An brief discussion about product and process costing

Product costing and pricing is a fundamental part of a business. To measure costing of an product we have to create ability on this by learning product costing technique and item producing forms. The necessary ventures to get ready costing for attire items has been discussed at below:

  • Product Costing

The most straightforward approach to discover the Product cost

Product Cost = Raw material cost + direct labour cost + indirect labour cost + factory overhead cost

To measure product cost we have to know or compute all the above cost heads independently.

• Raw Materials Cost:

Fabric is the primary raw material for a piece of clothing and other raw materials incorporate different trims and accessories.

• Fabric Costing:

The costing of weaved fabrics is done by i.e. GSM. Before GSM can be figured, it is essential to know the yarn cost, sewing cost, preparing costs and the procedure misfortunes. Initially we have to gather fabric or yarn cost and process costs from merchants and processors for inward costing reason.

• Yarn Price:

In the situation that we want to source yarns and weave the fabric without anyone else or from knitters, we need to gather yarn cost for the yarn we will use in your fabric. These are couple of various yarns sorts – 20s, 30s, 50s, 2/60s Combed. If we require coloured yarn for stripe fabric gather cost for coloured yarns.

• Sewing Price:

There are diverse sorts of weaves fabrics, similar to Single Jersey, Rib, Interlock, Feeder stripes, jacquard fabrics. Costs for making such fabrics are distinctive. We have to know their cost and utilize the cost in costing. Likewise consider sewing loss% while figuring yarn prerequisite and yarn costing. Regularly 2% is assumed as weaving procedure misfortune computation.

We get fabric cost by utilizing the formula given below:

Price of shell fabric/ kg =Yarn price +Knitting price + % of Knitting loss + Processing Cost + % of Processing loss

Price of neckline/sleeve fabric/ kg =Yarn price +Knitting price + % of Knitting loss + Processing Cost + % of Processing loss

In one style there may be more than one kind of fabric utilized. We have to identify the cost of fabrics independently.

  • Fabric Consumption per item:

Measures fabric consumption per unit considering normal piece of clothing size and making few specimen pieces of clothing. Consider the strategy for figuring fabric consumption. When we have the fabric cost and it’s consumption, we can without much of a stretch ascertain expense of fabric per piece of clothing utilizing taking after recipe,

Fabric Cost/Piece = Fabric Price per kg * Fabric utilization (in Kg).

• Trim and accessories cost

Calculate the bill of material for the given order and compute trims cost per items.In the bill of material per piece material cost is computed. Details of fabric s are additionally incorporated into the bill of material. Therefore, to discover process cost first we have to know complete procedures to be taken after for the given orders.

• Process Costing for internal procedures

Process cost = (Raw material processing cost + product processing cost)

Garments factory sewed the products in-house and source raw materials from outside, for example, fabrics, trims and extras. Some factories like to purchase yarns as an alternative of buying finished fabric. Inner procedures for direct and indirect cost of factories are fabric cutting, stitching, thread trimming and finishing.

• Cutting cost:

Per piece cutting expense is gotten from the salary of the cutting group in every month. If that cutting is finished by contractual workers, piece rate is given for cutting expense.

• Sewing cost:

If industrial facility pays piece rate to administrators then take piece rate, or compute direct labour cost for sewing from the monthly salary.

• Finishing Cost: Finishing process incorporates string trimming, checking, pressing, folding and packing. We can compute process wise cost and entirety up those to discover finishing cost.

• Factory overhead costing: In factory overhead cost all costs other than material cost, direct and indirect labour costs are incorporated.

In the above discussions, we have just discussed the issues and factors are required to know and cost that have to add with the product pricing. There are different techniques of garments costing and pricing as well. The goal is to identify the estimated cost of products. It should not be greater than the actual cost.

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