Session 8 Calulating COST 2
Session 8 Calulating COST 2
Session 8 Calulating COST 2
Direct Labour Cost per hour
Employee
Working hrs
Salary Pm
Pm
A( Skilled Tailor) 208
3100.00
B( Skilled Tailor) 208
3100.00
C( SS Tailor) 208
2500.00
D(Folder,Iron) 208
2900.00
832
11600.00
Direct labor
Any work that alters the
composition,condition,conformation
or construction of a product
Any operation that advances a
product towards its ultimate
condition for sale thereby adding to
its value
Piece Rates
Often difficult to set
Involve work study techniques to
measure time taken to perform an
operation.
Problems associated with Piece rate
systems
Labor Costing-Budgeted
Basis for labor costing is time.
Labor costs-Direct & Indirect need to be
budgeted for a firm to examine its financial
commitments & evaluate its capacity to
produce a product.
Total DLC=No.Of Operators*hours /week*
weeks/year*avg hourly earnings.
This rep the firms financial commitment to
employing a pre determined no.of operators
for specific time period.
Labor Costing-Budgeted
Calculated to establish Budgets, schedule work and
hire employees.
DLC=Std LC+Excess LC
Std LC-Money earned to produce the product/piece
rate earnings.
Std LC=% Plant efficiency*No. Of work
hours*weighted average base rate.
Std LC is needed to determine the cost of producing
each style & excess cost of each style.
Based on plant efficiency and weighted average
base rate.
Labor Costing-Budgeted
Plant efficiency is Volume of production
relative to the input of work hours.Based on
operational history of plant.
Base rate is established compensation for one
hour of work.May vary for skilled operators.
Excess labor cost=Compensation for time
spent on the job but not producing a product.
It is the difference between total earned and
total paid to direct employees.
Labor Costing-Individual
Style
Begins with a breakdown of all operations
involved in assembling a style.
The style can be broken into component
parts and sub totaled or the production
standards for each operation can be added
together for the total garment.
Production standard reflects the normal
time required to complete one operation
using a specified method that will produce
expected quality.
Spreading Costs
Cutting Costs
Pattern Configuration
Die cutting requirements
Fabric type
Fabric design
Spread Height
Assembly/Bundling
Amount of SKUs involved
Bundle integration
Bundling specifications required
Sewing Operations
Dis-advantages
Workers work at their own free will
Slow workers are not able to earn as much
Mfger might not find the best workers specially
during season
To earn more workers might produce inferior quality Every time a mfger hires, there needs to be price
negotiation.
Operators not responsible for upkeep of machines
and equipments
elaborate records need to be kept of pcs produced.
Cost Centers
Departments of the factory for which
costs can be identified.
Production Cost Centers
Service cost centers
Within service cost centers all costs
are overhead costs
Hence these costs have to be
allocated to the products.
Cost Centers-Advantages
The entire factory is divided into
smaller depts.
Each dept. hence is accountable
for cost control
Allows costs to be appropriately
distributed
Date
Std.Cost/Per
Hour
Cutting OT
Cutting
Cutting
B08
Wages+Incent
Total Cost
Total Cost
1/6/2007
1/6/2007
27.95
94.93
P/Hour
90 People
Embroidery OT
Embroidery
B08
Wages+Incent
Total Cost
1/6/2007
1/6/2007
31.72
42.27
P/Hour
P/Hour -P/Head
Finishing OT
Finishing
B08
Wages+Incent
Total Cost
1/6/2007
1/6/2007
31.5
79.71
P/Hour
P/Hour
Sewing OT
B08
Wages+Incent
1/6/2007
29.43
P/Hour
Total Cost
1/6/2007
56.69
P/Hour P/Machine
W/Center
Sewing
Remarks
Washing OT
Washing
B08
Wages+Incent
Total Cost
1/6/2007
1/6/2007
34.03
35.37
P/Hour
P/KG Hour
Dressing OT
Dressing
B08
Wages+Incent
Total Cost
1/6/2007
1/6/2007
27.79
68.8
P/Hour
P/KG Hour
W/Cente
r
BLR Units
Date
UNIT- 1
UNIT-4,
9 & 10
UNIT-6
&8
UNIT-7
UNIT 11 UNIT 12
UNIT 14 UNIT 16 UNIT17 UNIT19
Knit
Knit
Cutting
OT
1/6/2007
75.62
19.98
20.11
19.72
27.73
27.73
20.15
19.87
Cutting
1/6/2007
67.70
83.46
90.81
54.76
33.82
33.82
74.25
84.22
75.20
43.27
Embroide
ry OT
1/6/2007
20.00
20.00
36.74
Embroide
ry
1/6/2007
7.20
7.20
14.04
Finishing
OT
1/6/2007
19.64
19.77
19.80
19.71
35.22
35.22
19.72
17.76
53.04
Finishing 1/6/2007
63.66
48.00
52.92
56.40
41.31
41.31
58.77
33.95
55.67
55.57
Sewing
OT
1/6/2007
19.85
19.83
19.85
19.82
30.24
30.24
19.84
19.84
19.84
Sewing
1/6/2007
49.42
62.89
45.36
56.89
48.47
48.47
55.26
48.77
49.25
49.24
Washing
OT
Washing
Dry
Process
OT
Dry
Process
1/6/2007
19.14
1/6/2007
3.00
1/6/2007
1/6/2007
29.40