# Apparel Costing

## Apparel Cost Calculation Method for Export Order

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