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Costing technique in clothing industry

In order to achieve perfect garment costing, one must know about all the activiti

purchase of fabrics, sewing, packing, transport, overheads, etc and also about procedures, advantages and risk factors, advocates C Vigneswaran.

The Indian textile and apparel industry is very large and diverse, employing

people and accounting for 27 per cent of the country's exports. The apparel indu pivotal role as a key driver of the national economy and has grown to b

significant contributor to the country's economy over nearly three decades of it However, during last 10 years, the industry's actions, government policies as we

events have begun to converge, providing several growth opportunities for domestically as well as in the global market.

As the MFA quota-regime ended, India presented many opportunities for buyers, suppliers and investors to colla its textile industry, and to profit from the partnership. While the industry recorded a remarkable growth in a prote

environment, it faces a series of challenges that have come to the fore in the post-quota situation, notably in area

Price competitiveness. Faster lead times. High raw material base. Full service offering.

Access to market. "A Cost is the value of economic resources used as a result of producing or doing costed".

Garments costing

There are two types of garments, namely woven and knitted garments. Shirt, trouser, sarees, bed spreads, blan and made ups are woven. T-shirts, sweaters, undergarments, pyjamas and socks are knits.

Costing is the deciding factor for fixing of prices and the important thing to follow in all stages like purchase, marketing, sales, etc. Also update knowledge about everything related to garments, is essential to make perfect c Costing includes all the activities like purchase of fabrics and accessories, processing and finishing of fabrics, packing of garments, transport and conveyance, shipping, over heads, banking charges and commissions, etc. We must be aware that there are always fluctuations in the costs of raw materials and accessories, charges

processing, finishing, sewing and packing, charges of transport and conveyance. The method of making costing w style to style. As there are many different styles in garments. Hence let us take men's basic T-shirt style as exam in regular in use. To find out the costing of a garment, the following things should things be calcuated:

Fabric consumption. Gross weight of other components of garment. Fabric cost per kg. Fabric cost per garment. Other charges (print, embroidery, etc). Cost of trims (labels, tags, badges, twill tapes, buttons, bows, etc). CMT charges. Cost of accessories (hangers, inner boards, polybags, cartons, etc). Cost of a garment. Price of a garment.

Fabric consumption

The garments manufactured in many sizes to fit for everybody. Generally they are in sizes Small (S), Medium (M) Extra large (XL) and Double Extra Large (XXL). The quantity ratio or assortment can be any one of the following a ratio. S: M: L: XL: XXL - 1:2:2:2:1 S: M: L: XL: XXL - 1:2:1:2:1 S: M: L: XL: XXL - 1:2:3:2:2 As the price is the same for all these sizes of garments, the author have taken the centre size large(L)

calculation. Generally, the quantity of L size will be higher or equal to the quan of other sizes. Men's Basic T-shirt

Description: Men's Basic T-shirt-short sleeves- 100% Cotton 140 GSM Single je ribs at neck - solid dyed - light, medium and dark colours in equal ratio. Sizes: S, M, L, XL, XXL Ratio: 1: 2: 2: 2: 1 Export carton: 7 ply -120 GSM virgin corrugated - sea worthy. Cartons are to

with 2 nylon straps. Measurements in cm: (Finished garment) Size: L Chest - 60 cm Length - 78 cm Sleeve length - 24 cm Neck rib width - 3 cm Hem - 3 cm

Patterns are generally made with the seam allowance and cutting allowance. G cm is added with the total of body length and sleeve length. That is, Fabric consumption =(Body length + Sleeve length + allowance) * (Chest + allowance) *

10000 = (70 + 24 10000 + 12) * (60 + 3) * 2

= 187 grams Body & Sleeves : 187 grams Neck rib : 10 grams (approximately) Gross weight : 197 grams Therefore, the fabric consumption per garment is 197 grams. Gross weight & net weight

The above weight is the gross weight of fabric. It means the weight of the fabric bits cut in tubular form wit

shapes is called gross weight. This is the consumed fabric for the particular garment. Hence costing is to be made gross weight. The weight of the cut pieces after taking the shape according to the pattern is called net weight of fa Fabric cost per kg (in Rs) (all charges approximately)

Cost of fabric per kg is calculated and given in Particulars 34's combed yarn Knitting charge Dyeing charge Compacting charge Fabric wastage @ 5% Light colours Rs.135.00 Rs.8.00 Rs.35.00 Rs.6.00 Rs.9.20 Medium colours Rs.135.00 Rs.8.00 Rs.45.00 Rs.6.00 Rs.9.70 Rs.135.00 Rs.8.00 Rs.55.00 Rs.6.00 Rs.10.70

Dark colo

Fabric cost per kg Fabric consumption per garment Fabric cost per garment
Cost of trims

Rs.193.20 197 gms Rs.38.06

Rs.203.70 197 gms Rs.40.13

Rs.224.70 197 gms Rs.44.27

The accessories which are attached to the garments are called Trims.

Now the author have taken Men's Basic T-shirts, as example. Let us see what are the trims required for this style. Labels: Woven main label (2.5 cm width x 7 cm length): Rs 0.35 Polyester printed wash care label: Single colour print: Rs 0.10 Hang tag: Rs 0.40 So the total cost of trims is Rs 0.85 per garment. Cost of accessories: Polybags: Normal - Rs 0.30 per garment

Master Polybag: Rs 2 per master polybags to contain 8 garments - Rs 0.25 per g Export carton: Normal: Rs 40 per carton to contain 48 garments - Rs 0.80 per garment. So the total cost of accessories is Rs 1.35 per garment. Garment costing

Now we at last have to take the step to find out the freight charges for the Men's Basic T-shirt. Price of garment e given in Table 2.

Table 2: The freight charges for the Men's Basic T-shirt. Price of garment estimation is give Particulars 34's combed yarn Fabric cost per garment Cost of Trims CMT Charges Cost of accessories Rejection of garments (commonly 3%) Cost of Garment Local Transport Light colours Rs.135.00 Rs.38.06 Rs.0.85 Rs.11.00 Rs.1.35 Rs.1.50 Rs.52.76 Rs.1.00 Medium colours Rs.135.00 Rs.40.13 Rs.0.85 Rs.11.00 Rs.1.35 Rs.1.50 Rs.54.83 Rs.1.00 Rs.135.00 Rs.44.27 Rs.0.85 Rs.11.00 Rs.1.35 Rs.1.50 Rs.58.97 Rs.1.00

Dark c

Profit@15% appro. Commission/ pc

Rs.7.90 Rs.2.00

Rs.8.20 Rs.2.00

Rs.8.90 Rs.2.00

Price of Garment
Shipping charges

Rs.63.66

Rs.66.03

Rs.70.87

For men's basic T-shirt, the delivery terms in the buyer enquiry as 'FOB'. So sea freight charges is not added. B transport with the cost of garment has to be added. Finally, we have to convert the Indian rupee value to USD or Acknowledgement

The author expresses his thanks to Dr R Rudramoorthy, Principal and Dr K Ramachandralu, Professor & H Technology, PSG College of Technology, Coimbatore for their continuous encouragement. He also extends his tha

Ravi, Costing Manager, Stallion Garment, Tirupur and Mr Jagadeesh, Production Manager, Apple Clothing Limited, for their help towards the practical approach in bringing out this paper.

Note: For detailed version of this article please refer the print version of The Indian Textile Journal May 2009 issue C Lecturer, PSG Coimbatore

Daprtment College

of

Textile 641

of of

Fashion

Vi T

Email : vignes_waran@rediffmail.com.

published M

Reader Comments

muthu | 8/26/2010 4:04:49 PM


very very helpfull for a beginner.hats off to this site

Roshni | 8/25/2010 2:58:02 PM


VERY HELPFUL INPUTS.LOOKING FORWARD FOR MORE SUCH ARTICLES

Ayush | 8/20/2010 5:08:24 PM


There are very few people who share knowledge... Thanks I mean GREAT!

suhas | 8/4/2010 3:16:59 PM


t-shirt consumption

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Calculate the consumption of knit garments


Learn Apparel Merchandising, Learn Fashion design.

Dear All, For calculating the consumption of your knit garments pls follow the below instruction. The following information you need at first, as listed below:
(During the consumption pls used measurement of middle size for calculation or used the size which have most of the qty. If the style have 6 sizes then used size number 04 for consumption. Here we will consider the size: "L" for calculate the consumption) i. Body length of the garments in cm. Say it is - 73 cm ii. Sleeve length of the garments in cm. Say it is - 19.5 cm iii. Approximate sewing allowance at body hem, shoulder joint, sleeve hem & armhole joint (in cm). Say it is - 10 cm iv. Chest width (1/2) in cm. Say it is - 52 cm v. Approximate sewing allowance at both side seam (in cm). Say it is - 4 cm vi. Fabric GSM (finish). Say it is - 160 gsm

vii. Approximate fabric wastage in various stage. Say it is - 10% (In this regards pls note that, fabric wastage depend on how many additional elements the garments have,which may changed in any time.If the garments has rotary print, enzyme stone wash etc than the fabric wastage will be more than normal wastage)
If you already have all the above information then,now just put the following information and get the fabric consumption.http://knitgarmentsconsumption.blogspot.com/ otherwise you can follow the below

rules Rules: {(B/length + S/length + Sewing Allowance) X (1/2 Chest + Sewing Allowance)}X 2 X GSM X 12 / 10000000 + Wastage = {(73 + 19.5 + 10) X (52 + 4)} X 2 X 160 X 12 / 10000000 + 10% = (102.5 X 56) X 2 X 160 X 12 / 10000000 + 10% = 5740 X 2 X 160 X 12 /10000000 +10% = 22041600 / 10000000 + 10% = 2.20416 + 10 % = 2.424576 = 2.43 kg per dozen. (Consumption)

How to Calculate Product CM Cost at the Time of Order Booking?


One of my popular posts, Garment CM cost estimation using SAM or SMV gives partial answer of this question. I have explained it further to make it clear how you can quickly calculate CM of a product at the time of order booking or initial stage of product development.

Garment Sample image courtesy: Jabong.com

CM is referred to fabric cutting and garment sewing (making) labor cost per unit. Actually, all labor costs like cutting, sewing, pressing, folding and packing are included into CM. If one asked you what would be the CM of a product, you may find it is very difficult to answer with correct figure due to complexity in calculation. But if you follow logical method and keep your database ready and updated you can determine CM of a product with no time. Preparation of a database is onetime job and you need to update regularly or when updating is required. Following steps will help you to determine product CM cost. Sewing process has much variation in terms of work contents (time required to make a garment) than cutting and finishing process. So for cutting and finishing process there is less variation in labor cost per unit.

Step 1: Make database for labor cost per pieces for cutting and finishing
Just get last six months labor wages for cutting and finishing departments (excluding staffs) and total units cut and finished in lat six months. Calculate labor cost per pieces for cutting and finishing department. Cutting labor cost per piece = Total salary paid to cutting labors in a time period / Total pieces cut in that time period Finishing labor cost per piece = Total salary paid to finishing labors in a time period / Total pieces packed in that time period. If you want accuracy in cutting and finishing cost then calculate product wise labor cost per piece.

Step 2: Determine sewing labor cost per minute


Per minute cost of a factory depends on line efficiency. And average line efficiency of a style depends on style run (order quantity). First thing first, to calculate sewing labor cost create database for average style

efficiency according to order quantity. See Table-1 for example. This database needs to be updated regularly. To calculate efficiency of a style use following formula = (Order qty. * Garment SMV * 100) / (Total man hours spent to complete the style * 60) Instead of quantity you can use actual total production quantity in the style. Table-1: Line efficiency at different order quantity

Order qty. 100-500 501-1000 1001-3000 3001-8000 8001-10000 10000 plus

Average style Efficiency 30% 35% 40% 50% 55% 60%

Once you have average efficiency based on order quantity calculate sewing labor cost per minute. Collect updated list of minimum wages for skilled labor or get average employee rates from Human Resource (HR) department. Cost per minutes = (Minimum wages of high skilled labor / 480)/Efficiency% See following Table-2, where it shows style efficiency is 55%, minimum daily wages (for high skilled operator) INR 340 and work shift time 8 hours (480 minutes). So, cost per minutes is INR 1.29 Table -2: Factors to calculate sewing labor cost per minutes

Order qty 800110000

Minimum wages (high skilled) 340

Minutes/day

Efficiency level 55%

Labor Cost/minutes 1.29

480

Step-3: Calculate CM cost of the product


SMV is one very important component for product cost calculation. For the correct SMV of a product, consult with industrial engineering department. Or create your database for product SMV with style variations. Once you get product SMV add certain percentage on it as buffer.

Sewing labor cost per piece = Product SMV X labor cost per minute (@ predefined efficiency) Product CM = (Cutting cost + Sewing cost +Finishing cost) For safety, add allowances on the calculated CM prior to offering cost to your buyer.

Cutting rate per unit 2

Finishing rate per unit 4

Sewing SMV 14

Cost allowances 5%

CM (INR) 25.23

In the above example, cutting cost is INR 2, finishing cost INR 4 and sewing SMV taken 14 minutes. Later, 5% allowances are added to the calculated cost to reach to final CM cost. To make the calculation easier I have made CM cost calculator on an excel sheet. This sheet can be downloaded based on your demand.

Garment CM cost estimation using SAM or SMV


By Prasanta Sarkar
85

In the clothing manufacturing, supplier gives final manufacturing cost to buyer prior to order
confirmation. For that factory prepares cost sheet estimating costs in different cost heads. Cost heads like Fabric, Trims and Packing materials, Labor cost and Overheads. At costing stage, supplier only get one sample of the garment and specification of fabric and trims for the reference. For raw material cost suppliers directly take price quote from fabric and trim suppliers. For labor cost it is very important to estimate as near as it will be during actual production. The scientific method for estimating CM (Cut and make) cost of a garment involves following steps 1. 2. 3. Determine SAM of the garment (refer garment SAM calculation) Calculate average line efficiency and Calculate direct labor cost per minute

How to calculate the minute cost of the operator?


Formula: #1. Labor cost per minute = (Monthly salary of an operators/Total minutes available in the month) at 100% efficiency. But no line can perform at 100% efficiency, so labor cost per minute increases when line efficiency goes down. So correct way to calculate labor cost per minute is #2. Labor cost per minute = Total salary of the labors in a month / Total SAM produced by those labors in that month. Example: Operator monthly salary is INR 5000.00 Total available capacity per month (in minute) = 26 working days*8 hours/day*60=12,480 minutes So, per minute cost of the direct labor = 5000/12480 = 0.4006 INR at 100% efficiency Formula for the projected labor cost per pieces CM cost = (SAM of the garment * Minute cost of the labor)/Line efficiency(%) (Minute cost determined from above formula#1. If you use second formula then don't divide by line efficiency) If Sewing SAM is 15 minutes and line perform at 50% efficiency then estimated garment make cost = 15*0.40/50% =12 INR And Cutting SAM is 2 minutes and cutting room perform at 50% efficiency then estimated cutting cost = 2*0.40/50%=1.6 INR So, Total estimated CM cost of the garment = (12.00+1.60) = 13.60 INR Following above formula easily one can estimate garment CM cost and use it for the product costing.

Why do you need to consider line efficiency in CM costing?


Line output varies depending on the line efficiency. When a line performs at lower efficiency than standard (100%) line will produce less units in a day compared to what line could make at 100% efficiency. But factory spends same amount of money as salary whether line perform at 100% efficiency or less. So, per unit cost will increase when line performs at lower efficiency. Note: For the calculation of labor cost per minute, instead of average operator salary you can take cumulative of all operators salary (monthly) and divide total amounts by total minute available to the line (total operator * total minutes per operator per month) to have more accurate value.

Related Articles:
1. 2. 3. 4. Actual Garment Production Cost The way factory calculates it How to Calculate Raw Material Cost for Garments? Garment Production Cost: Actual Cost Vs Cost Per SAM Cost breakdown of a Men's woven shirt sold in USA market