Unit 1: Costing fundamentals
Textile / Textile Product Costing notes · PTU syllabus (BSTD 502-20)
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Unit summary
Costing finds what it costs to make and deliver a textile product. This unit explains costing, its advantages and the terms used in the export and sourcing trade.
After this unit you can
- Define costing and list its advantages
- Use trade terms such as FOB, CIF and duty
- Prepare a simple cost build-up
PTU syllabus topics
- Costing definition
- advantages and importance
- cost terminology — bonded warehouse
- CIF
- FOB
- counter sample
- duty
- overseas shipping
- storage cost
- air freight/express
EXW (ex-works)
Goods ready at factory
Everything after pickup
FOB (free on board)
Loading onto the ship at the port
Ocean freight, insurance, import duty
CIF (cost, insurance, freight)
Freight and insurance to destination port
Import duty and onward delivery
Topic 1
Costing fundamentals
Costing is the process of finding the cost of making and selling a product. Its advantages: setting prices, controlling costs, finding profit, quotations and decisions on make or buy.
- FOB (free on board)
- Seller pays up to loading at the port; buyer pays freight and insurance
- CIF (cost, insurance, freight)
- Seller pays cost, insurance and freight to the destination port
- Counter sample
- Sample made to match a buyer's sample
- Bonded warehouse
- Customs-controlled store where goods are kept before duty is paid
- Duty
- Tax on imported or exported goods
- Overseas shipping
- Sea freight, cheaper and slower
- Air freight / express
- Faster and costlier transport
- Storage cost
- Warehouse charges
Under FOB the buyer arranges and pays freight and insurance; under CIF the seller includes them in the price
Topic 2
Elements of cost
Direct material
Fabric, trims, thread
Direct labour
Cutting, sewing, finishing
Direct expenses
Embroidery, washing, printing
Overheads
Rent, power, supervision, depreciation
Key terms
- Costing
- Finding the cost of a product
- FOB
- Free on board
- CIF
- Cost, insurance and freight
- Duty
- Tax on traded goods
- Counter sample
- Sample matched to the buyer's
Quick revision
- FOB: seller pays up to loading; CIF: includes freight and insurance.
- Costing helps pricing and control.
- Costs: material, labour, expenses, overheads.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.Define costing.
- Q2.What is FOB?
- Q3.What is a counter sample?
- Q4.What is a bonded warehouse?
Long-answer questions
- Q1.Explain costing and the terms used in the textile trade.
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