BILL OF MATERIAL Components
Consumption
Denim Fabric (Construction:-2/1LHT,100% Cotton,64/46,12.5ozs/yd2) Buttons(Mettalic) Rivets(Mettalic) Brand Label(leather) Inside brand label(Taffeta) Pocket tag Pocket bag material(Poplin) material(Popli n) Care label Paper tag Packing material Sewing thread
1.1mtr
1pc 6pcs 1pc 1pc 1pc 25cm 1pc 3pcs LDPE 400mtrs
TOTAL QUANTITY (Cut order plan) Sizes
30
32
34
36
38
Ratio
2
2
1
3
2
Quantity
2000
2000
1000
3000
2000
ORDER PLAN FOR EACH COLOUR* Sizes Quantity
30
32
34
36
38
1000
1000
500
1500
1000
*Order for two colours indigo and sulphur black.
Direct Material Material (mtr)
Consumption (mtr)
Cost/mtr (INR)
Cost/gmt (INR)
Hidden Cost (2% margin)
Cons/10000 (mtr)
Cost/10000 (INR)
Denim Fabric Lining
1.1
90
99
1.98
11000
99,0000
0.16 0 .16
22
3.52
0.44
1600
35,200
400
0.01
4
0.08
4000000
40,000
106.52
2.5
Sewing Thread
Total
10,65,200
Trims & Care labels Material
Consumption (Pieces)
Cost/pc (INR)
Cost/gmt (INR)
Hidden Cost (2% margin)
Cons/10000 (pcs)
Cost/10000 (INR)
Mettalic Zipper Mettalic Button Rivets
1
8
8
0.16
10,000
80,000
1
0.75
0.75
0.015
10,000
7,500
6
0.20
1.20
0.024
60,000
12,000
1
6
6
0.12
10,000
60,000
Brand Label (leather) Inside brand label(Taffeta) Care label
1
0.75
0.75
0.015
10,000
7500
1
1
1
0.02
10,000
10,000
Pocket tag
1
0.25
0.25
0.005
10,000
2,500
17.95
0.359
Total
179500 179500
Cut Make Trim(Direct Labor) Sno. Operations
No. of workers
*Kind Wages/8hrs Time/10000 of (INR) (Hrs) workers
Cost/10000 Cost/gmt (INR)
(INR)
1
Inspection
2
S+SS
280+175
17
966
0.10
2
Spreading
2
S+SS
270+190
42
2415
0.24
3
Cutting
2
S+S
350+350
133
11666
1.16
4
Ticketing
2
S+S
250+250
133
8312
0.83
5
Bundling
2
S+SS
250+175
80
4250
0.4250
6
Cut part
2
S+S
300+300
133
6000
0.60
2
S+S
300+300
266
19950
1.90
420000
42
8312
0.83
481871
48.18
Inspection 7
Inspection
8
Washing
9
Pressing
2
Total
16
S+SS
250+250
133
Assumptions:1. Inspection speed-10mpm
5. Bundling-500pc/operat Bundling-500pc/operator/8hrs or/8hrs
2. Spreading-4mpm(manually)
6.Inspection-150pc/operator/8hrs
3. Cutting-150pc/operator/hr Cutting-150pc/operato r/hr
7. Washing from outside
4. Ticketing-300pc/operat Ticketing-300pc/operator/8hr or/8hr
8. Pressing-38pc/operator/hr Pressing-38pc/oper ator/hr
* S for skilled,SS for semiskilled
Sr.no
operations
No. of operator
Wage/8hrs/
Production
Operator
Per 8hrs
(INR)
Cost Cost/gmt per10000 (INR) (INR)
1
Top stiching of coin pocket
1
160
200
8000
0.80
2
Sew coin pocket to pocket facing
1
180
190
9400
0.94
3
Sew pocket facing to pocket bag
1
190
200
9500
0.95
4
Closing of pocket bag
1
170
180
9400
0.94
5
Sew the pocket to front(RH&LH)
2
220
295
14900
1.49
6
Back yoke to right & left back
2
200
350
11400
1.14
7
Hip pocket mouth hem
1
140
200
7000
0.70
8
Ornamental stitch on hip pocket
1
130
195
6600
0.66
9
Hip pocket to both left & right back
2
180
350
10200
1.02
10
Sew both side seam
2
250
300
16600
1.66
11
Zipper to left & right fly
2
220
320
13750
1.375
Sr.no
operations
No. of operator
Wage/8hrs/
Production
Operator
Per 8hrs
(INR)
Cost Cost/gmt per10000 (INR) (INR)
12
Sew left & right fly to both front
2
240
350
12500
1.25
13
Sew crotch seam
1
230
300
7600
0.76
14
Sew inseam
2
250
350
14200
1.42
15
Sew waist band with back & front
1
300
250
12000
1.20
16
Sew waist band edge
1
250
180
13800
1.38
17
Sew leather label & inside label on waist band
2
230
330
13900
1.39
18
Belt loop prepration(5/gmt)
2
220
1000
22000
2.20
19
Belt loop stitching
2
240
900
26000
2.60
20
Sew eyelet button hole
1
300
290
10300
1.03
21
Attach metallic button & rivet
2
230
500
9200
0.92
Total
32
25.825
258250
Total Cut make trim cost =48.18+25.82=Rs 74 Direct labor cost=Total cut make trim cost= Rs 74
Packing Material Sr Materials no.
Consumption in pieces
Cost/pc (INR)
Hidden cost With Cost/gmt 2% margin (INR)
Cons/10000 Cost/10 000
(INR)
(INR)
1
Polybag
1
2
0.04
2
10,000
20,000
2
Clip
2
0.75
0.03
1.5
20,000
15,000
3
Sticker
2
0.20
0.008
0.40
20,000
4,000
4
Gripper
2
0.50
0.02
1
20,000
10,000
5
Tag
3
1.5
0.09
4.5
30,000
45,000
6
*Cartoon
1/10
10
0.20
1
1,000
10,000
0.388
10.40
Total
104000
106.52+17.95+10.40=Rs 134.87 Total direct material cost= 106.52+17.95+10.40=Rs Total hidden cost with 2% margin for one garment=2.5+0.359+0.388=Rs garment=2.5+0.359+0.388=Rs 3.247 Total hidden cost with 2% margin for 10,000 garments=3.247 garments=3.247 X 10,000=Rs 32,470
Indirect cost Assumptions : 1. Number of m/c=105 2. Number of line=5 3. Average production/day=600 4. Total floor area=6000sqft 5. Depreciation=10%/annum 6. Cost of m/c=Rs 50,00,000 7. Cost of equipment=Rs 10,00,000 8. Number of light point=50(Rs 5/light/day) 9. Power consumption=13222 kw/year, 1kw=Rs 10 10. Rent=Rs 102857 11. Insurance=Rs 200/qtr/m/c 12. Stationary/year=Rs 5000 Note:
Order quantity=10,000gmt Time for completion of order=17days
Indirect labor
Sr no.
Indirect labor
1
Security
2
No.of labor
Cost/labor/day Cost/labor/day
Cost for 17 days
(INR)
(INR)
2
18
612
Supervisor
4
200
13600
3
Storekeeper
3
200
10200
4
Canteen staff
2
150
5100
5
Maintenance worker
5
200
17000
6
Housekeeping
8
20
2720
7
Checker
17
40
11560
8
Helper
14
20
4760
848
65552
Total
Note: Total indirect labor cost for 10000 garments=Rs 65552 So, total indirect cost for one garment=Rs 6.55
Indirect expenses
Sr no
Area of expenses
Allocation
Yearly cost (INR)
Cost for 17 days (INR)
1
Rent
Floor area
102857 102 857
4790
2
Power
No. of m/c
132221
6158
3
Depreciation
Value of m/c & equipment
600000
27945
4
Insurance
No. of m/c
80000
3912
5
Light
No. of light point
91250
5367
Total
48172
Note: Total indirect expenses for 10000 garments=Rs 48172 So, total indirect expenses for one garment=Rs 4.81
Indirect material Indirect material cost for 17days=Rs 232.71 Total indirect material cost for 10000 garments=Rs 232.71 So, total indirect material cost for one garment=Rs 0.0232
Calculations: Total direct cost= direct material cost + direct labor cost + direct expenses =(106.50+17.95+10.40)+(48.18+25.82)+0=Rs =(106.50+17.95+10.40)+( 48.18+25.82)+0=Rs 208.85 Total hidden cost(2% margin)=2.5+0.359+0.388=Rs margin)=2.5+0.359+0.388=Rs 3.24 Total direct cost with hidden cost=208.85+3.24=Rs cost=208.85+3.24=Rs 212.09 Total indirect cost= indirect material cost + indirect labor cost + indirect expenses =0.0232+6.55+4.81=Rs 11.36 Total cost=212.09+11.36=Rs cost=212.09+11.36=Rs 223.45 Total cost with 3% wastage=223.45+6.72=Rs wastage=223.45+6.72=Rs 230.17 Total cost with 15% margin=230.17+34.52=Rs margin=230.17+34.52=Rs 264.69 Let s consider MRP=Rs 1000 ’
Mark Up for retailer=3 Target cost=1000/3=Rs cost=1000/3=Rs 333.33 Range for negotiation negotiation= (333.33-264.69)=Rs 68.64
Analysis & Conclusion
Whatever costing we had done in this assignment we can conclude that the fabric cost is Rs 99 which is 43% of total cost so, if the cost of fabric is lesser extent then it gives more benefit from the buyer. The above costing gives gives us idea to understand the importance of direct materials cost which covers major percentage of total cost of manufacturing .We also understood about the recovery of factory overheads based on cost centers as well as got some idea to calculate the labor and machine hour rate.
Objective To determine the cost involved while manufacturing of denim jeans by the method of absorption costing for single jeans and also for 10,000 jeans.
ASSIGNMENT OF COSTING OF APPAREL PRODUCTION ON COSTING OF DENIM JEANS
SUBMITTED TO Ms. Nithya Venkataraman Asst professor Nift,Bangalore
SUBMITTED BY Pravin kr. Mahato Satish Kumar MF.Tech(AP) Sem-II,Nift, Bangalore.
