
Sewing Department 11.935
Finishing Department 22.13566667
Total Direct Material 237.8066664
CUTTING
SEWING
FINISHING
DIRECT LABOUR
CUTTING
SEWING
FINISHING
DEPARTMENT COST PER GARMENT(Rs.)
Cutting Department 1.26716604
Sewing Department 25.50561798
Finishing Department 2.559375
Total Direct Labour 29.33215902
DIRECT EXPENSES
WASHING
EMBROIDERY
DEPARTMENT COST PER GARMENT(Rs.)
Embroidery 8
Washing 68
Total Direct Expenses 76
PRIME COST
MATERIAL
LABOUR
EXPENSES
ELEMENTS COST PER GARMENT(Rs.)
Direct Material 237.806
Direct Labour 29.332
Direct Expenses 76
Prime Cost 343.138
FACTORY OVERHEADS• Factory overhead = Indirect
(material+labor+expenses) incurred @factory, Commences with the supply of raw material and ends with the primary packaging of finished goods.
• It includes:Indirect MaterialIndirect LabourIndirect Expenses
INDIRECT MATERIAL
CUTTING
SEWING
FINISHING
DEPARTMENT COST PER GARMENT(Rs.)
Cutting Department 0.141697878
Sewing Department 0.044655719
Finishing Department 4.718125
Cad Department 0.312109863
Total Indirect Material 5.241932741
CAD
INDIRECT LABOUR
CUTTING
SEWING
FINISHING
DEPARTMENT COST PER GARMENT(Rs.)
Cutting Department 0.234
Sewing Department 2.184
Finishing Department 0.364
Cad Department 0.720
Total Indirect Labour 3.504
INDIRECT EXPENSES
POWER CONSUMPTION
DEPRECIATION
INSURANCE
MAINTENANCE AND REPAIRS
POWER CONSUMPTION
CUTTING
SEWING
CAD
DEPARTMENT COST PER GARMENT(Rs.)
Cutting Department 0.163
Sewing Department 1.998
Finishing Department 0.474
Cad Department 0.092
Storage 0.018
Total Power Consumption 2.747STORAGE
FINISHING
DEPRECIATION
CUTTING
FINISHING
DEPARTMENT COST PER GARMENT(Rs.)
Cutting Department 0.081
Sewing Department 1.541
Finishing Department 0.905
Cad Department 0.0746
Storage 0.010
Total Depreciation 2.614
CUTTING
SEWING
CAD
STORAGE
FINISHING
INSURANCE
INSURANCE
DEPARTMENT COST PER GARMENT(Rs.)
Cutting Department 0.007
Sewing Department 0.226
Finishing Department 0.0236
Total Insurance 0.258
MAINTENANCE AND REPAIR
MAINTENANCE
DEPARTMENT COST PER GARMENT(Rs.)
Cutting Department 0.014
Sewing Department 0.408
Finishing Department 0.042
Total Insurance 0.465
TOTAL INDIRECT EXPENSES
TOTAL EXPENSE
S
ELEMENTS COST PER GARMENT(Rs.)
Power Consumption 2.747
Depreciation 2.614
Insurance 0.258
Maintenance And Repairs 0.465
Total Indirect Expenses 6.085
TOTAL FACTORY OVERHEADSELEMENTS COST PER
GARMENT(Rs.)
Indirect Material 5.241
Indirect Labour 3.504
Indirect Expenses 6.085
Total Factory Overheads 14.805
TOTAL OVERHEAD
S
ADMINISTRATION OVERHEADS• Administrative O/h includes indirect
(material+labor+expenses) incurred @policy formation, control and administration e.g..Human Resource , Director, VP
• It includes:ManpowerPower ConsumptionDepreciationMaterialExpenses
ADMIN OVERHEADSELEMENTS COST PER GARMENT
(Rs.)
Manpower 52.248
Material 0.938
Power Consumption 2.264
Depreciation 0.813
Other Expenses 3.47
Total Admin Overheads 59.733
MANPOWER
MATERIAL
POWER CONSUMED
DEPRECIATION
OTHER EXPENSES
DESIGN, SELLING AND DISTRIBUTION OVERHEADS
Design O/h : Designing includes costs of-Hiring designer(s), Expenditure on travel to international fairs/exhibitions to understand latest trends/ideas ,cost of experimenting with new fabrics, prototype development, Fit sample, Sales man sample
Selling O/h : Indirect (material+labor+expenses) incurred @creating and stimulating demand and securing orders, E.g.…advertisement, customer interaction
Distribution O/h : Indirect (material+labor+expenses) incurred @dispatching them to respective location.eg …warehouse expenses, rates and taxes for finished goods
DESIGN & SELLING & DISTRIBUTION OVERHEADS
SAMPLING
TRANSPORTATION
ELEMENTS COST PER GARMENT(Rs.)
Sampling 1.467
Transportation 1.25
Total D&S Overheads 2.717
FINAL COST
FINAL COST
ELEMENTS COST PER GARMENT(Rs.)
Prime Cost 346.81
Production Cost (Prime Cost + Factory Overheads )
361.62
Final Cost ( Production Cost + Admin Overheads + Design, Selling And Distribution Overheads)
424.07
DIRECT MATERIAL
86%
5% 9%
DIRECT MATERIAL
CUTTING SEWING FINISHING
DIRECT LABOUR
4%
87%
9%
DIRECT LABOUR
CUTTING SEWING FINISHING
DIRECT EXPENSES
71%
29%
DIRECT EXPENSES
EMBROIDERY WASHING
PRIME COST
69%
9%
22%
PRIME COST
DIRECT MATERIAL DIRECT LABOUR DIRECT EXPENSES
INDIRECT MATERIAL
3% 1%
90%
6%
INDIRECT MATERIAL
CUTTING SEWING FINISHING CAD
INDIRECT LABOUR
7%
62%
10%
21%
INDIRECT LABOUR
CUTTING SEWING FINISHING CAD
TOTAL INDIRECT EXPENSES
45%
43%
4%8%
TOTAL INDIRECT EXPENSES
POWER CONSUMPTION DEPRECIATIONINSURANCE MAINTENANCE AND REPAIRS
FACTORY OVERHEADS
35%
24%
41%
FACTORY OVERHEADS
INDIRECT MATERIAL INDIRECT LABOURINDIRECT EXPENSES
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