PRESENTATION ON COSTING FACTOR

Meeta Gawri

CONTENT

COST

IMPORTANCE OF COST
ELEMENT OF COST FACTOR OF COST

COSTING

CLASSIFING,ORGANISATING,REPORTING IT IS A PROCESS OF COLLECTING, AND USING COST.

COST CALCULATION IS VERY IMPORTANT FACTOR AS IT WILL RESULT IN EITHER PROFIT OR LOSS.

NEED OR IMPORTANCE OF COSTING

TO CALCULATE PROFIT OR LOSS TO ANALYSIS THE VARIOUS COST OF RESOURCES TO KEEP CHECK ON EXPENSES AND INFLOW OF COST OF GOODS

TO CALCULATE MANUFACTURING COSTFOR PLANNING, BUDGETING FOR INVENTORY CONTROL AND FUTURE EXPANSION

ELEMENTS OF COST

ELEMENTS OF COST

MATERIAL

LABOUR

EXPENSES

MATERIAL

DIREC T

LABOUR

INDIREC T

EXPENSE S

DIRECT COST : It is the actual cost of

Material that will make up the finish

product.

DIRECT LABOUR : It is the wages cost of those employees who actually manufactured the finished product

DIRECT EXPENSES :These are the expenses without which a specific product could not be made, these are related to specific product.

INDIRECT MATERIAL : Means those materials used in the factory which do not form part of the finished goods.

INDIRECT LABOUR : It means wages and Salaries to the employed to work in factory But dont form the finished goods

INDIRECT EXPENCES : All factory Expenses

PRIME COST
DIRECT MATERIAL+ DIRECT LABOUR + DIRECT EXPENCES FACTORY OVERHEAD

INDIRECT MATERIAL+ INDIRECT LABOUR +INDRECT EXPENCES PRODUCTION COST

PRIME COST+ FACTORY OVERHEAD

PRODUCTION COST

SELLING & DISTRIBUTION ADMINISTRATION & FINANCE

TOTAL COST

DIRECT MATERIAL Fabric used in a garment Zipper, cost of the button, Packing cost

DIRECT LABOUR

DIRECT EXPENSE

FACTORY OVERHEAD Cleaning material used in factory, Work-study officer salary Rent of factory, Heating and lighting in factory.

SELLING & FINANCE Discount to the customer Salesman salary, Rent of showroom

ADMN.

Wages cost of Royalty paid, the worker work for producing garment, Pressroom wages, Cutting room wages

Officer salary, bank charges, audit fees staff canteen cost

ELEMENTS OF USE IN MAKING A SHIRT

LABLE BUTTON

THREAD FABRIC

DIRECT COST= Fabric, Buttons, Fusing, threads

DIRECT LABOUR= Spreaders+ cutter+ Sewer+ washer

DIRECT EXPENSES=Royalty +Sampling+

Fabrication,

FACTORY OVERHEAD

Heat and Lighting

Factory rates Officer salary Maintenance cost Cleaning material

FACTOR OF COST

FIXED
FIXED

VARIABLE
VARIABLE

FIXED COST : These cost are not effected by the output of the business.

VARIABLE COST These cost increases with output of business. It include all direct cost

SEMIVARIABLE COST These cost contain an element of cost that are fixed as well as variable