Apparel Costing Techniques:
Mr. Wheldon defines costing as the classifying, recording and appropriate allocation of expenditure of the determination of the cost of product or services or process. Different types of industries require different methods of costing methods which suit to their industry. This article has presented eight important methods or techniques of textile and apparel costing with explanations.
|Apparel costing methods
Methods of Apparel Costing:
The methods adopted for estimating or ascertaining the cost may differ from industry to industry. The below are the important methods which are adopted for estimating the cost.
- Job costing,
- Batch costing,
- Contract costing,
- Process costing,
- Operation costing,
- Operating costing,
- Unit costing,
- Cost plus costing.
All the above textile and apparel costing methods have discussed in the following:
1. Job costing:
In case of job costing, costing is done against a specific order or job. This method is mainly applicable to engineering where production is carried out according to each job.
2. Batch costing:
This type of costing is method is applied there where products are manufactured in definite batches and held in stock for sales.
3. Contract costing:
Contract costing follows the principle of job costing. A contract is a big job while job is a small contract. Here, separate account is kept for each individual contract for calculating profit or loss.
4. Process costing:
If a product passes through various stages each distinct and well defined. It is desired to know cost of the product to each stage. So, here, costing is done for each process involved in the manufacturing. In apparel manufacturing industry, the cost of each operation like knitting, weaving, wet processing, garmenting etc. are estimated.
5. Operation costing:
In case of operation costing, the costing is done for individual operations involved in the manufacturing process. In apparel production, the cost for different operation like sleeve join, shoulder joining, sleeve hem, side seam etc. are estimated.
6. Operating costing:
This type of costing is adopted where expense are incurred for providing services such as those rendered by thus companies.
7. Unit costing:
In case of unit costing method, costing is done per unit of production. It is also termed as single costing or output costing.
8. Cost plus costing:
In contracts, where besides costs, an agreed sum or percentage to cover heads and profit is paid to the contractor.