Can Somebody Explain Me How To Calculate Applied Foh In Garments Factory

“Garment Industry uses Job Order Costing”.
Where Job order costing (not controlled by calendar month): “if different products with different time period”

The Costing will be done as follow to meet the legal requirements:

Allocation:
a). actual expenses transferred as indirect-department wise.
b). direct-product wise

Re allocation: “tfd operating cost between deptt.”: administrative, sales, service (security, janitorial, cafeteria etc.), indirect production, direct production.

Absorption: “department operating cost charged to production” based on service provided

Result:
a). Product: allocated actual cost + re allocation
b). Deptt: allocated actual cost - re allocation = “0” End results

Functional activity a/cs: open a/c related to;
A).The different products that we produce for our own production activity”- “preventive maintenance control and repairs” (dies, tools or machines etc.) With code/name & Dr with R/M + DL + operating cost
B). Specific accounts to control more expensive repair of machines, trucks and buildings.

Work in process in std cost (process costing):

1). Period 1:
a). Cost Applied: Total cost (40) qty (10)
b). Finished Goods transferred: If 9 units = 4 x 9= 36
c). WIP: Balance 4 as WIP

2). Period 2:
Op wip = 4 + Production Cost: 60 (15 units) – Finished: 54 (14 units) = Ending WIP 8 (2 units) & so on.



In garments Industry historical actual Over Heads are divided by minutes consumed in stitching these garments so a standard per minute cost is developed which is used in applying applied FOH.Because all garments may have different designs and patterns so per garment FOH cannot be calculated by dividing FOH by number of garments manufactured so SAM Standard average Minutes caluulated for this purpos
Arman01Ali Arman01Ali
26-30, M
1 Response Nov 30, 2012

calculate assumption based SPM (standards per minute) for particular or entire production and multiply it with standard rate to get Applied FOH.