AAF Costing Process

Costing
What is cost/costing? Costs are expenditures, such as time or labor, and other necessary requirements 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 paid regardless 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.)

Types of Costing in Value Addition

Emb.
H. Emb M. Emb Erri etc.

Print
BP SP

Dye and Tie-Dye

Dye Natural Chemical Tie Dye Pipe Spray Spoon Rope

Batik
Wax Sand Flash Brass Print etc.

Tailoring
Only Tailoring

Mark Up Policy

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 by the director.

AAF Markup Charges

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 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

Required Documents for Calculating Cost 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

Sample of Costing Sheet

1. Embroidery 2. Print 3. Dye and Tie-Dye

4. Batik
5. Tailoring

Costing Flow Chart

AAF (Field) Sample Costing

AAF-HO (Head Office) Costing

Aarong Costing

Order Development

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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. OD team will send it to Aarong Costing team for approval 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 price

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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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Revise/Re-costing policy
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.

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Re order costing policy

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.

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Question - Answer

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Thank You

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