How to Calculate Finishing Cost and Finishing Rate in Textile Industry?

Finishing Cost Calculation Process in Textile Industry:
To change the fabric appearance, textile finishing process has great importance in textile industry. Finishing cost also included when total cost is calculated. So, to know the actual method of textile finishing cost calculation is mandatory for the responsible person. 

Textile finishing cost calculation method
Fig: Textile finishing cost calculation method
Textile Finishing Cost Calculation Method:
Calculate the finishing cost and rate per of by following the below chart.
SL No.
Parameters
Quantity and Cost
01
Fabric quantity
400kg
02
Finishing chemical consumed
5kg
03
Chemical A consumed
4kg
04
Chemical B consumed
2kg
05
1 day
3 shift
06
Total finishing process time
4 hours
07
Number of labors
3
08
Labor wages
Rs. 200 per shift
09
Compacting
Rs. 8 per kg
10
Steam
Rs. 30000 per month
11
Power
Rs. 10000 per month
12
Transport
Rs. 20000 per month
13
Salary
Rs. 50000 per month
14
Other expenses
Rs. 40000 per month
15
Finishing chemical price
Rs. 250 per kg
16
Chemical A price
Rs. 25 per kg
17
Chemical B price
Rs. 60 per kg
18
Profit
15%

Solution:
To calculate textile finishing cost and finishing rate, below formula has to apply.

Finishing cost per kg,

    Direct labor + Direct material + Direct expense + Direct overhead
…………………………………………………………………....…………      .... (1)
                               Total finishing production

Total Finishing Production Calculation:

Total production,
= Fabric input
= 400kg

Total Finishing Production Time Calculation:

Total finishing production time,
= Finishing process time
= 4 hours
= (4/8) shift
= 0.5 shift

Direct Labor Cost Calculation:

Operator wages,
= Number of labor × No. of shift × labor wage per shift
= 3×0.5× Rs. 200
= Rs. 300

Direct Material Cost Calculation:

Finishing chemical cost = Amount of chemical consumed × chemical price = 5× Rs. 250 = Rs. 1250

Chemical A cost = Amount of chemical consumed × chemical price = 4× Rs. 25 = Rs. 100
Chemical B cost = Amount of chemical consumed × chemical price = 2× Rs. 60 = Rs. 120

So,
Direct material cost is,
= (Rs. 1250 + Rs. 100 + Rs. 120)
 = Rs. 1470

Direct Expense Cost Calculation:

Compacting,
= Fabric quantity × compacting rate per kg
= 400 × Rs. 8
= Rs. 3200

Overhead Cost Calculation:

In steam cost calculation,
= (Cost × 0.5 shift) / (30days × 3 shifts in a day) = {(30000 × 0.5)/90} = Rs. 167

In transport cost calculation,
= (Cost × 0.5 shift) / (30days × 3 shifts in a day) = {(20000 × 0.5)/90} = Rs. 112

In power cost calculation,
= (Cost × 0.5 shift) / (30days × 3 shifts in a day) = {(10000 × 0.5)/90} = Rs. 56

In other expenses cost calculation,
= (Cost × 0.5 shift) / (30days × 3 shifts in a day) = {(40000 × 0.5)/90} = Rs. 224

In salary cost calculation,
= (Cost × 0.5 shift) / (30days × 3 shifts in a day) = {(50000 × 0.5)/90} = Rs. 279

So, 
Total overhead cost stands at,
= Rs. 167 + Rs. 112 + Rs. 56 + Rs. 224 + Rs. 279
= Rs. 838

Now, from equation-01, we get,

Textile finishing cost per kg,

     (Rs. 1470 + Rs. 300 + Rs. 3200 + Rs. 838)
…………………………………………………………..
                                  400

= Rs. 14.50

After adding 15% profit, textile finishing rate stands at
= {14.50/ (1-15%)}
= Rs. 17.10