BILL OF MATERIAL

Components
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) Care label Paper tag Packing material Sewing thread

Consumption
1.1mtr

1pc 6pcs 1pc 1pc 1pc 25cm 1pc 3pcs LDPE 400mtrs

TOTAL QUANTITY (Cut order plan)

Sizes Ratio Quantity
30 2 2000 32 2 2000

34
1 1000

36 3 3000

38 2 2000

ORDER PLAN FOR EACH COLOUR*

Sizes Quantity
30 1000 32 1000 34 500 36 1500 38 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)
1.98 0.44 0.08

Cons/10000 (mtr)

Cost/10000 (INR)

Denim Fabric Lining Sewing Thread

1.1 0.16 400

90 22 0.01

99 3.52 4

11000 1600 4000000

99,0000 35,200 40,000

Total

106.52

2.5

10,65,200

Trims & Care labels

Material Consumption (Pieces) Cost/pc (INR) Cost/gmt (INR) Hidden Cost (2% margin)
0.16 0.015 0.024 0.12 0.015 0.02 0.005

Cons/10000 (pcs)

Cost/10000 (INR)

Mettalic Zipper Mettalic Button Rivets Brand Label (leather) Inside brand label(Taffeta) Care label Pocket tag

1 1 6 1 1 1 1

8 0.75 0.20 6 0.75 1 0.25

8 0.75 1.20 6 0.75 1 0.25

10,000 10,000 60,000 10,000 10,000 10,000 10,000

80,000 7,500 12,000 60,000 7500 10,000 2,500

Total

17.95

0.359

179500

Cut Make Trim(Direct Labor)

Sno. Operations No. of workers
2 2 2 2 2 2

*Kind Wages/8hrs Time/10000 of (INR) (Hrs) workers

S+SS S+SS S+S S+S S+SS S+S 280+175 270+190 350+350 250+250 250+175 300+300 17 42 133 133 80 133

Cost/10000 Cost/gmt (INR)

966 2415 11666 8312 4250 6000

(INR)
0.10 0.24 1.16 0.83 0.4250 0.60

1 2 3 4 5 6

Inspection Spreading Cutting Ticketing Bundling Cut part Inspection

7 8 9

Inspection Washing Pressing

S+S

300+300

266

19950 420000

1.90 42 0.83

S+SS

250+250

133

8312

Total

16

481871

48.18

Assumptions:1. Inspection speed-10mpm 2. Spreading-4mpm(manually) 3. Cutting-150pc/operator/hr 4. Ticketing-300pc/operator/8hr * S for skilled,SS for semiskilled 5. Bundling-500pc/operator/8hrs 6.Inspection-150pc/operator/8hrs 7. Washing from outside 8. Pressing-38pc/operator/hr

Sr.no

operations

No. of Wage/8hrs/ operator Operator (INR)

Production Per 8hrs

Cost Cost/gmt per10000 (INR) (INR)

8000 0.80

Top stiching of coin pocket Sew coin pocket to pocket facing Sew pocket facing to pocket bag Closing of pocket bag Sew the pocket to front(RH&LH) Back yoke to right & left back Hip pocket mouth hem Ornamental stitch on hip pocket Hip pocket to both left & right back Sew both side seam Zipper to left & right fly

160

200

180

190

9400

0.94

190

200

9500

0.95

170

180

9400

0.94

220

295

14900

1.49

200

350

11400

1.14

140

200

7000

0.70

130

195

6600

0.66

180

350

10200

1.02

10

250

300

16600

1.66

11

220

320

13750

1.375

Sr.no

operations

No. of Wage/8hrs/ operator Operator (INR)

Production Per 8hrs

Cost Cost/gmt per10000 (INR) (INR)

12500 1.25

12

Sew left & right fly to both front Sew crotch seam Sew inseam Sew waist band with back & front Sew waist band edge Sew leather label & inside label on waist band Belt loop prepration(5/gmt) Belt loop stitching Sew eyelet button hole Attach metallic button & rivet

240

350

13 14 15

1 2 1

230 250 300

300 350 250

7600 14200 12000

0.76 1.42 1.20

16

250

180

13800

1.38

17

230

330

13900

1.39

18

220

1000

22000

2.20

19

240

900

26000

2.60

20

300

290

10300

1.03

21

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 Consumption Cost/pc Hidden cost With Cost/gmt Cons/10000 Cost/10 no. in pieces (INR) 2% margin (INR) 000 (INR)
1 2 3 4 5 6 Polybag Clip Sticker Gripper Tag *Cartoon 1 2 2 2 3 1/10 2 0.75 0.20 0.50 1.5 10 0.04 0.03 0.008 0.02 0.09 0.20 2 1.5 0.40 1 4.5 1 10,000 20,000 20,000 20,000 30,000 1,000

(INR)
20,000 15,000 4,000 10,000 45,000 10,000

Total

0.388

10.40

104000

Total direct material cost= 106.52+17.95+10.40=Rs 134.87 Total hidden cost with 2% margin for one garment=2.5+0.359+0.388=Rs 3.247 Total hidden cost with 2% margin for 10,000 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.
1 2 3 4 5 6 7 8

Indirect labor

No.of labor

Cost/labor/day (INR)

Cost for 17 days (INR)

612 13600 10200 5100 17000 2720 11560 4760

Security Supervisor Storekeeper Canteen staff Maintenance worker Housekeeping Checker Helper

2 4 3 2 5 8 17 14

18 200 200 150 200 20 40 20

Total

848

65552

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)
Floor area No. of m/c Value of m/c & equipment No. of m/c No. of light point 102857 132221 600000

Cost for 17 days (INR)

1 2 3

Rent Power Depreciation

4790 6158 27945

4 5

Insurance Light

80000 91250

3912 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 208.85 Total hidden cost(2% margin)=2.5+0.359+0.388=Rs 3.24 Total direct cost with hidden 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 223.45 Total cost with 3% wastage=223.45+6.72=Rs 230.17 Total cost with 15% margin=230.17+34.52=Rs 264.69 Lets consider MRP=Rs 1000 Mark Up for retailer=3 Target cost=1000/3=Rs 333.33 Range for 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 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.