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Cost sheet-RAHUL JAIN(Striving for excellence)BCOM (H), MBA, FCS

Cost

Any amount incurred during the operations for providing the good or service to get the output into the hands of the customer

Controlling costs is essential to business success

A sacrifice of resources.

Apparel Products Value ChainBy Lyn Fernando

Product Development

Selling & Distribution (Agents)

Outbound logistics

Manufacturing (cut, sew & finishing)FOB 10-25% of

Retail

Buyer (Retailer)

Raw materials /Accessories –40-70% of FOB

Design

Non availability of advanced product development facilities

Lack of Advanced Manufacturing

Technology

Lack of Specialty fabrics & Accessories

-Lack of Direct contacts/ Access to Retailer.

-Long lead time

- Cost of Agents

Proximity to market, regular sailings -sea &

Air. Electronic Data Interchange for documentation

• High Cost Structure ( Labour, Utility) Wastage use of CAD/CAM

• Labor Laws, Invest in Human Resources

• Lack of Skilled Management

•Low productivity,

• Proximity to Suppliers

•High energy cost

Need to develop strong networks & lobby groups. Free Trade Agreements,

concessionary tariffs

Dependency on imported raw material, long lead times,delays

at customs, documentation, EDI

Lack of design capabilities

Sourcing

100%

Basic elements of Cost

Material

Labor

Expense

Prime Cost

Direct Material Consumed+ Direct Labor+ Direct Expense

COST SHEET

Manufacturing costs

• Manufacturing: Activities and processes that convert raw materials into finished goods.

• Manufacturing Costs include:– Direct materials

– Direct labor

– Direct Expense

– Manufacturing overhead

MANUFACTURING OVERHEAD

•Consists of costs that are indirectly associated with manufacturing the finished product.•Includes:

• Indirect materials • Indirect labor • Indirect expenses such as Depreciation on factory buildings and machines • Insurance, taxes, maintenance on factory facilities

Manufacturing Overhead

FACTORY OVERHEADS- Examples

Salary paid to merchandiser Salary paid to production manager Floor incharge salary Q.A. + Q.C. Plotting boy CAD operator Salary paid to fabric head Salary paid for line supervisor Salary paid to machinery maintenance House keeping Guard Medical care taker Fuel Electricity Water consumption Oil and Consumables Needles Rent/Depreciation on Factory Assets

OFFICE AND ADMINISTRATION OVERHEADS: Examples

Salary paid to: chairman MD GM Receptionists HR persons Accountants Purchases Dept. Persons Office Boys Telephone Expenses Stationary Expenses Electricity Expenses of office Rent/Depreciation on Office Assets

SELLING AND DISTRIBUTION OVERHEADS- Examples

Salary paid to selling and marketing staffAdvertisement costSample distribution Export documentation Testing expense Buying agent commission ConveyanceTrade Fair and other Promotional expensesWebsite and ecommerce expenses

Other Overheads

Financial OverheadsMiscellaneous ExpensesNon Operating overheadsTaxes

Assignment

Individual Assignment

Questions of Costsheetassignment.xls (Excel file) Write Key learnings/Reflections of the class

Some important points

Academic Honesty Reference Any Source When Confused Ask InstructorContact me: Rahul Jain (9811228852,

rahulkjain16@yahoo.co.in, Yahooid:rahulkjain16)

www.learningcosting.pbworks.com