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 MATERIAL
DEPARTMENT
CUTTING

COST PER GARMENT(Rs.)

203.735998

Cutting Department

SEWING

Sewing Department

11.935

Finishing Department FINISHING Total Direct Material

22.13566667

237.8066664

DIRECT LABOUR
DEPARTMENT
CUTTING Cutting Department 1.26716604

COST PER GARMENT(Rs.)

SEWING

Sewing Department

25.50561798

Finishing Department FINISHING

2.559375

Total Direct Labour

29.33215902

DIRECT EXPENSES
DEPARTMENT
EMBROIDERY Embroidery 8

COST PER GARMENT(Rs.)

WASHING

Washing

68

Total Direct Expenses

76

PRIME COST
ELEMENTS
MATERIAL Direct Material

COST PER GARMENT(Rs.)

237.806

LABOUR

Direct Labour

29.332

Direct Expenses 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 Material Indirect Labour Indirect Expenses

INDIRECT MATERIAL
DEPARTMENT
CUTTING Cutting Department

COST PER GARMENT(Rs.)

0.141697878

SEWING

Sewing Department

0.044655719

Finishing Department FINISHING Cad Department CAD Total Indirect Material

4.718125

0.312109863

5.241932741

INDIRECT LABOUR
DEPARTMENT
CUTTING

COST PER GARMENT(Rs.)

0.234

Cutting Department

Sewing Department

2.184

SEWING
Finishing Department 0.364

FINISHING

Cad Department

0.720

Total Indirect Labour

3.504

INDIRECT EXPENSES
POWER CONSUMPTION DEPRECIATION INSURANCE MAINTENANCE AND REPAIRS

POWER CONSUMPTION
DEPARTMENT
CUTTING Cutting Department

COST PER GARMENT(Rs.)

0.163

SEWING

Sewing Department
Finishing Department

1.998
0.474 0.092 0.018 2.747

FINISHING
Cad Department CAD Storage Total Power Consumption

STORAGE

DEPRECIATION
DEPARTMENT
Cutting Department Sewing Department SEWING Finishing Department 0.905

COST PER GARMENT(Rs.)

0.081 1.541

CUTTING

FINISHING

Cad Department
Storage Total Depreciation

0.0746
0.010 2.614

FINISHING CAD

STORAGE

INSURANCE
DEPARTMENT COST PER GARMENT(Rs.)
0.007 Cutting Department

Sewing Department

0.226

Finishing Department

0.0236

INSURANCE

Total Insurance

0.258

MAINTENANCE AND REPAIR

DEPARTMENT COST PER GARMENT(Rs.)
0.014

Cutting Department

Sewing Department

0.408

Finishing Department

0.042

MAINTENANCE

Total Insurance

0.465

TOTAL INDIRECT EXPENSES

ELEMENTS
Power Consumption

COST PER GARMENT(Rs.)

2.747

Depreciation

2.614

Insurance

0.258

Maintenance And Repairs

TOTAL EXPENSES

0.465

Total Indirect Expenses

6.085

TOTAL FACTORY OVERHEADS

ELEMENTS COST PER GARMENT(Rs.)
5.241 Indirect Material

Indirect Labour

3.504

Indirect Expenses

6.085

TOTAL OVERHEADS

Total Factory Overheads

14.805

ADMINISTRATION OVERHEADS
Administrative O/h includes indirect (material+labor+expenses) incurred @policy formation, control and administration e.g..Human Resource , Director, VP It includes: Manpower Power Consumption Depreciation Material Expenses

ADMIN OVERHEADS
ELEMENTS MANPOWER Manpower MATERIAL POWER CONSUMED DEPRECIATION Other Expenses OTHER EXPENSES Total Admin Overheads 3.47 59.733 Material Power Consumption Depreciation 52.248 0.938 2.264 0.813 COST PER GARMENT (Rs.)

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

ELEMENTS COST PER GARMENT(Rs.)

Sampling SAMPLING

1.467

Transportation

1.25

TRANSPORTATION

Total D&S Overheads

2.717

FINAL COST
ELEMENTS COST PER GARMENT(Rs.)

Prime Cost

346.81

Production Cost (Prime Cost + Factory Overheads )

361.62

FINAL COST

Final Cost ( Production Cost + Admin Overheads + Design, Selling And Distribution Overheads)

424.07

DIRECT MATERIAL
DIRECT MATERIAL
CUTTING SEWING 9% FINISHING

5%

86%

DIRECT LABOUR
DIRECT LABOUR
CUTTING SEWING 4% FINISHING

9%

87%

DIRECT EXPENSES
DIRECT EXPENSES
EMBROIDERY WASHING

29%

71%

PRIME COST
PRIME COST
DIRECT MATERIAL DIRECT LABOUR DIRECT EXPENSES

22%

9% 69%

INDIRECT MATERIAL
INDIRECT MATERIAL
CUTTING SEWING 6% FINISHING CAD 3% 1%

90%

INDIRECT LABOUR
INDIRECT LABOUR
CUTTING SEWING 7% FINISHING CAD

21%

10%

62%

TOTAL INDIRECT EXPENSES

TOTAL INDIRECT EXPENSES
POWER CONSUMPTION INSURANCE 4% 8% 45% 43% DEPRECIATION MAINTENANCE AND REPAIRS

FACTORY OVERHEADS
FACTORY OVERHEADS
INDIRECT MATERIAL INDIRECT EXPENSES INDIRECT LABOUR

41%

35%

24%