Costing of apparel

Direct costing of garment

5/16/2012

sDirect cost

The cost of the marginal or last unit produced. The accounting system in which variable costs are charged to cost units and the fixed costs are written off in full against aggregate contribution. Contribution : Sales- variable cost Marginal cost = DL+DM+DE+ NO variable costs are taken into account

Principles

For any given period of time ,FC will remain the same for any volume of sales and production For every extra item of product/service sold a) Revenue : Increases by the sales value of the item sold b) Cost : Increases as variable cost/unit c) Profit : Increases as amount of contribution earned from the extra item Profit measurement takes on the analysis of total contribution NO extra FC are incurred when output is increased

Features of direct costing

Cost classification Stock/Inventory valuation : Done under marginal cost a) Only VC are taken as stock b) Closing stock will be lower c) Less carry forward of stock d) Stock value will affect profit Marginal contribution for profitability of different products/departments

Advantages

Simple to understand Gives way for break even and profitability analysis and hence short term profit planning Effect of varying charges per unit is avoided Alternative sales or production policies can be assessed and decisions taken can yield maximum results Eliminates balances in o/h control accounts Prevents carry forward in stock valuation

Disadvantages

Separation of costs can be misleading Exclusion of FC affects profits Unrealistic in case of highly fluctuating levels of production( seasonal production) O/H absorption is estimated ; can be erroneous In practice, SP, FC and VC per unit may vary Not practical for long-term profit planning

Thread consumption of casual shirt

1inch = 0.0254 m Collar Collar = 20*2 (SNLS Top stitch + under stitch) Collar stand = 21.5*2 + 17*1 (SNLS top stitch + under stitch) Collar bone = 6*2 (SNLS) Total = 40+59+12 = 121 inch

Yoke Yoke attachment = 17*2 = 34 Yoke shoulder = 6*2 = 12 Total = 34 + 12 = 46 inch

Pocket Left front pocket = 7.5*2 + 5.5 + 2.5 = 48 Right panel placket = 25.5 Total = 48 + 25.5 = 73.5 inch

Cuff Top stitch + under stitch = (14+ +1 +9.5*2)*2= 92 inch Diamond placket (5 +13)*2 = 36 inch Shoulder attachment = (21.5*2)*2 = 86 inch Button stitch = 256cm or 100.78 inch (1cm = 0.393 inch) Button hole = 224 cm or 88.19 inch 2.5 stitch per inch on SNLS TOTAL = 121 + 46 + 73.5 + 92 + 36 + 86 + 100.78 + 88.19 = 643.47 INCH

2.5 stitch per inch on SNLS then thread consumption = 643.47*2.5 =1608.67 inch

Stitch done by chain stitch (401)

Side seam = (34*3)*2 = 204 inch Hem = 44 inch Collar neck = 16 inch Right placket = 25.5 inch 3 stitch per inch on CHAIN STITCH (401) then thread consumption = 289.5*3= 868.5 inch Total thread consumption = 1608.67 + 868.5 = 2477.17 inch Or 62.92 meter