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AAF Costing Process

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Costing

What is cost/costing?Costs are expenditures, such as time or labor, and other necessaryrequirements for the attainment of a good.

Costing is a process.

Why is costing important?

Its important for AAF because costs (fixed and variable) have to be paidregardless of how much is produced.

Why costing is done?

Well-prepared costing information contributes to accountability and

transparency as well as good decision making and intelligent risk taking.

Wage Payment

Section wise payment of wages(Wash, Iron, Embroidery, Tailoring etc.)

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AAF Value Addition

Embroidery (Hand EMB, Machine EMB, Erri etc.)

Print (Block and Screen)

Dye

Chemical Vegetable

Tie Dye

Batik (Wax batik, sand flash, brass print etc.)

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Types of Costing in

Value Addition

Print Dye and Tie-Dye BatikEmb.

BP

SP

Wax

Sand FlashBrass Print

etc.

Dye

Natural

Chemical

H. Emb

M. EmbErri

etc. Tie Dye

Pipe

Spray

Spoon Rope

Tailoring

Only

Tailoring

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12% mark up is added to the cost of goods

manufactured. Mark up rates for different product lines

might change from time to time and are finalized bythe director.

Mark Up Policy

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Staff Salary and Benefit

Indirect raw materials

Indirect labors

Transportation cost

Other Miscellaneous production expenses-

Taxes, insurance, depreciations, factory supplies of materials

Maintenance and repairs of machineries and utilities

AAF Markup Charges

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AAF Costing Sheet

A. Cost of basic raw materials

B. Wages

C. Cost of accessories

D. Mark up = (B+C) X 12%

E. Total cost = A+B+C+D

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Required Documents for CalculatingCost of Production

Approved sample

Breakdown costing of the product

Instruction paper

Price sheet, information of raw materials, utilities etc.

Circular of wages

Pattern (occasionally)

Costing sheet

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1. Embroidery

2. Print

3. Dye and Tie-Dye

4. Batik

5. Tailoring

Sample of Costing Sheet

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Costing Flow Chart

Order Development

Aarong Costing

AAF-HO (Head Office) Costing

AAF (Field) Sample Costing

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Function of Costing Unit (Field AAF)

AAF Field Costing Personnel

Collect sample costing from OD (Order Development) team (AAF-HO)

Prepare costing sheet and send it to OD team.

Follow instruction sheet and coordinate with other sections (raw materials,

wages, iron, wash etc.)

Prepare costing sheet for non textile product

Communicate with the updated market price11

OD team will send it to Aarong Costing team for approval

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Function of Costing Unit (AAF- HO)

AAF HO Team (Costing)

Collect sample costing from OD Team

Prepare costing sheet for approval by Aarong costing team

Handover sample costing to OD team after approval

Communicate with production centre for various costing problem

Collect information for the updated price of raw materials

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Costing may be revised if designer changes any criteria of design, and

based on his/her written instruction costing personnel revises the costing

of goods.

Changes in the qty/unit, price of raw materials and wages will be considered

for re-costing.

Revise/Re-costing policy

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If the product design is same then order section will do the job. If

criteria of design is changed then costing personnel evaluates

according to designers indication and finalizes the costing.

Designers need to mention costing.

Re order costing policy

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Question - Answer

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Thank You

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