Steps of Process Costing in Apparel Manufacturing Industry
What is Process Costing in Apparel Sector?
|Process costing in apparel industry
All the data given for calculation are approximate values, while doing real time calculation the latest data from the industry should be taken. From the components of cost sheet we know that,
= Direct material+ direct labor+ direct expense+ all overheads
Total apparel production
Total apparel production
- Total production,
- Total process time,
- Direct material cost,
- Direct labor cost,
- Direct expense cost,
All the above matters have explained in the following:
It is the total output of the process or total input of raw materials used in the particular process. In case of some processes, the input quantity will be taken as production quantity and in some processes; the output quantity will be taken as the production quantity.
The total time taken to complete the particular process is known as total process time. The unit of time may be kept in hour or shift or day or week or months which are dependent on the process and the convenience. Sometimes, the total process time is given directly or in some cases it has to be calculated using the following formula:
Total process time,
Production capacity per shift
It is the cost of all direct materials which are used in the particular processes. The cost of each material is calculated individually as per quantity consumed and the corresponding price of the material and then total direct material cost is calculated. It can be calculated by using the below formula:
Direct material cost = Material price × quantity of material used
Direct labor cost is the cost of all direct labors like operators, helpers in apparel production or textile production etc. employed in the particular process and for the particular period of process completion that means total process time. It can be calculated by using the following formula:
Direct labor cost = No. of labors × wage per shift × total process time in shift
Direct expense cost is the cost of re-work or reprocessing or the amount spent on doing job work for the definite operation in the process such as embroidery, button sewing, curing, hiring of machine for the production etc.
Overheads are all indirect costs which will be calculated generally per month like rent, power, salary etc. Here, the reach indirect cost is calculated for the particular process time from the monthly cost. Here, salary can be calculated by using the following law: