**Apparel Costing for Export Order:**

To calculate

**apparel costing**or cost of an apparel export order, we have to maintain a process sequence. In this sequence, we have to calculate primary or prime cost, factory cost, office cost and total cost of an export order respectively.Fig: Apparel costing for export order |

**Apparel Costing Methods for Export Order:**

**Example:**

Find out the total cost of 10000 pcs polo shirt with 15% profit. All the data are given in the below:

Cost of yarn used- Rs. 40,0000

Cost of accessories used- Rs. 1,00000

Labor wages- Rs. 90,000

Knitting cost or charge- Rs. 16000

Dyeing charge- Rs. 160000

Compacting charge- Rs. 12000,

Power- Rs. 50000

(Factory: office: S&D = 3: 1.5:0.5)

Salary- Rs. 150000

(Factory: office: S&D = 1.5: 2.5:1)

Spare parts in factory- Rs. 5000

Stationary- Rs. 6000

(Factory: office: S&D = 1:2.5:1.5)

Transport- Rs. 40000

(Factory: office: S&D = 1:1:2)

Other expenses- Rs. 100000

(Factory: office: S&D = 3:5:2)

**Solution:**

**Primary or Prime Cost Calculation Method:**

Prime cost = (Direct material + Direct labor + Direct expenses) …………………….. (1)

Now,

Direct material,

= Yarn cost + Accessories cost

= 40,0000 + 1,00000

= Rs. 50000

Again,

Direct labor = Rs. 90000

Again,

Direct expense,

= (

**Knitting**charge + Dyeing charge + compacting charge)
= 160000 + 16000 + 12000

= Rs. 188000

Now, from equation (1), we get,

Prime cost,

= 50000 + 90000 + 188000

= Rs. 778000

**Factory Cost Calculation Method:**

Factory cost,

= (Prime cost + Factory Overheads)

= (Prime cost + Factory indirect material + Factory indirect labor + indirect expense) …….... (2)

Now,

Factory indirect material,

= Spare parts + Stationary

= 5000 + (1/5*6000)

= 5000 + 1200

= Rs. 6200

Again,

Factory indirect labor,

= Salary (1/5*150000)

= Rs. 45000

So, Factory indirect labor is 45000

Again,

Factory indirect expense,

= (Power+ transport+ other expense)

= (3/5*50000) + (¼*40000) + (3/10*100000)

= 30000 + 10000 + 30000

= Rs. 70000

Now, from equation (2), we get,

Factory cost,

= 778000 + 6200 + 4500 + 70000

= Rs. 899200

**Office Cost Calculation Method:**

Office cost,

= (Factory cost + Office Overheads)

= (Factory cost + Office indirect material + Office indirect labor + Office expense) …...... (3)

Now,

Office indirect material,

= Stationary

= 2.5/5*6000

= Rs. 3000

Again,

Office indirect labor,

= Salary

= 2.5/5*150000

= Rs. 75000

Again,

Office expense,

= Power+ transport + other expenses

= (1.5/5*50000) + (1/4*40000) + (5/10*100000)

= 15000 + 10000 + 50000

= Rs. 75000

Now, from equation (3) we get,

Office cost,

= 899200 + 3000 + 75000 + 75000

= Rs. 1052200

**Total Cost Calculation Method:**

Total cost,

= Office cost + selling and distribution (S&D) overheads

= (Office cost + S&D indirect material + S&D indirect labor + S&D indirect expenses)…...... (4)

Now,

S&D indirect material,

= Stationary

= 1.5/5*6000

= Rs. 1800

Again,

S&D indirect labor,

= Salary

= 1/5*150000

= Rs. 30000

Again,

S&D indirect expenses,

= Power + Transport + Other expense

= (0.5/5*50000) + (2/4*40000) + (2/10*100000)

= 5000 + 20000 + 20000

= Rs. 45000

Now, from equation (4), we get,

Total cost,

= 1052200 + 1800 + 30000 + 45000

= Rs. 1129000

So,

Total cost stands at Rs. 1129000

Cost per pcs,

= 1129000/10000

= Rs. 112.90

After adding 15% profit,

Price per pc,

= {Cost/ (1-profit %)}

= {112.90/ (1-15%)}

= Rs. 132.83

So, price per pcs polo shirt stands at Rs. 132.83

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