Appendix IV
Notes to Accountants
1.
The cost statements submitted in support of export authorization applications under the high Hong Kong cost content scheme must be prepared by the approved accountant who represents the manufacturer on Preference matters.
2.
Cost accounting must be carried out strictly in accordance with the principles established for the preparation of Commonwealth Preference costings as set out in Notice 27A. All costings must relate to recent actual quantity production costs, not to estimated costs.
3.
The Hong Kong costs allocated to the principal textile materials (in the greystate) must be in accordance with the costs shown in Appendices II, IIA and III. If the cost for specific loomstate fabric or yarn is not shown in the Appendices the Department must be supplied with a one foot square sample in the case of fabrics and full details of the material. Details of the cost acceptable to the Department will be passed to the enquirer concerned as soon as possible after the enquiry is made.
Only cloth spun and woven in Hong Kong may be used for production unless special permission is obtained from the Department. Yardage used for cotton woven lining must be taken into account when calculating the required yardage unless the material is of British origin. To qualify as being of British origin, the material must be woven in Britain, consigned directly to Hong Kong and be supported by a form E120 issued in Britain.
5.
A statement of finishing processes undergone set out as in Appendix VII must be obtained from the finishing factory processing the principal materials. The costs allocated to these processes in Appendices V and VI must be in accordance with those shown in Appendix I. The sanforizing and schreiner finishing costs must not be claimed simultaneously. The finished weight of fabrics used to calculate finishing costs must be
in accordance with Columns (e) or (f) of Appendices II and IIA.
6.
The percentage of factory overheads applied to productive labour costs must in no instance exceed the maximum permitted applied factory overheads percentage shown below
Description
Maximum permissible overheads
as percentages of labour charges
a) Garments
b) Towels (all kinds)
30%
35% (No overheads should be
applied to yarn blenching and/or dyeing costs)
c) Bed linen, table linen
20%
7.
d) Other made-ups including
bedspreads
50%
Costs relating to any application for different styles or sizes of a product must relate to the style or size which contains the lowest Hong Kong cost content per square yard. This will normally mean that only the largest size of any item is costed. Average costs must not be used.
18.A schedule.
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