Quiz 3 Flashcards
Cost
The monetary value expanded to produce a garment style
Price
The monetary value or revenue that is collected from the customer who purchases the product
Profit
When the price exceeds the cost
Profit and loss statement
A simplified chart that provides a skeleton outline of the accounting categories, with just the totals, to show the status of the business
Cost of goods
Includes all variable and fixed costs
Variable costs
Costs that increase or decrease in direct proportion to the number of units produced, such as labor, materials, and freight
Fixed costs
Costs remain the same no matter how many units are produced and may include telephone bills, rent property payments, taxes, benefit expenses for employees, and expenses for personnel other than construction labor
Direct labor
Wages for cutters and sewers and overhead
Overhead
All the expenses in addition to materials and direct labor that are required of a contractor or manufacturer at the factory level to produce and deliver garments to the entity that ordered them
Indirect labor
Wages of individuals who provide essential support to the production process but do not actually make the product such as QA personnel, maintenance, and security
Gross margin
The amount left over after the cost of goods sold is subtracted from net sales
Operating expenses
Sales and marketing costs such as sales personnel, showrooms, and advertising; the cost of discounts and chargebacks
Chargebacks
Refunds on returned goods
Bill of materials
A detailed list of materials developed for each style before it is made into a sample or put out for bids. This list identifies actual materials used to construct one sample/prototype garment
Fallout
Wasted fabric that occurs when cutting production pattern pieces from yardage
Free on board (FOB)
Ownership is transferred to the importer when the goods are loaded on a transporting vehicle
