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55_20-_2057_20Costing.pdf
- 6. Session
#55
Costing
► COSTING is the process of collecting,
classifying, calculating, organizing, reporting and
using costs.
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© 2009
- 7. Session
#55
Need
► To be able to establish a selling price for a
garment
► To control the expenditure
► To help measure the profit of the business
► To enable management to quote process or
tender for contracts
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© 2009
- 8. Session
#55
Need
► To calculate staff wages
► To provide information to management on the
effective use of resources
► To keep account and control of stocks of material.
► To assist in planning and forecasting
► To enable budgets to be prepared.
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© 2009
- 10. Session
#55
Costs not Easily Traced
► Rent of Factory
► Electricity Bill
► Cleaning
► Manager’s Salary
► Machine Maintenance
► Wear and tear of machines
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© 2009
- 11. Session
#55
Cost of Goods
► It includes materials plus direct labor plus
factory overhead.
► It includes all costs required to produce a
garment.
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© 2009
- 12. Session
#55
CMT
► For companies that use domestic contractors
to manufacture their garments, the cost of
goods is the full package price charged by the
contractor or the cut, make and trim (CMT) plus
the cost of the materials.
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© 2009
- 13. Session
#55
LDP
► Companies that manufacture their garments
offshore must use the landed duty paid (LDP)
cost of each style.
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© 2009
- 18. Session
#56
Net Margin
► The net margin for the period is the gross
profit less the revenue expenses for the period.
► The revenue expenses are essentially the
selling, distribution, administration and finance
overheads for the period.
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© 2009
- 21. Session
#57
MOQ
► If a specific fabric require 1.5yards/garment
and the MOQ is 1,000 yards, then the
merchandiser must be confident that each color
ordered in that style will sell at least 667 units.
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© 2009
- 22. Session
#57
MOQ
► For this reason, many merchandisers use a
specific fabric style and the same range of colors
for multiple garment styles.
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© 2009
- 23. Session
#57
MOQ
► For all the other direct materials such as trim,
thread, buttons, zippers, labels, shoulder pads,
and poly bags, MOQ must also be considered.
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© 2009
- 24. Session
#57
Retail Price
► Retail selling prices are based on
predetermined store pricing and wholesale costs
► FIRST PRICE is the original retail price.
► First price is determined by adding initial
marks up to wholesale price.
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© 2009
- 25. Session
#57
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© 2009
Whole Sale Price
Initial Markup
First Price
Additional Mark Up
Premium Price
Markup Cancellation
First Price
Temporary Mark Down
Promotional Price
Markdown Cancellation
First Price
Permanent Mark Down
Clearance Price
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