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