Finishing Cost Calculation Process in Textile Industry:
To change the fabric appearance,
textile finishing process has great importance in
textile industry. Finishing cost also included when total cost is calculated. So, to know the actual method of textile finishing cost calculation is mandatory for the responsible person.
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| Fig: Textile finishing cost calculation method |
Textile Finishing Cost Calculation Method:
Calculate the finishing cost and rate per of by following the below chart.
SL No. | Parameters | Quantity and Cost |
01 | Fabric quantity | 400kg |
02 | Finishing chemical consumed | 5kg |
03 | Chemical A consumed | 4kg |
04 | Chemical B consumed | 2kg |
05 | 1 day | 3 shift |
06 | Total finishing process time | 4 hours |
07 | Number of labors | 3 |
08 | Labor wages | Rs. 200 per shift |
09 | Compacting | Rs. 8 per kg |
10 | Steam | Rs. 30000 per month |
11 | Power | Rs. 10000 per month |
12 | Transport | Rs. 20000 per month |
13 | Salary | Rs. 50000 per month |
14 | Other expenses | Rs. 40000 per month |
15 | Finishing chemical price | Rs. 250 per kg |
16 | Chemical A price | Rs. 25 per kg |
17 | Chemical B price | Rs. 60 per kg |
18 | Profit | 15% |
Solution:
To calculate textile finishing cost and finishing rate, below formula has to apply.
Finishing cost per kg,
Direct labor + Direct material + Direct expense + Direct overhead
= …………………………………………………………………….………… …. (1)
Total finishing production
Total Finishing Production Calculation:
Total production,
= Fabric input
Total Finishing Production Time Calculation:
Total finishing production time,
= Finishing process time
= 4 hours
= (4/8) shift
Direct Labor Cost Calculation:
Operator wages,
= Number of labor × No. of shift × labor wage per shift
= 3×0.5× Rs. 200
Direct Material Cost Calculation:
Finishing chemical cost = Amount of chemical consumed × chemical price = 5× Rs. 250 = Rs. 1250
Chemical A cost = Amount of chemical consumed × chemical price = 4× Rs. 25 = Rs. 100
Chemical B cost = Amount of chemical consumed × chemical price = 2× Rs. 60 = Rs. 120
So,
Direct material cost is,
= (Rs. 1250 + Rs. 100 + Rs. 120)
Direct Expense Cost Calculation:
Compacting,
= Fabric quantity × compacting rate per kg
= 400 × Rs. 8
Overhead Cost Calculation:
In steam cost calculation,
= (Cost × 0.5 shift) / (30days × 3 shifts in a day) = {(30000 × 0.5)/90} = Rs. 167
In transport cost calculation,
= (Cost × 0.5 shift) / (30days × 3 shifts in a day) = {(20000 × 0.5)/90} = Rs. 112
In power cost calculation,
= (Cost × 0.5 shift) / (30days × 3 shifts in a day) = {(10000 × 0.5)/90} = Rs. 56
In other expenses cost calculation,
= (Cost × 0.5 shift) / (30days × 3 shifts in a day) = {(40000 × 0.5)/90} = Rs. 224
In salary cost calculation,
= (Cost × 0.5 shift) / (30days × 3 shifts in a day) = {(50000 × 0.5)/90} = Rs. 279
So,
Total overhead cost stands at,
= Rs. 167 + Rs. 112 + Rs. 56 + Rs. 224 + Rs. 279
Now, from equation-01, we get,
Textile finishing cost per kg,
(Rs. 1470 + Rs. 300 + Rs. 3200 + Rs. 838)
= …………………………………………………………..
400
After adding 15% profit, textile finishing rate stands at
= {14.50/ (1-15%)}
= Rs. 17.10
