RVJ2 Fashion

Cost Accounting and Control

BSA-III

Rhea Mae Amit

Vicente Victoria
Joice Matilla
Joshua De Castro
 Overhead Allocation of RVJ2 Fashions

The RVJ2 Fashions Company currently uses Traditional Costing method also known as practical
capacity method to allocate overhead cost per unit. Although practical capacity method of
allocation method has been criticized by many researchers as being ineffective in allocating
overheads to unit price of a product or service, other studies have emphasized that no particular
method can give absolute accuracy, but carefully complied and used in appropriate circumstances,
one or more of these should provide acceptable results.

The company uses the direct labor hours as the capacity to compute overheads rate per unit for
financial purposes.

- Working hours per day - 8 hrs.

- Working days per month - 23 days
- Direct labors - 500
Direct labor hours 8*23*500=92000

Overheads per unit = Total Overheads per month (refer table 01)
Total units per month

= 5,745,562.14
92,000

= 62.45

The following information is about the cost spent to produce a men’s T-shirt by RVJ2 Fashions
Note: some of the figures we have used bellow are hypothetical and they are used only for
studying purposes.
Table: 01

Overheads Amount
(LKR)
Salary 3,011,935.1
EPF 4 526,432.5
ETF 078,964.9
Electricity-0203 875,482.8
Electricity-9792 889,706.8
Water 8
14,324.8
Maintenance-Factory 0
26,879.0
Machine Repairing 05,970.0
Depreciation Plant & Machinery 0
272,194.1
Depreciation Building 50% 461,135.5
Depreciation Furniture & Fitting 3
33,546.1
Depreciation Motor Vehicle 50% 6
38,917.8
Printing Stationary 50% 9
43,209.2
Postage 50% 51,007.5
Telephone Exp-SL Telecom 04,255.0
Traveling-50% 0
4,385.0
Cleaning 50% 13,964.5
Transport Expenses-Laguna 0
24,230.0
Transport Expenses-Davao 0
63,180.0
Transport Expenses-Cebu 0
68,172.0
Transport Expenses-Tarlac 0
59,280.0
Transport Expenses-Bacolod 0
72,400.0
Transport Expenses-Ilocos 0
36,800.0
Transport Expenses-Quezon 059,000.0
Tea & Meals 0
22,388.0
Medical & Medicines 02,607.0
Newspapers & Other Office Exp. 0
1,415.0
Security Expense 0
81,250.0
Repair & Services-KB 5940 0
Fuel & Oil-KB 5940 1,200.0
Fire Insurance 08,830.8
Financial Cost-20% 0
922,498.2
Provision For Recruitment Charges 020,000.0
0
Total Expense 5,745,562.1
4

Table: 02

COST SHEET
Product Men’s T-Shirt Yarn dyed feeder stripes
Style no: XYZ Country Philippines
Buyer: ABC Fabric Viscose
GSM/widt 150/34-31" jersey
h Amount
Particulars Details (LKR)
Fabric Costing
Yarn Price as per supplier
list Per Kg 500.0
0
Knitting charges Per Kg 50.0
Greige Fabric Cost Per Kg 0
550.0
Average dyeing cost 40.0
Weight loss on dyed 9.00% 053.1
fabric:
Fleece brushing /Peaching - 0 -
Loss Due To Printing - -
Sub total 643.1
Interest on yarn
prices:/margin 10.00% 64.3
Dyed Fabric Cost: 1
707.4

Garment costing
Avg. Fabric
Consumption 210.00 148.5
(gram) 6
CMTP Charges
Stitching: 40.00
Cutting: 5.00
Finishing: 12.00
Packaging: 9.00
Embellishment 5.00
Trims 8.00 79.0
0
Sub Total 227.5
Overhead cost 62.4
Margin (after overhead) 20.00% 5
58.0
Ratio/Rejection 4.00% 011.6
Charges for On Board 02.0
Total price of a apparel 0
361.6
 Further details of Packing, Trims and Embellishment costing have been shown in the following
table.
Table: 03

Trims
Amount
Particulars Consumptio Rate (LKR)
M/label n1 2.0
W/care 1 01.0
Tag N/a 0.0
Thread 10 mtr 04.0
Fusing N/a 0.0
Twill tape N/a 0.0
Mobilon tape 30 cm 1.0
Zipper N/a 0.0
Patch label N/a 0.0
Button N/a 0.0
Total 8.0
Packing materials
Tissue N/a 0.0
Board N/a 0.0
Hanger N/a 0.0
H/tag 1 0
3.0
Poly bag 1 3.0
Blister N/1 0.0
Carton 1/10 3.0
Other 0.0
Label logo 0.0
Total 9.0

Embellishment
Embroidery/appliq N/a 0.0
Printing N/a 0.0
Rhin stud N/a 0.0
Lace N/a 0.0
Rib N/a 0.0
Collar N/a 0.0
Crochet lace N/a 0.0
Enzyme wash N/a 0.0
Dori 5.0
Total 5.0