Marketing Apparel Products Apparel Development 2 Objective 4.01.
Costing of Apparel Products
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Costing of Apparel Products
Ladies Denim Jeans
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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.
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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.
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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
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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
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DIRECT EXPENSES
WASHING
EMBROIDERY
DEPARTMENT COST PER GARMENT(Rs.)
Embroidery 8
Washing 68
Total Direct Expenses 76
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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
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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
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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
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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
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INDIRECT EXPENSES
POWER CONSUMPTION
DEPRECIATION
INSURANCE
MAINTENANCE AND REPAIRS
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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
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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
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INSURANCE
INSURANCE
DEPARTMENT COST PER GARMENT(Rs.)
Cutting Department 0.007
Sewing Department 0.226
Finishing Department 0.0236
Total Insurance 0.258
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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
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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
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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
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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
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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
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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
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DESIGN & SELLING & DISTRIBUTION OVERHEADS
SAMPLING
TRANSPORTATION
ELEMENTS COST PER GARMENT(Rs.)
Sampling 1.467
Transportation 1.25
Total D&S Overheads 2.717
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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
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DIRECT MATERIAL
86%
5% 9%
DIRECT MATERIAL
CUTTING SEWING FINISHING
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DIRECT LABOUR
4%
87%
9%
DIRECT LABOUR
CUTTING SEWING FINISHING
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DIRECT EXPENSES
71%
29%
DIRECT EXPENSES
EMBROIDERY WASHING
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PRIME COST
69%
9%
22%
PRIME COST
DIRECT MATERIAL DIRECT LABOUR DIRECT EXPENSES
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INDIRECT MATERIAL
3% 1%
90%
6%
INDIRECT MATERIAL
CUTTING SEWING FINISHING CAD
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INDIRECT LABOUR
7%
62%
10%
21%
INDIRECT LABOUR
CUTTING SEWING FINISHING CAD
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TOTAL INDIRECT EXPENSES
45%
43%
4%8%
TOTAL INDIRECT EXPENSES
POWER CONSUMPTION DEPRECIATIONINSURANCE MAINTENANCE AND REPAIRS
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FACTORY OVERHEADS
35%
24%
41%
FACTORY OVERHEADS
INDIRECT MATERIAL INDIRECT LABOURINDIRECT EXPENSES