Denim Merchadising

“An alternative approach towards Costing of denim jeans for Buying House / Export House”
Graduation Project submitted in Partial Fulfilment of the requirements
For the degree of
Bachelor of Fashion Technology (Apparel Production)

NATIONAL INSTITUTE OF FASHION TECHNOLOGY, MUMBAI
Industry Mentor: Mr. Sanjay Achrekar (General Manager, Katmandu Apparel Pvt. Ltd., Mumbai)
College Mentor: Mr. Ranjan K. Saha (Course Co-ordinator, Department of Fashion Technology, NIFT)
1
Manish Singh Dhakad
M/BFT/10/11
Semester: VIII
Katmandu Apparel Pvt. Ltd. | Manish Singh Dhakad, BFT, NIFT
2

PREFACE
The “Bachelor of Fashion Technology” programme is well structured and integrated

course of NATIONAL INSTITUTE OF FASHION TECHNOLOGY. The main objective
of B.F.Tech. Programme is to develop skill in student by supplement to the
theoretical study of apparel mass-production. Textile internship helps to gain real life
knowledge about the industrial environment and business practices. B.F.Tech.
programme provides student with a fundamental knowledge of business and
organizational functions and activities, as well as an exposure to strategic thinking of
management.
In every professional course, training is an important factor. Professors give us

theoretical knowledge of various subjects in the college but we are practically
exposed of such subjects when we get the training in the organization. It is only the
training through which I come to know that what an industry is and how it works. I
can learn about various departmental operations being performed in the industry,
which would, in return, help us in the future when I will enter the practical field.
During this whole training I got a lot of experience and came to know about the
practices in real that how it differs from those of theoretical knowledge and the
practically in the real life.
In today‟s globalized world, where cut-throat competition is prevailing in the market,

theoretical knowledge is not sufficient. Beside this one need to have practical
knowledge, which would help an individual in his/her carrier activities and it is true
that
“Experience is best teacher”.

ACKNOWLEDGEMENT
With immense pleasure, I would like to present this report as a part of my Graduation
Project on "Development of company specific costing model for buying house
merchandising". It has been an enriching experience for me to undergo this project,
which would not have possible without the goodwill and support of the people
around. As a student of National Institute of Fashion Technology, Mumbai I would
like to express my sincere thanks to all those who helped me during this period.
I feel my pleasure to extend my sincere thanks and gratitude to my college mentor
Mr. Ranjan k. Saha, (Course-Co-ordinator, DFT, NIFT) & industry mentor Mr. Sanjay
Achrekar, General Manager (KAPL-Mumbai) who genuinely played his role in right
from planning, project framework to guiding me through this project.
I would also like to thank Mr. Lokesh Gutta, Manager (Production & operation) of
Katmandu Apparel Private Limited who gave me all the required information
related to apparel production.
Not to forget, I am also thankful to Mr. Kiran Ramakant Temkar (Director) & Mrs.
Manisha kiran Temkar (CEO) who was quite helpful in providing different facilities
during the project period.
Mr. Mahesh Khopkar, Mr. Jude James, Mr. Sameer Gandhi, Mr. Gautam Kamble,
Mr. Dharmesh Jain, Mrs. Tejal Pallan & Carmen Katke of KAPL also lend their
helping hands in making me understand merchandising concepts & Costing
parameters involved in the process.
I am also grateful to all the HODs and Miss. Vijeshri Kolbekar who led my way and I
am extremely thankful for the help and support of the staff and employees of
Katmandu Apparel Private Limited without which I could not make my project this
much successful.
Here comes the time to say my thanks to my institute NIFT which provided me
this golden opportunity. At last but not the least I‟d like to thank my seniors and
classmates who helped me directly or indirectly through their valuable suggestion.
However, I accept the sole responsibility for any possible error of omission
and would be extremely grateful to the readers of this project report if they bring such
mistakes to my notice.
MANISH SINGH DHAKAD

4
M/BFT/10/11
NIFT, MUMBAI

ABSTRACT
Sourcing operations in Garment Buying House are extremely complex due to

the intricacies of a global supply chain. Sourcing decisions should not be made
without an exhaustive analysis of cost structures of resources required for
production. FOB & Landed costs must be analysed for sourcing decisions, but they
must be complemented by information of the effects of supplier lead times and
consumer-retail interactions, which are critical to overall supply chain performance.
To do perfect garment costing, one must know about all these activities
thoroughly about their costs, procedures, advantages and risk factors. Also he must
know how to solve the problems when occurred and to take suitable alternate
decision immediately in time. We must be aware that there are always fluctuations in
the costs of raw materials and accessories, charges of knitting, processing, finishing,
sewing and packing, charges of transport and conveyance. Hence we must have
update knowledge about the latest prices and charges, latest procedures, methods
and quality systems, market prices and availability, transportation (road, sea, air) and
freight charges, etc.
An alternative approach towards Costing of denim jeans in a specific Buying

House has been developed in this study. The model looks at cost structures for the
entire supply chain from raw material sourcing to export of finished goods. The cost
model shows the accrual of costs throughout each processing step within the textile
and apparel industry. It also identifies costs related to international trade, including
transportation costs and other different types of cost.
The study examines the supply chain processes and costs for producing
denim jeans in Asian region of the world. Trade agreement duty provisions, world
cotton market price competitiveness, export tax rebates, and labour rates
significantly affect a countries‟ competitiveness in the textile and apparel industry.
The study helps identify the cost makeup of each process and the resources
consumed.
This model can assist companies to look outside their area of operation and
have an appreciation of costs related to upstream and/or downstream processes
within their supply chain. They can identify broad issues related to their strategic
partnerships with suppliers and customers and investigate these in more detail. By
combining supply chain costs, transportation time, and manufacturing
responsiveness, analyses can be performed to identify scenarios where 5
responsiveness is more critical than cost effectiveness. This study has found that a
responsive supply chain can outweigh a lower cost but less responsive supply chain
in certain sourcing environments.

TABLE OF CONTENTS
1. INTRODUCTION ......................................................................................................................... 7
1.1. NEED OF THE PROJECT .............................................................................................................. 8
1.2. PROBLEM FORMULATION ........................................................................................................ 9
1.3. IDENTIFICATION OF TOPIC/DEVELOPMENT OF RESEARCH PROPOSAL ................................. 11
1.4. OBJECTIVE & SUB-OBJECTIVE OF THE PROJECT ..................................................................... 13
2. REVIEW OF LITERATURE ......................................................................................................... 14

2.1. COST, COSTING & COST ACCOUNTING .................................................................................. 15
2.2. CLASSIFICATION OF COST ON DIFFERENT BASIS .................................................................... 15
2.3. ESSENTIALS OF GOOD COSTING SYSTEM ............................................................................... 18
2.4. RESEARCH JOURNAL ABSTRACT .............................................................................................. 18
2.5. COST CALCULATION SOFTWARES AVAILABLE IN MARKET ..................................................... 20
2.6. COST COMPONENTS ANALYSIS .............................................................................................. 21
2.7. COST CALCULATIONS FORMULAS .......................................................................................... 22
2.8. DIFFERENT PRICES OF RAW MATERIAL & LABOUR IN MARKET ............................................. 23
3. METHODOLOGY....................................................................................................................... 25
3.1. QUANTITATIVE RESEARCH ...................................................................................................... 26
3.2. QUALITATIVE RESEARCH ......................................................................................................... 27
3.3. DATA COLLECTION METHOD .................................................................................................. 27
3.4. REPRESENTATION OF DATA ANALYSIS .................................................................................... 28
3.5. STEPS OF METHODOLOGY ...................................................................................................... 29
3.6. WEEKLY TIME AND ACTION CALENDER .................................................................................. 31
4. DATA COLLECTION & ANALYSIS ............................................................................................. 32
5. RESULT & EXPECTED OUTCOME ............................................................................................ 98
6. LIMITATIONS & FUTURE SCOPE OF PROJECT ...................................................................... 100
7. CONCLUSION ......................................................................................................................... 102 6
8. BIBLIOGRAPHY....................................................................................................................... 104

CHAPTER-1
INTRODUCTION

1. INTRODUCTION:-
I conducted my Graduation Project at KATMANDU APPAREL PRIVATE

LIMITED, MUMBAI from 20 January 2014 to 20 May 2014. During my course of
project, I tried to understand the concepts of garment costing, starting from the
concept sample to the bulk production. I tried to imply the knowledge I have gained
through various Merchandising, Costing & production related subjects I have been
taught at NIFT and from all the knowledge I have gained at our institute and here at
KATMANDU APPAREL PVT. LTD.; I have tried to document it here with my best
efforts.
1.1 NEED OF THE PROJECT:
The Indian textile and apparel industry is very large and diverse,
employing 35 million people and accounting for 27 per cent of the country's
exports. The apparel industry plays a pivotal role as a key driver of the
national economy and has grown to be the most significant contributor to the
country's economy over nearly three decades of its existence.
The industry recorded a remarkable growth in a protected market

environment; it faces a series of challenges notably in areas such as:
 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 the things costed".
In order to achieve perfect garment costing, one must know about all
the activities including purchase of fabrics, sewing, packing, transport,
overheads, etc. & one must know about all these activities thoroughly about
their costs, procedures, advantages and risk factors. Also he must know how
to solve the problems when occurred and to take suitable alternate decision
immediately in time.
We must be aware that there are always fluctuations in the costs of raw
materials and accessories, charges of knitting, processing, finishing, sewing
and packing, charges of transport and conveyance. Hence we must have
update knowledge about the latest prices and charges, latest procedures,
methods and quality systems, market prices and availability, transportation 8
(road, sea, air) and freight charges, etc.

We must remember that the quality depends on price; price depends
on quality. Each product will have different price according to its quality. We
do not manufacture only one quality of garments. Also we manufacture the
garments not only for one customer. While we do the garment costing, the
customer‟s price level, quality & quantity and payment terms, to be taken into
consideration.
1.2 PROBLEM FORMULATION:
1.2.1 INITIAL IDEA
Simplification of Costing of Denim Jeans during concept sample

development stage to generate value for research & development in
new technology by development of cost calculation system.
1.2.2 RESEARCH PROBLEM
During Costing process at the garment sampling stage, there

are certain variances that are not taken into consideration because of
its negligible effect during the production stage; there is a random
variation in costing from concept development stage to production
stage (usually a bit higher). The main problems here in Costing are
given below-
a. Standard operating procedures not followed

b. No fix cost for value added service (embroidery, printing etc.)
c. No check-points for cost components factors (stretch,
Shrinkage etc.)
d. No Calculation of trims (sewing threads etc.) for optimizes
sourcing procedure.
e. A department like sampling takes more time than the usual
because of absence of Research & Development.
1.2.3 OBJECTIVE OF RESEARCH
To develop an alternative approach towards costing of denim

jeans with extrapolation of existing methods which will try to reduce
cost & generate value for investment for Research & Development in
new technical machinery.
9

1.2.4 APPROCH ADOPTION TO METHODOLOGY
INITIAL IDEA
BACKGROUND
STUDY
REFINEMENT OF
IDEA & PROBLEM
FORMULATION
REVIEW OF
LITERATURE
DESIGN &
DEVELOPMENT
OF
METHODOLOGY
DATA
COLLECTION &
ANALYSIS
EXPECTED
OUTCOME
10

1.3 IDENTIFICATION OF TOPIC / DEVELOPMENT OF RESEARCH PROPOSAL:
Project Title: An alternative approach towards Costing of denim

jeans for Buying House Merchandising.
Company Name: Katmandu Apparel Private Limited, Mumbai
Student Name: Manish Singh Dhakad (M/BFT/10/11)
Industry Mentor: Sanjay Archrekar, General Manager,

Kathmandu Apparel Private Limited, Mumbai
College Mentor: Ranjan Kumar Saha, Course-Coordinator

Department of Fashion Technology,
National Institute Of Fashion Technology
Project Idea: Simplification of Costing of Denim Jeans during

concept sample development stage to generate
value for research & development in new
technology by development of cost calculation
system.
Problem Statement: • During costing process at the garment sampling

stage, there are certain variables that are not &
taken into consideration because of its negligible
effect during the production stage, hence there is a
random deviation in the costing from sampling
stage to production stage.
• This project will help the company to find various

dependent variables in garment costing to
minimize the deviation in costing & to find
accuracy in costing at Research & development
stage by involving those variables which are not
there in past researches and previously developed
application/software.
Objective: To develop an alternative approach towards

11
costing of denim jeans with extrapolation of
existing methods which will try to reduce cost &
generate value for investment for Research &
Development in new technical machinery.
Proposed Methodology: Extrapolation of the existing costing procedure
keeping in mind the changes going to incur to
develop an alternative approach towards costing of
denim jeans which can ensure maximum accuracy
in costing without significant monetary loss. Study
the basic costing at the acceptance stage of the
order and compare it with the production costing, if
there is variance then pinpoint the areas which
were regularly wrongly costed and how this new
system can help to recognise such areas. Find the
cost profitability & cost savings to generate value
for investment for R&D.
Team/Resources: • Style Study to understand flow of company

• People: Accountant, Merchandiser, Production
manager, Buyer, Faculty Members
• Subjects: Costing of Apparel products, Fashion
Merchandizing, RDBMS, Garment Construction,
ERP, Textile & Apparel Internship
• Location: Katmandu Apparel Pvt. Ltd., Dadar,
Mumbai
• Support & Outside Services: Application based
support for software demo.
Expected Outcome: a.) A new way of calculating cost in less time

which will enable us to manage the order flow at
lower margin and to quote the best price to buyers.
b.) Technical enhancement in R&D from total cost
savings & profit margins of company.
Related Documents: (Background Study)
• Costing Techniques in Clothing Industry,

Indian Textile Journal, May, 2009
• Methods of Garment Costing,
Indian Textile Journal, November, 2013
12
•Factors influencing costing of Woven Fabric,
Indian Textile Journal, January, 2009
•Merchandizing Costing,
Textile Today, Published August, 2013
1.4 OBJECTIVE OF THE PROJECT:
The objectives of graduation project is firstly to gain practical exposure and

secondly application of knowledge on real life projects and/or assignments.
This graduation project is aimed towards blending the class room principles
with industry application. This project also helps students to learn and improve
their interpersonal communication skills with colleagues, peer group and workers.
The main Objective of this Graduation Project is -
“To develop an alternative approach towards costing of denim jeans

with extrapolation of existing methods which will try to reduce cost &
generate value for investment for Research & Development in new
technology & machinery.”
1.4.1 SUB-OBJECTIVE OF THE PROJECT
Sub-objectives of the project will be all the secondary objectives which

are required for achieving Primary or main objective of the research.
 To find dependent and independent factors of costing which are

not there in past researches & previously developed
applications.
 To minimize the deviation in costing from concept development

stage to production stage for accuracy in Costing.
 To find Cost profitability in implementing new software, this will

also reduce lead time, labour & Cost.
13

CHAPTER-2
REVIEW OF LITERATURE
14

2. REVIEW OF LITERATURE:-
A review of literature may be a self-contained unit -- an end in itself -- or a

preface to and rationale for engaging in primary research. A review is a required
part of research proposals and generally, the purpose of a review is to analyze
critically a segment of a published body of knowledge through summary,
classification, and comparison of prior research studies, reviews of literature, and
theoretical articles or Journals.
2.1 COST, COSTING & COST ACCOUNTING:
Cost can be deﬁned as the expenditure incurred on or attributable to a

given thing. Cost is the amount of resources used for something which must
be measured in terms of money.
Costing is the techniques and processes of ascertaining costs. The

techniques to be followed for the analysis of expenses and the processes of
different products or services differ from industry to industry. The main object
of costing is the analysis of financial records, so as to subdivide expenditure
and to allocate it carefully to selected cost centres, and hence to build up a
total cost for the departments, processes or jobs or contracts of the
undertaking.
Cost Accounting primarily deals with collection, analysis of relevant of

cost data for interpretation and presentation for various problems of
management. It is defined as, „the establishment of budgets, standard costs
and actual costs of operations, processes, activities or products and the
analysis of variances, profitability or the social use of funds‟.
(Source: Managerial and Cost Accounting_2009

Larry M. Walther, Christopher J. Skousen, Free book by Bookboon.com)
2.2 CLASSIFICATION OF COST ON DIFFERENT BASIS
2.2.1 On the Basis of Time:

a. Historical Costs: These costs are ascertained after they are
incurred. Such costs are available only when the production of a
particular thing has already been done.
b. Pre-determined Costs: These costs are calculated before they

are incurred on the basis of a specification of all factors affecting
cost. Such costs may be:
(i) Estimated costs: Costs are estimated before goods
are produced; these are naturally less accurate than
15
standards.

(ii) Standard costs: This is a particular concept and
technique. This method involves:
2.2.2 On the basis of Nature of Elements:
There are three broad elements of costs which can be illustrated

by the following chart:
2.2.3 On the basis of Association with the Product:
a. Product Costs: Product costs are those which are traceable to

the product and included in inventory values. In a manufacturing
concern it comprises the cost of direct materials, direct labour
and manufacturing overheads.
b. Period Costs: Period costs are incurred on the basis of time

such as rent, salaries, etc., include many selling and
administrative costs essential to keep the business running.
Though they are necessary to generate revenue, they are not
associated with production; therefore, they cannot be assigned
to a product.
16

2.2.4 On the basis of Functionality:
A company performs a number of functions. Functional costs
may be classified as follows:
a. Manufacturing/production Costs: It is the cost of operating the

manufacturing division of an undertaking.
b. Administration Costs: They are indirect and covers all

expenditure incurred in formulating the policy, directing the
organisation and controlling the operation of a concern, which
is not related to research, development, production, distribution
or selling functions.
c. Selling and Distribution Cost: Selling cost is the cost of seeking

to create and stimulate demand e.g. advertisements, market
research etc. Distribution cost is the expenditure incurred
which begins with making the package produced available for
dispatch and ends with making the reconditioned packages
available for re-use e.g. warehousing, cartage etc.
d. Research and Development Costs: They include the cost of

discovering new ideas, process and products by experiment and
implementing such results on a commercial basis.
e. Pre-production Cost: When a new factory is started or when a

new product is introduced, certain expenses are incurred. There
are trial runs. Such costs are termed as pre-production costs
and treated as deferred revenue expenditure.
2.2.5 On the basis of behaviour:

Costs can also be classified according to their behaviour.
a. Fixed Costs
b. Variable Costs
c. Semi-variable Costs
(Source: Study material: Executive programme

Cost and Management Accounting (Module-1, Paper-2)
The Institute of Company Secretaries of India
In Pursuit of Professional Excellence, Statutory body under an Act of Parliament
ICSI House, 22, Institutional Area, Lodi Road, New Delhi- 110003
17
Class notes (Sem-VI) : Costing of Apparel Products
By- Rengini Chandramohan (Associate Professor))

2.3 ESSENTIALS OF GOOD COSTING SYSTEM:
For availing of maximum benefits, a good costing system should

possess the following characteristics.
 Costing system adopted in any organization should be suitable to its

nature and size of the business and its information needs.
 A costing system should be such that it is economical and the benefits
derived from the same should be more than the cost of operating of the
same.
 Costing system should be simple to operate and understand.
Unnecessary complications should be avoided.
 Costing system should ensure proper system of accounting for
material, labour and overheads and there should be proper
classification made at the time of recording of the transaction itself.
 Before designing a costing system, need and objectives of the system
should be identified.
 The costing system should ensure that the final aim of ascertaining of
cost as accurately possible should be achieved.
(Source: Intermediate (Group-II, Paper-8) Cost and Accounting management

The institute of Cost Accountants of India,
12, Sudder Street, KOLKATA- 700016)
2.4 RESEARCH JOURNALS ABSTRACT
Costing is a very complex procedure, with set patterns and guidelines

followed by the industry, and it is difficult to find out costs for every processes
there are some inbuilt costs while costing, elaborate Saroj Bala and Tripti
Gupta.
About 65 - 70% cost of the garment is the cost of the fabric and hence,
it is very crucial to get the right cost of the fabric from fabric manufacturers
and suppliers. Garment manufacturers struggle to get the best possible cost
of the fabric. It would be interesting to know the important points to consider
for getting a comprehensive understanding of costing. Costing seems to be a
complex exercise as it depends on a number of variables.
What are the costs to consider…?
i) Direct cost: Cost of raw material -- 66%. Cost of size and chemicals -
4%. Production cost comprising of running the machine, maintenance, power 18
fuel, humidification and other utilities -- 8 % and worker wages and salaries --
8% losses incurred due to shrinkage, wastage, grading, and also selling
commissions.

ii) Indirect cost: Interest on investment, loan, working capital,
depreciation, etc. Above 7%, overheads and administrative expenses like
travelling, telephone, couriers, legal issues, taxes comprising of 7%.
iii) Profit: 10 - 20% depending on the order size. In some companies,

70% of the fabric cost will comprise of direct cost, but in corporate selling only
40% cost of the fabric is direct cost and 60% is overheads.
What are the factors which affect the cost …?
Type of raw material

Amount of raw material or GSM of the fabric
Sizing and Chemicals Cost
Production cost or cost of weaving process
Mill-made or power loom made
Wastage and shrinkage
Dyeing costs
Length & Width of fabric
Shade %
Class of dye and quality
Colour
Weight of the fabric
Finishing cost
Shrinkage and wastage
Export terms & Conditions
(Source: Ms Saroj Bala, Associate Professor & Mrs Tripti Gupta, Assistant Professor 19
Pearl Academy of Fashion, New Delhi
Factors influencing costing of Woven Fabric

Indian Textile Journal, January, 2009)

2.5 COST CALCULATION SOFTWARES AVAILABLE IN MARKET
MerchanNet 6.08 (Cost: $599.00USD)

Software for garment, clothing, apparel, leather, footwear, bags,
luggage, socks, hats, necktie manufacturer, export trading company and
factory in soft line products.
CostingNet 4.38 (Cost: $249.00USD)

CostingNet is used to create a detail product costing sheet. Best for
factory or manufacturer in industry like garment, clothing, apparel, toys, home
textiles, giftware, premium goods, household product, footwear, bags,
luggage, plastic products, electrical & electronics, travel and sporting goods.
SampleNet 4.28 (Cost: $249.00USD)

SampleNet is used to manage all the sample development activity for
your merchandising department. It generates sample orders with YY, trim
parts and size spec., sample invoices, customs invoice, sample history report
and sample status report in different grouping.
(Source: www.softmenu.org 20
www.ibuyer.hk)

2.6 COST COMPONENTS ANALYSIS
Direct Material:
Fabric Shell (Consumption, Rate, Unit of measurement, Quantity)
Fabric lining (Consumption, Rate, Unit of measurement, Quantity)
Fabric Pocketing (Consumption, Rate, Unit of measurement, Quantity)
Trims & accessories

(Consumption, Rate, Unit of measurement, Quantity)
All sewing trims are taken into consideration like Buttons,
Zipper, Label, Rivet, Velcro, Twill tape, Studs, Hanger, and
Polybags etc. except packaging trims like Carton boxes & stick
tapes.
Direct Labour: (Average manufacturing cost is taken from factory)
Cut, Make (Rate, UOM, Quantity)

Packaging charges (Rate, UOM, Quantity)
Direct expenses: (Average manufacturing cost is taken from factory)
Washing (Rate, UOM, Quantity)

Heat Seal (Rate, UOM, Quantity)
Print (Rate, UOM, Quantity)
Embroidery (Rate, UOM, Quantity)
Profit margin are added as per Buyer`s requirement of Quality,

Quantity & Lead-time.
(Source: Basic Cost sheet and Quotation sheet,

Katmandu Apparel Private Limited) 21

2.7 COST CALCULATIONS FORMULAS
[{ } ]
Warp Cost (cost per yard) =
[{ } ]
Weft Cost (cost per yard) =
Warp weight =
Weft weight =
Fabric cost = [warp weight × warp yarn cost × weft weight × weft
yarn cost]
Cutting labour cost =
Finishing labour cost =
Cost per minute =
CM cost = SAM of garment x minute cost of labour / line efficiency
Efficiency for styles =
Labor cost (salary paid) = SMV x Labour cost per minute
CM = cutting cost + sewing cost + finishing cost
(Source: www.ocs.com (Online Clothing Study)

22
Class notes-NIFT (Sem-VI-B.F.Tech.) : Costing of Apparel Products
By- Rengini Chandramohan (Associate Professor))

2.8 DIFFERENT PRICES OF RAW MATERIAL, LABOUR & OTHER
SERVICES IN MARKET
Cotton seed price: 2.52 Yuan per ton (china)

Seed cotton price: 8.93 Yuan per ton (china)
Cotton Price:
S.No. Month US Cents per pound

1 July 2013 92.62
2 Jun 2013 93.08
3 August 2013 92.71
4 September 2013 90.09
5 October 2013 89.35
6 November 2013 84.65
7 December 2013 87.49
8 Jan 2013 87.21
*Cotton with seed = 3 × cotton without seed
Labour cost in different manufacturing countries by ILO in USD

per hour:
Asian competitors:
S.No. Country USD per hour
1. Bangladesh 0.22
2. Cambodia 0.33
3. Pakistan 0.37
4. Vietnam 0.38
5. Srilanka 0.43
6. Indonesia 0.44
7. India 0.51
8. Remote inland area 0.55 - 0.80
China
9. Other costal & core area 0.86 - 0.94
China
10. Prime costal area China 1.08
11. Malaysia 1.18
12. Thailand 1.29-1.36
23

US region supplier:
1. Mexico 2.54
2. Honduras 1.72 - 1.82
3. Dominican Republic 1.55 - 1.95
4. Haiti 0.49 - 0.55
5. US 14.10
African region supplier:

1. Turkey 2.44
2. Morocco 2.24
3. Russia 1.97
4. Tunisia 1.68
5. Bulgaria 1.53
6. Jordan 1.01
7. Egypt 0.83
Energy rates:
S.No. Country USD per kilo watt hour
1. China 0.1000
2. Colombia 0.1070
3. Guatemala 0.1600
4. India 0.1120
5. US 0.0630
6. Vietnam 0.0550
*Water rates, steam, other cost can also be added.
Duty Rates:
S.No. Country Duty % Rebate %
1. China 16.5 15
2. Colombia 16.5 0
3. Guatemala 0 0
4. India 16.5 0
5. US 0 0
6. Vietnam 16.5 0
(Source: International Labour Organisation, ILO)
24

CHAPTER-3
METHODOLOGY
25

3. DESIGN AND DEVELOPMENT OF METHODOLOGY
3.1 Quantitative Research
3.1.1 Descriptive and interpretive approaches to qualitative research

(What is the current situation?)
Descriptive research seeks to describe the current status of an

identified variable or phenomenon. The researcher does not usually
begin with an hypothesis, but is likely to develop one after collecting
data. Analysis and synthesis of the data provide the test of the
hypothesis. Systematic collection of information requires careful
selection of the units studied and measurement of each variable in
order to demonstrate validity.
3.1.2 Correlation analysis approach

(What is the Possible cause?)  
Correlational research attempts to determine the extent of a

relationship between two or more variables using statistical
data. Relationships between and among a number of facts are sought
and interpreted to recognize trends and patterns in data, but it does not
go so far in its analysis to establish cause and effect for them. Data,
relationships, and distributions of variables are observed only.
Variables are not manipulated; they are only identified and are studied
as they occur in a natural setting.
*Sometimes correlational research is considered a type of descriptive
research, and not as its own type of research, as no variables are
manipulated in the study.
3.1.3Causal-Comparative/Quasi-Experimental
(What was the cause?)
Causal-comparative/quasi-experimental research attempts to

establish cause-effect relationships among the variables. These types
of design are very similar to true experiments, but with some key
differences. An independent variable is identified but not manipulated
by the experimenter, and effects of the independent variable on the
dependent variable are measured. The researcher does not randomly
26
assign groups and must use ones that are naturally formed or pre-
existing groups. Identified control groups exposed to the treatment
variable are studied and compared to groups who are not.

3.2 Qualitative Research
3.2.1 Historical  (What was the situation?)
 Description of past events, problems, issues, facts
 Data gathered from written or oral descriptions of past events,

artifacts, etc.
 Describes what was in an attempt to reconstruct the past involves
much interpretation of events and its influence on the present    
3.2.2 Grounded Theory (What is grounded theory?)
Grounded theory is probably applied less often in business

research than is either phenomenology or ethnography.
Grounded theory represents an inductive investigation in which the
researcher poses questions about information provided by
respondents or taken from historical records. The researcher asks the
questions to him or herself and repeatedly questions the responses to
derive deeper explanations. Grounded theory is particularly applicable
in highly dynamic situations involving rapid and significant change.
3.2.3 Ethnography (what is self-Observation?)
Ethnography represents ways of studying cultures through

methods that involve becoming highly active within that culture.
Participant Observation involved in ethnography approach means the
researcher becomes immersed within the culture that he or she is
studying and draw data from his or her observation.
(Source: http://www.weber.edu, http://www.bcps.org/ and

CHAPTER 7 QUALITATIVE RESEARCH TOOLS_ http://www.cengage.com/)
3.3 Data collection method:

27
3.3.1 Primary Data: Extrapolation of Past records, Company Cost
sheets, ERP Software Database, Different Directories of fabric, Trims & other

Costs. Demonstrations of different cost effective software, Sourcing
Department Records. Analysis of existing system.
3.3.2 Secondary Data: Available researches on costing, Textile

Journals and Books available in Resource Center, Related Internet websites
and previously developed application available on web. Class room Study
Material & Internship reports.
3.4 Representation of data analysis:
3.4.1 Brainstorming:
Brainstorming works by focusing on a problem, and then

deliberately coming up with as many solutions as possible and by pushing the
ideas as far as possible. One of the reasons it is so effective is that the
brainstormers not only come up with new ideas in a session, but also spark off
from associations with other people's ideas by developing and refining them.
 No criticism
 Welcome unusual ideas
 Quantity Wanted
 Combine and improve ideas
3.4.2 Check-sheet (Defect concentration diagram)
A check sheet is a structured, prepared form for collecting and

analyzing data. This is a generic tool that can be adapted for a wide variety of
purposes.
3.4.3 Histogram:
A graphical representation, similar to a bar chart in structure,

that organizes a group of data points into user-specified ranges. The
histogram condenses a data series into an easily interpreted visual by taking
many data points and grouping them into logical ranges or bins. 28

3.5 Steps of methodology:
To develop an alternative approach towards costing of denim jeans

with extrapolation of existing methods which will try to reduce cost & generate
value for investment for Research & Development in new technical
machinery.
3.5.1 To find dependent and independent factors of costing which are

not there in past researches & previously developed
applications.
 Study the Company flow process & Job of Costing merchant.

 Study the Cost related Journals and Researches for finding
variables.
 Brain-storming for developing check-sheet of Material & Labour
requirement.
 Collection of Check-sheet data of any concept sample for
correction & Improvisation.
 Differentiate dependent & independent factors for each entity.
 Find advantages & disadvantages of including different
dependent & independent variables.
3.5.2 To minimize the deviation in costing from concept development

stage to production stage for accuracy in Costing.
 Study of detailed Costing process & Cost components for

effective Sourcing procedures.
 Study of all Costing formulas in detail for accuracy in Costing.
 Development of cost-sheet formats & other cost absorption
formats in detail.
 Customization of thread calculator as per the company product
type for effective thread consumption calculation.
 Collect data for costing of samples & costs which are followed
by the company during concept sampling stage including
wastages & profit margins to develop cost sheet for a particular
season.
 Compare cost and find variance & total cost savings.
 Develop charts for the total trends followed in fabric prices. 29
 Calculation of reverse cost for fabric from the data available on
different resources for analysis of increment of cost during a
period & for effective sourcing negotiation.

3.5.3 To find Cost profitability in implementing new software, this will
also reduce lead time, labour & Cost.
 Study of present software used & find advantages &

disadvantages of the system.
 Enquiry, testing and demo of the new software for cost savings
in man-power, time and overheads.
 Comparison of cost profitability in implementing new system.
 Suggestion of new machinery implementation in research and
development from the total cost savings for the future scope of
the research.
 Reasons for investment in technological upgradation.
30

WEEKLY TIME AND ACTION CALENDER
MONTH (Week) JANUARY FEBRUARY MARCH APRIL
S.No.
TOPIC 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th
1 Development of Concept for GP
2 Identification of Topic
3 Development of Research Proposal
4 Study of company flow process
5 Literature Study
6 Background Study
7 Design & Development of Methodology
8 Job of Costing merchant
9 Study all costing formula in detail for accuracy in costing
10 Understand the Costing process & cost components
11 Develop formats of forms and check-sheet
12 Develop format for Cost-sheet
13 Midterm Review & Analysis of feedback
14 Execution and Field Work
15 Data Collection and Analysis
16 Develop new cost sheet for concept samples
17 Study of concept development sample for costing
18 Find all dependent and independent variables
19 Differentiate dependent and independent factors
20 Data collection of styles for check-sheet directory
21 Find the margin variance between quotation of different styles
22 Find advantages and disadvantages of including dependent and independent variables
23 Find total cost savings and margin increments during the period
24 Testing and demo of the new software for cost savings in man-power, time and overheads
25 Comparison of new application implementation
26 Enquiry of new machinery implementation in research and development
27 The future scope of the research
28 Report Writing

31
CHAPTER-4
DATA COLLECTION &

ANALYSIS
32

4.1 To find dependent and independent factors of costing which are not there
in past researches/Journals/Literature & previously developed applications.
4.1.1 Study the Company flow process & Job of Costing merchant.
a) Company flow process of Katmandu Apparel Pvt. Ltd.
33

b) Job of Costing Merchant:
 Develop standard costs.

 Determine the cost of purchased or manufactured products/services.
 Analyze the variance between costs and standard costs.
 Interact with Production Control to ensure Bills of Materials (BOM) are
accurate and up to date. Review and audit BOM‟s to ensure they
reflect the latest manufacturing practices.
 Analyze actual labor, material, and overhead cost against
standard/Budget.
 Work with the finance department to implement and apply cost
accounting policies and procedures.
 Support Controller‟s efforts for implementing and maintaining internal
controls for operations, sales, engineering, and finance.
 Development of new labor and overhead rates, budget, and forecasts.
(Manufacturing Cost Analyst Job Description, http://www.lewmar.com

Main Duties of Cost Analyst, http://www.jobwings.com)
4.1.2 Study the Cost related Journals and Researches for finding variables.
34
(
(Source: Factors influencing costing of Woven Fabric,

Indian Textile Journal, January, 2009)

4.1.3 Brain-storming for developing check-sheet of Material & Labor
requirement.
35

STYLE DETAILS BREAKDOWN
Cost_id SM_23_01 SM_23_02 SM_23_03 SM_23_04 SM_23_05
Product package no. 82644
Style no. KAG_82644
Improvisation.
Reference no. CF14_82644

Collection Skinny Jeans
Season Fall 2014
Product Group Denim Jeans
Brand JCP
Category Childrens
Material Wear
Buyer Denim
Factory Jessica Marple
Product Description KAG
Fabric supplier AZG(DCM)-Skinny Jeans
Assigned IBO India
Costing For Supplier
Sizes Regular
Finish Destructive, rinse, Rock
wash Destructive, rinse, Rock
Designer Sgill 19
Style line Bottom Wear
Costing remark Development Stage
Currency for costing USD-INR
Handled by Manish Dhakad
UOM per Garment
Trade term FOB
4.1.4 Collection of Check-sheet data of any concept sample for correction &

36
MATERIAL COST BREAKDOWN
Cost_id SM_23_01
Fabric For Shell_1 Shell_2 Pocketing
Mill Reference_id KAG-13-391 KAG-13-1091 poly-cotton
Buyer Reference_id
Supplier
Fabric Type Denim Denim Pocketing
Composition Cotton, Ramie, Poly, Spandex Cotton, Ramie, Poly, Spandex Poly, Cotton
Sourcing type Yarn dyed yarn dyed Solid
UOM yds yds yds
Quantity
Quality grade
Weave Twill Twill Twill
Color Blue Blue White
Style
Yarn type Ring-spun Ring-spun Ring-spun
Loom
Country of origin China China China
Count 28x28
GSM 120
Payment terms
Shrinkage 4.5 to 8.5 4.5 to 8.5 4.5 to 8.5
Wastage
Size & chemical
Finishing
Cuttable width 57 55 57
Finished width 58/59 56/57 58/59
Dyeing type Indigo Indigo
Lead time 120 Days 120 Days 120 Days
Extra % 3-5 % 3-5 % 3-5 %
Consumption per marker
Number of garments in marker 18 18
Average consumption
TRIMS COST BREAKDOWN

Cost_id SM_23_01
Trim_id TS_82644_1 TS_82644_2 TS_82644_3 TS_82644_4 TS_82644_5 TS_82644_6 TS_82644_7 TP_82644_1
Trim type Stitching Stitching Stitching Stitching Stitching Stitching Stitching Packaging
Trim Description AZ Metal logo Shank-27L-6-16
Category Buttons Buttons Zipper Thread Thread Elastic Buttons
Sub-catergory Shank Rivet Metal Sewing Decorative Adjustable 4 hole Plastic
Size 27L 14L 3 120-60 Tkt 40 Tkt 3/4 inches 24 L
UOM Piece Piece Piece Meter Meter Inche Piece
Price terms
Consumption
Quantity
Extra % 5 5 5 10 10 5 5
Wastage 3 3 3 3 3 3 3
Brand Arizona Arizona YKK Coats Coats Slotted Clear Plastic
Material Metal Metal Metal Cotton Cotton Spandex Plastic
Supplier
Remark/Code JAZ-086AT JAZ-083 #3 Color Contrast Slotted 4 hole 37
Destruction Wash GY22 GY22 Antique Copper C8601 C3950 DTM Clear
Rinse Wash GY22 GY22 Antique Copper C2336 C3950 DTM Clear
Rock Wash GY22 GY22 Antique Copper A&E#45957 Tan#3 C3950 DTM Clear

LABOUR & WORKMANSHIP COST BREAKDOWN
Cost_id SM_23_01 SM_23_02 SM_23_03 SM_23_04 SM_23_05
Factory_id
Country China
Port of origin
Factory
Efficiency
Capacity
Lead time 120 Days
SAM 17 Min.
Labour cost 1.55
Cutting 0.2
Stiching 1
Finishing 0.35
Quantity 775000
UOM Piece
VAS Wash
MANUFACTURING, SUB-CONTRACT, PACKING & TRANSPORTATION COST BREAKDOWN

Cost_id SM_23_01
Packaging Code AZ-01-557-A CPSIA AZ-01-911-A AZ-01-920-B AZ-01-981-C BR-02-330-A 37-30-071-A
Manufacturing Overheads
Type of manufacturing
UOM Piece Piece Piece Piece Piece Piece Piece
Quanity 775000 775000 775000 775000 775000 775000 775000
Extra % 5 5 5 5 5 5 5
Packing Labeling Labeling Labeling Labeling Labeling Ticketing Ticketing
Description Center label Tracking label
Waistband label
Fit label Size label Matchbook hangtag
Containers
Transportation mode
From
To
Export term FOB (FREIGTH ON BOARD)
Warehousing charges
Export/import cost 38
Interest %
Disocunt %

ADMINISTRATIVE, SALES & DISTRIBUTION, PROFIT & OTHER COST BREAKDOWN
Cost_id SM_23_01 SM_23_02 SM_23_03 SM_23_04 SM_23_05 SM_23_06 SM_23_07
Lead time
Building rent
salary of staff
Bills
Utilities
Transportaion Expenses
Administrative
Employee welfare
Stationary & printing
Pantry
House keeping
Overtime
Sales & Distribution
Profit %
R& D
Security & helpers
Training & Recruitment
Repair & Replacement
Depreciation
Newspaper & Magazines
After sales expenses
Bank Expenses

Others
39
4.1.5 Differentiate dependent & independent factors for each entity.
STYLE DETAILS BREAKDOWN

S.No. Entity Dependent/Independent
1 Cost_id
2 Product package no.
3 Style no.
4 Reference no.
5 Collection
6 Season
7 Product Group
8 Brand
9 Category
10 Material Dependent
11 Buyer Dependent
12 Factory Dependent
13 Product Description
14 Fabric supplier
15 Assigned IBO
16 Costing For
17 Sizes
18 Finish Dependent
19 Wash Dependent
20 Designer
21 Style line
22 Costing remark
23 Currency for costing
24 Handled by
25 UOM
26 Trade term Dependent
MATERIAL COST BREAKDOWN

1 Cost_id
2 Fabric For
3 Mill Reference_id
4 Buyer Reference_id
5 Supplier
6 Fabric Type Dependent
7 Composition Dependent
8 Sourcing type 40
9 UOM
10 Quantity Dependent
11 Quality grade Dependent
12 Weave Dependent
13 Color Dependent
14 Style
15 Yarn type Dependent
16 Loom Dependent
17 Country of origin Dependent
18 Count Dependent
19 GSM Dependent
20 Payment terms Dependent
21 Shrinkage Dependent
22 Wastage Dependent
23 Size & chemical Dependent
24 Finishing Dependent
25 Cuttable width Dependent
26 Finished width Dependent
27 Dyeing type Dependent
28 Lead time Dependent
29 Extra %
30 Consumption per
marker
31 Number of garments in
marker
32 Average consumption Dependent
TRIMS COST BREAKDOWN

1 Cost_id
2 Trim_id
3 Trim type Dependent
4 Trim Description
5 Category Dependent
6 Sub-catergory Dependent
7 Size Dependent
8 UOM
9 Price terms Dependent
10 Consumption Dependent
12 Wastage
13 Brand Dependent
14 Material Dependent
15 Supplier
16 Remark/Code
17 Destruction Wash Dependent 41
18 Rinse Wash Dependent
19 Rock Wash Dependent

LABOUR & WORKMANSHIP COST BREAKDOWN

1 Cost_id
2 Factory_id
3 Country Dependent
4 Port of origin Dependent
5 Factory Dependent
6 Efficiency Dependent
7 Capacity
8 Lead time Dependent
9 SAM Dependent
10 Labour cost Dependent
11 Cutting Dependent
12 Stitching Dependent
13 Finishing Dependent
15 UOM
16 VAS Dependent
MANUFACTURING, SUB-CONTRACT, PACKING &

TRANSPORTATION COST BREAKDOWN

1 Cost_id
2 Packaging Code
3 Manufacturing
4 Overheads
5 Type of manufacturing Dependent
6 UOM
7 Quanity Dependent
8 Packing Dependent
9 Description
10 Containers Dependent
11 Transportation mode Dependent
From/To
12 Export term Dependent
13 Warehousing charges
14 Interest % Dependent
15 Export/import cost
16 Disocunt % Dependent
42

ADMINISTRATIVE, SALES & DISTRIBUTION, PROFIT &
OTHER COST BREAKDOWN

1 Cost_id
2 Lead time
3 Building rent
4 salary of staff Bills
5 Utilities
6 Transportation Dependent
Expenses
7 Administrative Dependent
8 Employee welfare
9 Stationary & printing
10 Pantry
11 House keeping
12 Overtime
13 Sales & Distribution
14 Profit %
15 R&D
16 Security & helpers
17 Training & Recruitment
18 Repair & Replacement
19 Depreciation
20 Newspaper &
Magazines
21 After sales expenses
22 Bank Expenses
23 Others
4.1.6 Find advantages & disadvantages of including different

dependent & independent variables in Cost Accounting.
Advantages Disadvantages
Dependent variables are directly Dependent variables must be

related to the cost of the entity, as analyzed time to time as; cost
it is directly linked to value added may differ from time to time.
service.
Independent variable helps us to Independent variables are not

understand & create linkage to directly related to cost; hence
develop directory & also for they can be used for referring 43
reference purpose. material type etc. Not for cost of
material directly.

4.2 To minimize the deviation in costing from concept development stage to
production stage for accuracy in Costing.
4.2.1 Study of detailed Costing process & Cost components for

effective Sourcing procedures.
Material cost is a major cost component of garment

manufacturing costs and a correct cost calculation method will give one
a better projection of garment cost for a style, explains Vishnu Pareek.
To do perfect garment costing, one must know about all these

activities thoroughly about their costs, procedures, advantages and risk
factors. Also he must know how to solve the problems when they occur
and to take suitable alternate decision immediately in time.
There are always fluctuations in the costs of raw materials and

accessories, charges of knitting, processing, finishing, sewing and
packing, charges of transport and conveyance. Hence knowledge
update is required about the latest prices and charges, latest
procedures, methods and quality systems, market prices and
availability, transportation (road, sea, air) and freight charges, etc.
Different Costing methods include:
 Job Costing
 Batch Costing
 Contract or Terminal Costing
 Single or Output Costing
 Process Costing
 Operation Costing
 Operating Costing
 Departmental Costing
44
 Multiple Costing

4.2.2 Study of all Costing formulas in detail for accuracy in Costing.
Fabric Cost Breakdown: (No transportation cost involved)
[{ } ]
1). Warp Cost (cost per yard) =
(1Maund ≈ 37 Kilograms)
(1 Oz. = 28.350 grams)
(Denim⟶ 7-10 oz. & Non-denim⟶ 4-6 oz.)
[{ } ]
2). Weft Cost (cost per yard) =
(1 meter = 1.094 yards = 39.3701 inches)

(Fabric width 59" = 1.4986 meters)
3). Wastage = 7 %
4). Miscellaneous = (weaving + Electricity + Maintenance etc.)
5). Fabric weight = [warp weight + weft weight]
6). Weaving Cost per Yard = Warp cost + Weft cost +

Wastage + Miscellaneous
7). Warp weight =
8). Total ends = Fabric width X Ends per inch X Shrinkage %
(Raw Cotton yarn shrinkage = 8 - 10 %)
9). Weft weight

=
45
10). Fabric cost = [warp weight × warp yarn cost × weft
weight × weft yarn cost]

Price of fabric depends upon:
a) Raw material cost
b) Weaving cost
c) Processing cost
d) Yarn dyeing cost
e) Packaging cost
f) Grey checking cost
g) Excise & other duties
h) Machine & Land depreciation
i) Manpower cost (Indirect labour)
j) Power & Water cost
k) Profit
For ascertaining turns per inch:
For weft (medium) yarn = √ × 3.25
For warp (medium) yarn = √ × 3.75
GSM ∝ Ends per inch/Picks per inch/Construction ∝
GSM ∝ Cost (for same type of fabric)
Sizing cost ∝
Weight of warp per sq. meter of fabric in grams (A)

=
Weight of weft per sq. meter of fabric in grams (B)

=
GSM = Weight of weft yarn (A) + Weight of warp yarn (B)
46
GSM = * +
(Ounce/Sq. yard) = (GSM/33.91)

General specification of denim jeans:
GSM = 200 - 400
Yarn density (Tex) = 60 - 100
Density or Count = 10 – 6
GSM = * + ×[ ]
1 Tex = weight of 1000 meter thread in grams.

Tkt. = ( )
(Rs.30) (Rs. 30) (Rs. 10per meter.)

Ginning ⟶ Roving ⟶ Yarn ⟶ weaving
(Rs. 1.5 kg) (1 kg.)
(If order >15,000-20,000 meter then Dyeing Cost lowers by Rs.1-2/-)

Price in China market:
S.No. Process Cost (USD per pound)

1 Washing fiber $ 2.75 per pound
2 Twist $ 3 per pound
3 Carding $ 2.75 per pound
4 Worsted single ply $19 per pound
Average textile processing cost:
S.No. Process Cost Percentage

1 Carding cost $ 1.373 per 19-20 %
pound
2 Filling Spinning $ 1.26 per pound 18 %
room cost
3 Warping room $ 0.92 per pound 13 %
cost
4 Spooling cost $0.558 per pound 8%
5 Warping $ 0.183 per 2.5 % 47
pound
6 Drawing cost $ 0.239 per 3.5 %
pound

7 Web drafting $ 0.501 per 7%
pound
8 Weaving $ 1.267 per 7.5 %
pound
9 Finishing $ 0.639 per
pound
Different types of wastes:
S.No. Item Percentage

1 Invisible loss 1.5 %
2 Sweepings 1.5 %
3 Usable waste 3-4 %
4 Card Sliver 0.5 %
5 Draw frame sliver 0.6 %
6 Speed frame 0.5 %
7 Ring frame 1.0 %
8 Roving end 0.4 %
9 Open end sliver 0.3 %
10 Combing 1 - 1.5 %
11 Waste overall 3-4 % (seeds)
12 Trash 15 % (depending upon
geographical location)
13 Doff conditioning 1-1.5 %
14 Poly Spandex 6-12 % (weaving
performance 100-130 %)
15 Warping & Weaving waste 2-3 %
16 Waste shrinkage 1-1.5 %
17 Value loss 7 % in running cotton
18 3 % in running polyester
Dyeing cost:
Vat Dyes > Reactive Dyes
Finishing Cost:
Flame retardency - 15Rs./meter
Anti-static - 5Rs./meter
Anti-satin - 10Rs./meter
Anti-wrinkle - 5Rs./meter
48
If added in jigger (softners) - 10Rs./Kg.
Stentering - 20Rs./Kg.

Shrinkage/Wastage:
Cambric / Cotton - 5%
Poly blends - 4.5% - 5%
COST OF FABRIC = COST OF GREY FABRIC+DYEING

CHARGES+FINISHINGING CHARGES+SHRINKAGE/WASTAGE
Weaving costs:
 Mill made loom cost ≈ 125 % Power loom cost
 Twill weave = 12 paisa / pick / inch / sq. meter
 Satin weave = 12 paisa / pick / inch / sq. meter
 P.V. Suiting = 14.2 paisa / pick / inch / sq. meter
 For 1000 meter dobby = 17 paisa / pick / inch / sq. meter
 For 1000 meter Jacquard = 20 paisa / pick / inch / sq. meter
 For 2400 hook Jacquard = 17 paisa / pick / inch / sq. meter
 Double beam fabric = 40 paisa / pick / inch / sq. meter
Rs. 35 per Kg. (approx.) includes steam, power or wages.
Raw material cost per meter for 150 cm fabric width
= [2.3 x Ozs. per sq. yard + 8.4]±4%
RMC (Ring per meter) = RMC OE per meter x [1+Oz. per sq. yard/100]
iNDEX = [ ] x 0.27
UHML=Upper half mean limit
Str.=Strength in grams per tex using HVI mode.
Fabric cost consideration:
a.) Take accurate fabric consumption based upon new marker

ratio and take testing commitment for width, shrinkage & defect
percentage.
b.) Take 2-7% buffer margin on material cost estimation.
49
c.) Take consumption of pocket lining, shell etc. & all other
different fabric used.

Labour cost breakdown:
Efficiency for styles =
Cutting labour cost =
Finishing labour cost =
Cost per minute =
Labor cost (salary paid) = SMV x Labour cost per minute
CM = cutting cost + sewing cost + finishing cost
CM cost = SAM of garment x minute cost of labour / line efficiency
For accuracy:
Labour cost per minute =
CMT charges will include stitching, cutting, finishing, packing,

embellishment, value added services, trims.
Factory overhead over direct labour wages =
Labour rate variance = (standard rate - actual rate) x actual hour

worked
Cutting SAM = Spreading, Marking, Cutting, Re-layering, Re-

cutting, Sorting, Bundling.
Stitching SAM = m/c time + material handling with allowances +

Bundle time
Total m/c time = [{(A+17B+C) x D} + {(A+17B+C) x D} E
= (1+E %) x {(A+17B+C) x D} 50
Finishing SAM: Pressing & finishing SAM will be calculated as

per operations.
4.2.3 Development of cost-sheet formats & other cost absorption
formats in detail.
For Pre-production Costing formats:
 Factory expenses sheet

 Administrative expenses sheet
 Selling & Distribution expenses sheet
 Time-study sheet
 Data-base sheet
 Cost-Sheet format
For Post-production Costing formats:
 Sewing Section sheet

 Cutting Section sheet
 Finishing & Packaging Section sheet
 Power consumption in Cutting section
 Power consumption in Sewing section
 Power consumption in finishing & packing section
 Depreciation Sheet
 Insurance Premium sheet
 Consumable goods sheet
 Vehicles sheet
 Mechanic`s purchase form
 Total electricity consumption sheet
 Indirect Labour expenses
 Power consumption sheet
 Cost-sheet format 51

EASTERN KNIT WEAR LTD.
EXPENSES INCURRED IN FACTORY
PER MONTH PER MONTH ON DENIM JEANS
S.NO. ITEMS
TAKA USD TAKA USD
1 LESS: CLOSING STOCK
2 Freight & Forwarding
3 Freight inward
4 Electricity Bills
5 Fuel (Diesel & petrol) & Coal
6 Consumables stores
7 Annual maintenance contract
8 Books & Periodicals
9 Conveyance
10 Courier charges
11 Recruitment & Training
12 Insurance premium
13 Staff welfare
14 Miscellaneous expenses
15 Postage & telegram
16 Printing & stationary
17 Rent & Taxes
18 Repair & maintenance (m/c)
19 Repair & maintenance (Vehicles)
20 Repair & maintenance (plant)
21 Telephone & VC
22 Travelling
23 Water charges
24 Depreciation
25 Indirect labor (Managers)
26 Power
27 Waste/normal loss of material
28 Waste for foremen
29 Oil
30 Gases
31 Steam
32 Canteen & recreation
33 Drawing & Office expenses
34 Workers Compensation
35 Research expenses R&D
36 Health & Safety (facilities)
37 Security & House keeping
38 Store supervision expenses 52
39 Expenses of service department
40 ADD: OPENING WIP
TOTAL

ADMINISTRATIVE EXPENSES
AVG. PER MONTH PER MONTH ON DENIM JEANS
S.NO. ITEMS
INR USD INR USD
2 Freight & Forwarding
3 Freight inward
4 Electricity Charges
5 Fuel (Diesel & petrol) & Coal
6 Consumables stores
7 Annual maintenance contract
8 Books & Magazines
9 Conveyance allowances
10 Courier charges
11 Recruitment
12 Insurance premium
13 Salary & Staff welfare
14 Miscellaneous expenses
15 Bonus & Diwali expenses
16 Printing & stationary
17 Rent & Taxes
18 Repair & maintenance (m/c)
19 Repair & maintenance (office, others)
20 Leave encashment
21 Telephone & VC
22 Travelling
23 Water charges
24 Depreciation
25 P.F. employment contribution
26 Advertisement & Promotion
27 Donation
28 Certification, membership & Subscription
29 Oil & Gases
30 Bank Charges
31 Director`s Salary & GM Salary, others
32 Canteen & recreation, Pantry
33 Drawing & Office expenses
34 Overtime
35 Sampling expenses, R&D
36 Repair & Replacement
37 Helpers & House keeping
38 Audit fee & Legal expenses 53
39 Expenses of service department
40 ADD: OPENING WIP
TOTAL

SALES & DISTRIBUTION EXPENSES
AVG. PER MONTH PER MONTH ON DENIM JEANS
S.NO. ITEMS
INR USD INR USD
2 Courier charges
3 EGCC Report
4 Export promotion Council
5 Freight charges
6 Laboratory charges
7 Sales & Promotion
8 Ware housing charges
9 Audit & Quality checking
10 Sales tax
11 Foreign tours
12 Insurance
13 Catalogues
14 Samples
15 Folders
16 Royalties
17 Market research
18 Demonstration expenses
19 Cost of sales
20 Profit
21
22 ADD: OPENING WIP
TOTAL 54

55

56

KATMANDU APPAREL GROUP
PPK No. Date
Cost_id Buyer
Style No. Brand
Product Season
Order Details Remark:
Order Quantity
Sizes
Embroidery/Embellishment
Wash/Finish
Value Addition Service
PRE-PRODUCTION COST-SHEET
DESCRIPTION QUANTITY UOM UNIT PRICE AMOUNT
Direct Material
Direct Labour
Direct Expenses
Prime Cost
Indirect material
Indirect Labour
Indirect Expenses
Manufacturing Cost
Administrative Expenses
Sales & marketing Expenses
Profit Margin
Total Cost of Product
Handled By: Approved By:

57
Developed by: Manish S. Dhakad, KAG, Mumbai

58

59

60

61

62

63

64

65

66

67

68

69

70

71

KATMANDU APPAREL GROUP
PPK No. Date
Cost_id Buyer
Style No. Brand
Product Season
Order Details Remark:
Order Quantity
Sizes
Embroidery/Embellishment
Wash/Finish
Value Addition Service
COST-SHEET
DESCRIPTION QUANTITY UOM UNIT PRICE AMOUNT
Direct Material
FABRIC
TRIMS & ACCESSORIES
ADD: WASTAGE
Direct Labour
CUTTING
SEWING
FINISHING & PACKING
Direct Expenses
PRINT/EMBROIDERY/WASH/DYEING
Prime Cost
Indirect material
Indirect Labour
Indirect Expenses
Manufacturing Cost
Administrative Expenses
Sales & marketing Expenses
Profit Margin
72

4.2.4 Customization of thread calculator as per the company product
type for effective thread consumption calculation.
73

4.2.5 Collect data for costing of samples & costs which are followed by the
company during concept sampling stage including wastages & profit margins
to develop cost sheet for a particular season.
KATMANDU APPAREL PRIVATE LIMITED

PPK No. 90880 Date 06/03/2014
Cost_id 9147 Buyer J. C. PENNY
Style No. SU-14-AZ-90880-BANG Brand ARIZONA BOYS
Product CARGO SHORT Season FALL_14
Order Details AZB SU14 BTM YD CARGO SHORT EXTRA % 5%
Order Quantity 22008 PCS. REMARK:
Sizes REGULAR
Embroidery/Embellishment NO
Wash/Finish YES
Value Addition Service NO
COST-SHEET
CATEGORY DESCRIPTION CONSUMPTION UOM RATE (USD) AMOUNT (USD) TOTAL
FABRIC SHELL 0.80 YDS $2.510 $2.008 $44,192.064

FABRIC POCKETING 0.23 YDS $0.900 $0.207 $4,555.656
AFTER ADDING WASTAGE (5%) $2.326 $51,185.106
TRIMS & ACCESSORIES
Sewing Thread 135 Meter $0.002 $0.213 $4,688.364
CPSIA Label 1 PCS. $0.020 $0.020 $440.160
Wash care AZ-01-894 1 PCS. $0.050 $0.050 $1,100.400
Wash care AZ-01-911 1 PCS. $0.036 $0.036 $792.288
Direct Material
Wash care AZ-01-548 1 PCS. $0.025 $0.025 $550.200
28 L Button Shear Plastic 5 PCS. $0.044 $0.220 $4,841.760
24 L 4 hole Clear Button 2 PCS. $0.017 $0.035 $764.118
3/4 " Button hole elastic 0.95 YDS $0.057 $0.054 $1,191.733
Match book 1 PCS. $0.051 $0.051 $1,122.408
Zipper-brass 1 PCS. $0.262 $0.262 $5,766.096
Horn Button 24 L 2 PCS. $0.034 $0.069 $1,509.749
CUT, MAKE $1.420 $1.420 $31,251.360
Direct Labour
PACKAGING CHARGES $0.350 $0.350 $7,702.800
Direct Expenses WASHING CHARGES $0.200 $0.200 $4,401.600
Prime Cost $5.382 $1,18,446.506
Manufacturing Cost $1.970 $43,355.760
Profit Margin 10.00%
PER PIECE COST (USD) $5.920

TOTAL ORDER VALUE (USD) $1,30,291.156
74

PPK No. 43301 Date 01/04/2014
Style No. FA14-OD-43301 Brand OKIE-DOKIE
Product CHOP POCKET SHORT Season FALL_14
Order Details ODITBFA14 COTTON NYLON SHORT EXTRA % 5%
Sizes REGULAR
Wash/Finish NO
COST-SHEET
FABRIC SHELL 0.38 YDS $2.430 $0.923 $1,72,252.883

AFTER ADDING WASTAGE (5%) $0.970 $1,80,865.527
TRIMS & ACCESSORIES
Master Polybag 0.091 PCS. $0.470 $0.043 $7,978.401
Carton 0.091 PCS. $0.470 $0.043 $7,978.401
1 3/8" Knitted elastic 0.52 YDS $0.065 $0.034 $6,305.120
Direct Material
1 1/4" knitted elastic 0.52 YDS $0.058 $0.030 $5,626.107
1/2" Twill tape 0.22 YDS $0.056 $0.012 $2,298.197
Size Wrap 1 PCS. $0.036 $0.036 $6,715.512
Main label with wash care 1 PCS. $0.024 $0.024 $4,477.008
CUT, MAKE $0.660 $0.660 $1,23,117.720
Direct Labour
Prime Cost $2.274 $4,24,123.850
Manufacturing Cost $0.980 $1,82,811.160

75

PPK No. 99678 Date 12/02/2014
Style No. FA14-TG-99678-REG Brand TOTAL GIRLS
Product DENIM SKIRT Season FALL_14
Order Details TGF14 WOVEN COATED DENIM SKIRT EXTRA % 5%
Sizes REGULAR
Wash/Finish YES
COST-SHEET
FABRIC SHELL 0.48 YDS $2.130 $1.022 $13,188.960

FABRIC POCKETING 0.06 YDS $0.870 $0.052 $673.380
TRIMS & ACCESSORIES
Sizer 1 PCS. $0.022 $0.022 $283.800
Hanger 1 PCS. $0.105 $0.105 $1,354.500
Carton 0.071 PCS. $1.050 $0.075 $961.695
Main label with wash care 1 PCS. $0.022 $0.022 $283.800
Sewing thread 100 Meter $0.002 $0.158 $2,035.620
Direct Material
Zipper antique nickle 2 PCS. $0.193 $0.386 $4,979.400
24 L Button 2 PCS. $0.017 $0.034 $438.600
3/4 " elastic 0.66 YDS $0.057 $0.038 $485.298
Match book 1 PCS. $0.023 $0.023 $296.700
Rivets 7.5 mm 2 PCS. $0.022 $0.044 $567.600
Zipper semi auto 1 PCS. $0.193 $0.193 $2,489.700
CPSIA Label 1 PCS. $0.020 $0.020 $258.000
27 L button 1 PCS. $0.039 $0.039 $503.100
CUT, MAKE $0.870 $0.870 $11,223.000
Direct Labour
Prime Cost $3.764 $48,558.161

TOTAL ORDER VALUE (USD) $53,413.977
76

PPK No. 98061 Date 12/02/2014
Product DENIM SKIRT Season FALL_14
Order Details TGF14 WOVEN DENIM SKIRT EXTRA % 5%
Sizes REGULAR
Wash/Finish YES
Value Addition Service YES
COST-SHEET
FABRIC SHELL 0.53 YDS $1.980 $1.049 $10,265.231

TRIMS & ACCESSORIES
Carton 0.071 PCS. $1.050 $0.075 $729.248
Sizer 1 PCS. $0.220 $0.220 $2,152.040
Hanger 1 PCS. $0.105 $0.105 $1,027.110
7.5 mm Rivet 3 PCS. $0.022 $0.066 $645.612
Direct Material
24 L Button 2 PCS. $0.018 $0.036 $352.152
Studs 1 Set $0.750 $0.750 $7,336.500
3/4" Button hole elastic 0.71 YDS $0.057 $0.040 $395.878
Match book 1 PCS. $0.023 $0.023 $224.986
Antique nickle zipper 1 PCS. $0.193 $0.193 $1,887.926
CPSIA Label 1 PCS. $0.020 $0.020 $195.640
27 L Logo Button 1 PCS. $0.039 $0.039 $381.498
CUT, MAKE $0.910 $0.910 $8,901.620
Direct Labour
WASHING CHARGES $0.730 $0.730 $7,140.860
Direct Expenses
HEAT SEAL $0.200 $0.200 $1,956.400
Prime Cost $5.382 $52,643.232

77

PPK No. 99866 Date 14/02/2014
Product DENIM SKIRT WITH ZIPPER Season FALL_14
Order Details TGF14 WOVEN DENIM SKIRT WITH ZIPPER EXTRA % 5%
Sizes REGULAR
Wash/Finish YES
COST-SHEET
FABRIC SHELL 0.50 YDS $2.530 $1.265 $29,360.650

TRIMS & ACCESSORIES
Hanger 1 PCS. $0.105 $0.105 $2,437.050
Sizer 1 PCS. $0.022 $0.022 $510.620
Carton 0.071 PCS. $1.050 $0.075 $1,730.306
Direct Material 24 L Button 2 PCS. $0.017 $0.035 $805.851
4 mm Dome stud 1 Set $0.850 $0.850 $19,728.500
3/4" elastic 0.7 YDS $0.057 $0.040 $926.079
Match book 1 PCS. $0.023 $0.023 $533.830
Antique nickle Zipper 1 PCS. $0.193 $0.193 $4,479.530
CPSIA Label 1 PCS. $0.021 $0.021 $487.410
27 L logo Button 1 PCS. $0.039 $0.039 $912.153
CUT, MAKE $0.830 $0.830 $19,264.300
Direct Labour
WASHING CHARGES $0.540 $0.540 $12,533.400
Direct Expenses
HEAT SEAL $0.200 $0.200 $4,642.000
Prime Cost $4.975 $1,15,474.288


78

PPK No. 99972 Date 30/01/2014
Style No. FA14-AZ-99972-REG Brand ARIZONA GIRLS
Product BOTTOM GIRLS ROLL CUFF Season FALL_14
Order Details AZGFA14BTM- PRINTED ROLL CUFF EXTRA % 5%
Sizes REGULAR
Embroidery/Embellishment YES
Wash/Finish YES
COST-SHEET
FABRIC SHELL 0.81 YDS $2.870 $2.325 $61,976.502

TRIMS & ACCESSORIES
Carton 0.091 PCS. $0.810 $0.074 $1,965.109
3/4 " hole elastic 0.656 YDS $0.054 $0.035 $944.404
24 L Button 2 PCS. $0.019 $0.038 $999.750
Label AZ-01-920B 1 PCS. $0.021 $0.021 $559.860
Direct Material
Match book 1 PCS. $0.049 $0.049 $1,306.340
CPSIA Label 1 PCS. $0.020 $0.020 $533.200
Size wrap 1 PCS. $0.058 $0.058 $1,546.280
Wash care 1 PCS. $0.031 $0.031 $826.460
Main label 1 PCS. $0.032 $0.032 $853.120
9.5 mm rivet 3 PCS. $0.026 $0.077 $2,047.488
27 L logo button 1 PCS. $0.039 $0.039 $1,039.740
CUT, MAKE $0.940 $0.940 $25,060.400
Direct Labour
WASHING CHARGES $0.460 $0.460 $12,263.600
Direct Expenses
EMBROIDERY $0.210 $0.210 $5,598.600
Prime Cost $5.489 $1,46,339.865

79

PPK No. 100010 Date 22/02/2014
Style No. FA14-AZ-100010-REG Brand ARIZONA GIRLS
Product SKINNY JEAN Season FALL_14
Order Details AZGFA14BTM SKINNY JEAN W PRINTED PATCH EXTRA % 5%
Sizes REGULAR
Embroidery/Embellishment YES
Wash/Finish YES
COST-SHEET
FABRIC SHELL 0.88 YDS $2.340 $2.059 $78,126.048

FABRIC LINING 0.03 YDS $2.550 $0.077 $2,902.410
TRIMS & ACCESSORIES
Label AZ-01-920B 1 PCS. $0.021 $0.021 $796.740
27 L logo Button 1 PCS. $0.040 $0.040 $1,517.600
Main label 1 PCS. $0.032 $0.032 $1,214.080
wash care 1 PCS. $0.031 $0.031 $1,176.140
Size wrap 1 PCS. $0.052 $0.052 $1,972.880
Direct Material CPSIA Label 1 PCS. $0.020 $0.020 $758.800
Match book 1 PCS. $0.049 $0.049 $1,859.060
Sizer 1 PCS. $0.022 $0.022 $834.680
24 L Button 2 PCS. $0.017 $0.035 $1,317.277
9.5 mm Rivet 3 PCS. $0.026 $0.077 $2,913.792
3/4" button hole elastic 0.656 YDS $0.049 $0.032 $1,219.543
Carton 0.077 PCS. $0.810 $0.062 $2,366.318
Hanger 1 PCS. $1.050 $1.050 $39,837.000
CUT, MAKE $0.880 $0.880 $33,387.200
Direct Labour
WASHING CHARGES $0.700 $0.700 $26,558.000
Direct Expenses EMBROIDERY $0.210 $0.210 $7,967.400
PRINT $0.300 $0.300 $11,382.000
Prime Cost $6.999 $2,65,532.734

80

PPK No. 57491 Date 03/03/2014
Style No. FA14-AZ-57491 Brand ARIZONA GIRLS
Product DENIM JACKET Season FALL_14
Order Details AZLGSP14 WOVEN DENIM JACKET EXTRA % 5%
Sizes REGULAR
Wash/Finish YES
COST-SHEET
FABRIC SHELL 0.59 YDS $1.990 $1.174 $43,343.076

TRIMS & ACCESSORIES
Sizer 1 PCS. $0.020 $0.020 $738.320
Hanger 1 PCS. $0.048 $0.048 $1,771.968
sewing thread 215 Meter $0.002 $0.339 $12,524.491
Direct Material
CPSIA Label 1 PCS. $0.020 $0.020 $738.320
Hang Tag 1 PCS. $0.028 $0.028 $1,033.648
Wash care label 1 PCS. $0.031 $0.031 $1,144.396
Stickers 1 PCS. $0.020 $0.020 $738.320
24 L Mock Snap button 1 PCS. $0.042 $0.042 $1,543.089
24 L Snap button 1 PCS. $0.062 $0.062 $2,299.498
CUT, MAKE $1.030 $1.030 $38,023.480
Direct Labour
Prime Cost $3.874 $1,43,015.648

81

PPK No. 98046 Date 14/03/2014
Product KNEE JAGGING Season FALL_14
Order Details TGF14 WOVEN PIECED KNEE JEGGING EXTRA % 5%
Sizes REGULAR
Wash/Finish YES
COST-SHEET
FABRIC SHELL 0.91 YDS $2.380 $2.166 $16,362.619

TRIMS & ACCESSORIES
Sizer 1 PCS. $0.022 $0.022 $166.210
Hanger 1 PCS. $0.105 $0.105 $793.275
24 L button 2 PCS. $0.017 $0.035 $262.310
Direct Material
7.5 mm rivet 2 PCS. $0.022 $0.045 $338.464
CPSIA Label 1 PCS. $0.020 $0.020 $151.100
Match book 1 PCS. $0.022 $0.022 $166.210
3/4" hole elastic 0.7 YDS $0.049 $0.034 $259.137
Antique nickle zipper 1 PCS. $0.193 $0.193 $1,458.115
27 L logo button 1 PCS. $0.039 $0.039 $296.912
CUT, MAKE $0.930 $0.930 $7,026.150
Direct Labour
Prime Cost $5.196 $39,257.586

Developed by: Manish S. Dhakad, KAG, Mumbai 82

PPK No. 97984 Date 22/04/2014
Product DENIM SHORT Season FALL_14
Order Details ODITBFA14 PULL-ON DENIM SHORT EXTRA % 5%
Sizes REGULAR
Wash/Finish YES
COST-SHEET
FABRIC SHELL 0.33 YDS $2.130 $0.703 $31,096.999

TRIMS & ACCESSORIES
Micro dotted inlining 0.02 YDS $0.500 $0.010 $442.410
Direct Material CPSIA Label 1 PCS. $0.020 $0.020 $884.820
1 3/8 " elastic 0.558 YDS $0.065 $0.036 $1,604.621
Size wrap 1 PCS. $0.036 $0.036 $1,592.676
CUT, MAKE $0.590 $0.590 $26,102.190
Direct Labour
Prime Cost $2.199 $97,302.616

83

PPK No. 104937 Date 24/04/2014
Product DENIM PANT Season FALL_14
Order Details OD BABY BOY F14 DENIM PANT EXTRA % 5%
Sizes REGULAR
Wash/Finish YES
COST-SHEET
FABRIC SHELL 0.33 YDS $2.370 $0.782 $48,666.955
TRIMS & ACCESSORIES
Sewing thread 65 Meter $0.000 $0.000 $0.000
Direct Material Size wrap 1 PCS. $0.000 $0.000 $0.000
CPSIA label 1 PCS. $0.000 $0.000 $0.000
1 1/8" Knitted elastic 0.525 YDS $0.000 $0.000 $0.000
AFTER ADDING WASTAGE (5%) $0.000 $0.000
CUT, MAKE $0.770 $0.770 $47,914.020
Direct Labour
PACKAGING CHARGES $0.380 $0.380 $0.000
Prime Cost $2.191 $1,12,704.042

84

FALL-14 SEASON ORDERS (FABRIC COST SAVING FROM SAMPLING TO PRODUCTION)
ORDER Fabric Fabric Cost Fabric Fabric Cost Fabric Fabric Cost
PPK # TYPE QUANTITY Shell Shell Saving Lining Lining Saving Pocketing Pocketing Saving
Difference Price Shell Difference Price Shell Difference Price Shell
(Put average consumption in yards per garment)
90880 AZBSP14BTM YD CARGO SHORTS 22008 0 $ 2.51 $ - 0 $ 0.90 $ -
ODITBFA14 COTTON NYLON SHORT PORK CHOP

43301 186542 0.02 $ 2.43 $ 9,065.94
PKTS.
99678 TGF-14 WOVEN COSTED DENIM SKIRT 12900 0.02 $ 2.13 $ 549.54 0 $ 0.87 $ -
98061 TGF-14 WOVEN DENIM WITH ZIPPER SKIRT 9782 0.05 $ 1.98 $ 968.42 0.01 $ 1.10 $ 107.60
99866 TGF-14 WOVEN DENIM WITH ZIPPER SKIRT 23210 0.01 $ 2.53 $ 587.21 0.01 $ 1.20 $ 278.52
99972 AZGFA14BTM- PRINTED ROLL CUFF CROP 26660 0 $ 2.87 $ - -0.01 $ 1.30 $ -346.58
AZGFA14BTM- FASHION SKINNY JEAN PRINTED

100010 37940 0.04 $ 2.34 $ 3,551.18 0 $ 2.55 $ - 0 $ 1.40 $ -
PATCHES
AZGFA14BTM- DENIM JACKET WITH KNIT
97430 0 Order Cancelled
SLEEVES
AZGFA14BTM- FASHION SKINNY JEAN PRINTED
57491 36916 -0.01 $ 1.99 $ -734.63 0 $ 0.96 $ -
PATCHES
98046 TGF-14 WOVEN PIECED KNEE JEGGING 7555 -0.04 $ 2.38 $ -719.24 -0.01 $ 1.20 $ -90.66
100014 AZGFA14BTM- FASHION BOOT CUT SCATTERED 0 Order Cancelled
AZGFA14BTM- FASHION BOOT CUT LUREX AND

EMBELLISMENT
4.2.6 Compare cost and find variance & total cost savings.
AZGFA14BTM-SIDE SEAM EMBELLSHED FASHION

SKINNEY JEANS
AZGFA14BTM-FASHION BOOTCUT W SIDE SEAM
PRINT
97984 ODITBFA14 PULL ON DENIM SHORT 44241 0.02 $ 2.13 $ 1,884.67 0 $ 0.99 $ -
104937 OD BABY BOY F14 DENIM PANT LEGGING 62226 0.02 $ 2.37 $ 2,949.51
TOTAL $ 18,051.49 664788 $ 18,102.61 $ - $ -51.12

85
FALL-14 SEASON_THREAD COST SAVING
Thread Cost saving
Required
S.no. PPK No. Description TOTAL (m) required in By Factory Variance per Total cost saving
Quantity
mtr. garment
1 90880 AZBSP14BTM YD CARGO SHORTS 22008 134.96 135 289 154 $ 0.09 $ 1,958.98
2 43301 ODITBFA14 COTTON NYLON SHORT PORK CHOP PKTS. 186542 53.00 55 119 64 $ 0.04 $ 6,900.56
3 99678 TGF-14 WOVEN COSTED DENIM SKIRT 12900 95.12 100 139 39 $ 0.02 $ 290.79
4 98061 TGF-14 WOVEN DENIM WITH ZIPPER SKIRT 9782 77.38 80 180 100 $ 0.06 $ 565.40
5 99866 TGF-14 WOVEN DENIM WITH ZIPPER SKIRT 23210 78.09 80 163 83 $ 0.05 $ 1,113.48
6 99972 AZGFA14BTM- PRINTED ROLL CUFF CROP 26660 183.87 185 227 42 $ 0.02 $ 647.20
7 100010 AZGFA14BTM- FASHION SKINNY JEAN PRINTED PATCHES 37940 214.83 215 236 21 $ 0.01 $ 460.52
8 97430 AZGFA14BTM- DENIM JACKET WITH KNIT SLEEVES ORDER CANCELLED
9 57491 AZGFA14BTM- FASHION SKINNY JEAN PRINTED PATCHES 36916 212.80 215 236 21 $ 0.01 $ 448.09
10 98046 TGF-14 WOVEN PIECED KNEE JEGGING 7555 167.61 170 327 157 $ 0.09 $ 685.59
11 100014 AZGFA14BTM- FASHION BOOT CUT SCATTERED
12 100016 AZGFA14BTM- FASHION BOOT CUT LUREX AND EMBELLISMENT
ORDER CANCELLED
13 100008 AZGFA14BTM-SIDE SEAM EMBELLSHED FASHION SKINNEY JEANS
14 100017 AZGFA14BTM-FASHION BOOTCUT W SIDE SEAM PRINT
15 97984 ODITBFA14 PULL ON DENIM SHORT 44241 68.45 70 140 70 $ 0.04 $ 1,789.99
16 104937 OD BABY BOY F14 DENIM PANT LEGGING 62226 64.29 65 140 75 $ 0.04 $ 2,697.50
TOTAL COST SAVING $ 17,558.08

86
Product Package Number 82644 (Total order quantity = 775000)
(1 Yds = 36 Inches) Before After Before After
Variance
KAG-13-1091 (Shrinkage Variance Variance @57"
Fabric Type KAG-13-391 (Bulk Cuttable 57") @56"
problem)
Cuttable width (Inches) 55" 55" 0 55" 56" 57" 1" 1"
Shrinkage % (weft , warp) 4.5 to 14 4.5 to 12 2% in warp 4.5 to 8.5 4.5 to 8.5 4.5 to 8.5 0 0
Lay length (Yds) 17.25675 16.890722 -0.366028 16.241528 15.956472 15.661556 -0.28506 -0.579972
Consumption per garment (Yds.) 0.95871 0.93837 -0.02034 0.90231 0.88647 0.87009 -0.01584 -0.03222
Marker efficiency % 80.966 81.279 0.313 81.895 81.92 82.049 0.025 0.129
Waste percentage % 19.034 18.721 -0.313 18.105 18.08 17.951 -0.025 -0.129
Total fabric required (Yds.) 743000.25 727236.75 -15763.5 699290.25 687014.25 674319.75 -12276 -24970.5
Total fabric including 5% extra 780150.2625 763598.5875 -16551.675 734254.7625 721364.9625 708035.7375 -12889.8 -13329.225
Total cost of fabric @ 1.91 $ per yard $ 14,90,087.00 $ 14,58,473.30 -31613.69925 $ 14,02,426.60 $ 13,77,807.08 $ 13,52,348.26 -24619.5 -50078.33775
Total Cost Savings in USD $ 31,613.70 $ 50,078.34
(-ive sign in variance column shows decrease in the entity & +ive sign shows the increment for a particular entity.)

87
4.2.7 Develop chart for the total trends followed in fabric with prices.
88

4.2.8 Calculation of reverse cost for fabric from the data available on different
resources for analysis of increment of cost during a period & for effective
sourcing negotiation.
89

4.3 To find Cost profitability in implementing new software, this will also reduce lead
time, labor & Cost.
4.3.1 Study of present system used & write observations based on analysis.
Observations during the study:
1. Targets are given to operators based on time-studies which do not

take work-study into consideration.
2. Operations are not set properly; there is a massive scope to
improve methods & reduce cost in the factory.
3. There are too many helpers in the lines, helpers can be easily
reduced.
4. The current layout is poor and needs improvement.
5. Many Garment parts are marked and in many cases these are
unnecessary.
6. A transportation system will improve productivity considerably.
7. No information on end-bits utilization
8. Splicing should be used and will improve fabric utilization.
9. Fabric reconciliation is not being done; Fabric profit and loss is not
calculated for the orders.
10. Comparison of Costed, Marked and Achieved consumption is not
done.
11. Marker making is done manually, which is time consuming and
fabric is not utilized properly.
4.3.2 Enquiry, testing and demo of the new software for cost savings in man-
power, time and overheads.
Description Enquiry Demo Testing

Optitex-3D   
Pro-Suit   ×
RFID   ×
Mod-sew  × × 90

4.3.3 Comparison of cost profitability in implementing new system.
Section a
The following factors have been identified to have an influence on adoption of

CAD / CAM.
Factors influencing Strongly Moderately Indifferent Moderately Strongly Can’t

adoption of IT positive positive negative negative say
High Price
Reduces dependence
on people
Failed installation in
other organization
Collaborative working
between various
employees, supplier
and buyer is easier
Ability of supplier to
train the users in our
organization
Saves fabric
The supplier does not

have an office in the
location where my
organization is situated 91

Improves first pass
quality product
Reduces throughput
time for product
assemble
Requirement of
constant training
Ready availability of
literate professionals
Constant up gradation
of system required
CHANCES OF ERROR
MAY INCREASE
Section b
This sheet will help you decide which system is best for your pattern
development department and organization. (Even if you have one)
TUKATEC STUDIO Source
Criteria RICH-PEACE OPTI-TEX GERBER ASTER JAIMINI
H CAD
How you found out about APPLICATION APPLICATIO

APPLICATION SUPPORT ENGG.
BANSWARA KAPL SUPPORT ENGG. N
them (OPTITEX)
(OPTITEX)
SUPPORT
Communications-digitizers
5 7 6 3 1 4 2 ENGG.
and file import
(OPTITEX)
Piece geometry
identifications(points, 92
3 6 7 4 5 1 2
lines, notches, orientations MR.
lines, piece rotation line for PRAMOD

marker making) GUPTA
Pattern design functions-

4 6 5 3 7 2 1
measurement capabilities

darts, pleats, trace, cut,
4 7 6 2 5 3 1
combine, shrink, stretch,
flip, rotate patterns.

seam allowance definition, 5 7 6 2 4 3 1
corners, corner insert
Removing and adding of

patterns from present files,
printing and redo and undo
6 7 5 2 3 4 1
functions & keyboard and
mouse hot keys- shortcut
keys
Pattern grading functions 7 6 5 2 3 4 1
Maker making functions 5 6 4 3 7 2 1
Automatic marker making APPLICATIO

4 6 5 1 7 3 2 N
functions
SUPPORT
Software platforms 3 7 6 5 4 2 1
ENGG.
Outputs and consumables
4 6 5 1 7 3 2 (OPTITEX)
availability
Manuals 6 7 5 1 3 4 2
MR. PRAMOD
GUPTA
Communications access
with respect internet 3 7 6 2 4 5 1
compatibility
Warranty and after sales

5 7 6 3 4 1 2
service
CAM and CAS interface 6 7 5 2 4 3 1
Customizing features 4 5 7 6 3 1 2 93
Cost implications 1 6 7 3 2 5 4

Interface capabilities with
other design software 1 7 6 2 3 4 5
Plotting facility 7 5 4 6 1 2 3
TOTAL 83 122 96 53 77 56 35
Any remarks: 3D PATTERING IN STYLE CAD IS COMING

OPTITEX- BODY CUSTOMIZATION & LOW PRICE
TUKA-TECH- NO BODY CUSTOMIZATION & HIGH PRICE
4.3.4 Suggestion of new machinery implementation in research and

development from the total cost savings for the future scope of the research.
4.3.4.1 Double Bed Heat Seal (Price: $1281.079)

Heat Transfer Press Machine Model DC 54(Platen size- 15 x 20 with
microprocessor based digital timer and digital temperature controller &
counter.
Features:
 Manually operated heat transfer press
 Ideal machine for plastisol fusing. curing and heat transfer printing
 Easy operation through clamp system.
 Electronic contractor switching for noise free and zero maintenance.
 Anti-static Teflon is use on the upper bed to prevent corrosion.
 Minimum moving parts result in zero maintenance.
Model Size Power Temp M/C Dimensions Weight
DC 44 15"x15" 1500w/hr, 230V 220°C L25" W26" H31" 75Kgs

94
DC 54 20"x15" 3600w/hr, 230V 220°C L28" W26" H31" 85Kgs
DC 64 22"x17" 3600w/hr, 230V 220°C L30" W28" H31" 105Kgs

4.3.4.2 Taking-TK-6090-CXLS (Price: $366.865)
Single Needle Large Hook Heavy Duty Machine TK6090LS (Long
Stitch)
Features:
 The standard 1-needle type machine that delivers the basic
functions and performance best suited to the sewing of heavy-
weight materials.
 The maximum stitch length is 10mm. The complete rectangular
feed locus enables accurate feed of extra heavy-weight materials
while preventing stitch gathering.
 With its sufficient needle bar stroke of 38mm and long 190R needle,
the machine supports the sewing of extra heavy-weight materials
 Automatic lubricating mechanism helps improve maintainability
 Equipped with a bottom-feed adjusting mechanism that adjusts the
amount of bottom-feed while keeping the needle feed fixed.
4.3.4.3 AMS-221EN-HS3020/7200 (246mm×200mm)

Computer-controlled Cycle Machine with Input Function (for sewing
pockets on jeans)
Features:
・The machine sews folded pocket cloth on the garment body.
・Maximum stitching range of a pocket that can be sewn is 246mm
(width) × 200mm (length)
95

Model name AMS-221EN-HS3020/7200
Application Heavy-weight
Max. sewing
2,000 sti/min
speed
Stitch length 0.1～12.7mm （0.05mm step）
Storage of Main-body memory: Max. 500,000 stitches, 999 patterns (max. 50,000
pattern stitches / pattern)
data in the External media: Max. 49,950,000 stitches, 999 patterns (max. 50,000
memory stitches / pattern)
Needle DP×17（#19）
4.3.4.4 AP-876 (Full-automatic)

(Automatic Pocket Setter-For jeans)
The machine automatizes a series of pocket setting processes

such as the folding of a pocket,
placement of the pocket on a garment
body, sewing, bar-tacking and
stacking, thereby increasing
productivity and achieving production
without requiring the operator to have
any special skill. This promises
consistent finished quality.
Model name AP-876
High-speed, 1-needle, lockstitch, zigzag stitching

Machine head machine
(exclusive machine head)
Max. sewing speed 4,000sti/min
Sewing area 250mm (L)×250mm (W)
Stitch length 0.1～6mm
Operation panel IP-420 (large-sized color liquid crystal touch panel)

96
Strage of pattern data in the memory Max. 999 pattern

4.3.5 Reasons for investment in technological upgradation.
In this changing business scenario to gain the competitive edge

apparel companies need to upgrade them to meet the fast changing demand
of the market and generating profit margins at the same time.
Under mentioned are some of the reasons strengthening the need of

technological upgradation:
 To meet the fast paced fashion cycle demand Apparel

Companies must be updated with the latest & sophisticated
infrastructure in terms of technical & software abilities. It is
because one cannot easily predict the demand of the overseas
buyer.
 For companies dealing in high volumes, even minor saving in
terms of material, labour & time will yield greater profit.
 Despite the high prices of the machineries break-even point can
be achieved earlier as the volumes are high.
 Technological upgradation can smoothen the sourcing
procedure as samples can be virtually presented even if trims &
other materials are not available. We can develop physical
samples of those styles only which are approved in the virtual
form.
 Conclusively with efficient technology we can quote
comparatively lower cost to the buyers & attract more orders in
the future.
97

CHAPTER-5
RESULT/EXPECTED OUTCOME
98

a.) A new way of calculating cost in less time which will enable us to manage the
order flow at lower margin and to quote the best price to buyers.
 Costing is done on the basis of CIP (Cost Integrated process) which

includes complete breakdown of cost components & cost is calculated
separately for each entity i.e. fabrics cost, trims cost, SAM cost,
Packaging, margin & profits etc.
 Pre-production & Post-production cost can be absorbed during the

actual production & same data can be used further for quotation
purpose during concept development stage.
b.) Technical enhancement in R&D from total cost savings & profit margins of
company.
 Successful enquiry, demo & Implementation of new Industrial

engineering software for easy calculation of SAM & reducing cost of
production planning & control.
 Successful enquiry, demo & Implementation of Optitex virtual 3-D

sampling (CAD software) for cost saving by reducing lead time,
manpower & other needful resources.
99

CHAPTER-6
LIMITATIONS & FUTURE

SCOPE OF PROJECT
100

Project carried out has many positive aspects, but at the same time there are
also certain shortcomings in the project, which can be accounted to many factors
such as- resources, time constraint, company policy, confidential Data of Costing,
method approached.
This project also has been carried out to meet successfully the objectives set,
but there are certain aspects where there has been some sort of shortcomings. This
project is 100% quantifiable in terms of cost and time. But quantification of various
items could not be done because of time limitations.
Cost of manufacturing a product during several stages is not going to be
same time after time. There is a lot of fluctuation in cost depending upon the market
price of different raw material & also it depends upon the quantity, quality &
negotiation with the suppliers.
Limitation of project:
1. Only few styles (Fall 2014 season) are analysed for costing due to time
limitations.
2. Exact cost cannot be mentioned or shared due to sensitive nature & also for
the reason of maintaining security.
3. Costing data need to be updated time to time due to fluctuations in raw

material prices in market.
4. Proper training & motivation is required for employees to calculate proper cost
according to actual consumption including wastages & profit.
5. Frequent changes in Manpower, method of manufacturing & work

environment can change the cost of product to be manufactured.
Future Scope of Project:
1. Cost absorption formats are developed in this project which can help in
calculating pre-production & post-production cost in manufacturing unit.
2. This project can be used for the reference purpose to understand the costing
procedure in detail.
3. Cost benefits relationship can be derived once the technological up-gradation

is fully functional and can be a subject of future research.
101
4. Reduction of cost at production stage can only be calculated during the actual
production after successful implementation of new software.

CHAPTER-7
CONCLUSION
102

The order processing for a particular style starts with the buyer seeking initial costing
& styling from the manufacturers. Manufacturers based on consumption of fabric,
trims & CMPT etc. quotes the initial basic costing.
But due to a significant variation in cost like fabric, trims & CM cost which fluctuates
during the production stage , the proposed/planned cost differ from the actual.
Since there is no pre-defined set of formulas & method to predict fluctuation in cost
parameters, the profit margin varies from what is planned earlier for any specific
product. Cost quoted to buyers may also vary from buyer to buyer & it also depends
upon quality, quantity, lead time & margins.
For example- Due to changing economic conditions the prices of raw material in the
market keeps on fluctuating and same is the case of labor cost in different
geographical location.
Keeping in mind the extensive manufacturing facilities in different geographical

locations, the company anyhow has to keep the machines running to manage the
running cost which includes labor cost & overheads etc. For this purpose, company
processes the orders on a no-profit, no-loss basis. Consequently to generate the
profit or curtail the loss, Company negotiates with the fabric suppliers & trims
suppliers to markdown the cost.
Conclusively, Costing is a very critical process which has to handled & controlled as
the order proceeds.
103

CHAPTER-8
BIBLIOGRAPHY
104

 Intermediate (Group-II, Paper-8) Cost and Accounting management
The institute of Cost Accountants of India,
12, Sudder Street, KOLKATA- 700016
 Managerial and Cost Accounting_2009

Larry M. Walther, Christopher J. Skousen, Free book by Bookboon.com
 Study material: Executive programme

Cost and Management Accounting (Module-1, Paper-2)
The Institute of Company Secretaries of India
In Pursuit of Professional Excellence, Statutory body under an Act of Parliament
ICSI House, 22, Institutional Area, Lodi Road, New Delhi- 110003
 Costing Techniques in Clothing Industry, Indian Textile Journal, May, 2009
 Methods of Garment Costing, Indian Textile Journal, November, 2013
 Factors influencing costing of Woven Fabric, Indian Textile Journal, January, 2009
 Merchandizing Costing, Textile Today, Published August, 2013
 www.ocs.com (Online Clothing Study)
 Class notes (Sem-VI) : Costing of Apparel Products

By- Rengini Chandramohan (Associate Professor)
105

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“An alternative approach towards Costing of denim jeans for Buying House / Export House”

Graduation Project submitted in Partial Fulfilment of the requirements

For the degree of

Bachelor of Fashion Technology (Apparel Production)

Katmandu Apparel Pvt. Ltd. | Manish Singh Dhakad, BFT, NIFT

The “Bachelor of Fashion Technology” programme is well structured and integrated

In every professional course, training is an important factor. Professors give us

In today‟s globalized world, where cut-throat competition is prevailing in the market,

Katmandu Apparel Pvt. Ltd. | Manish Singh Dhakad, BFT, NIFT

MANISH SINGH DHAKAD

Katmandu Apparel Pvt. Ltd. | Manish Singh Dhakad, BFT, NIFT

Sourcing operations in Garment Buying House are extremely complex due to

An alternative approach towards Costing of denim jeans in a specific Buying

Katmandu Apparel Pvt. Ltd. | Manish Singh Dhakad, BFT, NIFT

2. REVIEW OF LITERATURE ......................................................................................................... 14

4. DATA COLLECTION & ANALYSIS ............................................................................................. 32

5. RESULT & EXPECTED OUTCOME ............................................................................................ 98

6. LIMITATIONS & FUTURE SCOPE OF PROJECT ...................................................................... 100

7. CONCLUSION ......................................................................................................................... 102 6

Katmandu Apparel Pvt. Ltd. | Manish Singh Dhakad, BFT, NIFT

Katmandu Apparel Pvt. Ltd. | Manish Singh Dhakad, BFT, NIFT

I conducted my Graduation Project at KATMANDU APPAREL PRIVATE

1.1 NEED OF THE PROJECT:

The industry recorded a remarkable growth in a protected market

Katmandu Apparel Pvt. Ltd. | Manish Singh Dhakad, BFT, NIFT

1.2 PROBLEM FORMULATION:

1.2.1 INITIAL IDEA

Simplification of Costing of Denim Jeans during concept sample

1.2.2 RESEARCH PROBLEM

During Costing process at the garment sampling stage, there

a. Standard operating procedures not followed

1.2.3 OBJECTIVE OF RESEARCH

To develop an alternative approach towards costing of denim

Katmandu Apparel Pvt. Ltd. | Manish Singh Dhakad, BFT, NIFT

Katmandu Apparel Pvt. Ltd. | Manish Singh Dhakad, BFT, NIFT

Project Title: An alternative approach towards Costing of denim

Company Name: Katmandu Apparel Private Limited, Mumbai

Student Name: Manish Singh Dhakad (M/BFT/10/11)

Industry Mentor: Sanjay Archrekar, General Manager,

College Mentor: Ranjan Kumar Saha, Course-Coordinator

Project Idea: Simplification of Costing of Denim Jeans during

Problem Statement: • During costing process at the garment sampling

• This project will help the company to find various

Objective: To develop an alternative approach towards

Team/Resources: • Style Study to understand flow of company

Expected Outcome: a.) A new way of calculating cost in less time

Related Documents: (Background Study)

• Costing Techniques in Clothing Industry,

The objectives of graduation project is firstly to gain practical exposure and

The main Objective of this Graduation Project is -

“To develop an alternative approach towards costing of denim jeans

1.4.1 SUB-OBJECTIVE OF THE PROJECT

Sub-objectives of the project will be all the secondary objectives which

 To find dependent and independent factors of costing which are

 To minimize the deviation in costing from concept development

 To find Cost profitability in implementing new software, this will

Katmandu Apparel Pvt. Ltd. | Manish Singh Dhakad, BFT, NIFT

Katmandu Apparel Pvt. Ltd. | Manish Singh Dhakad, BFT, NIFT

A review of literature may be a self-contained unit -- an end in itself -- or a

2.1 COST, COSTING & COST ACCOUNTING:

Cost can be deﬁned as the expenditure incurred on or attributable to a

Costing is the techniques and processes of ascertaining costs. The

Cost Accounting primarily deals with collection, analysis of relevant of

(Source: Managerial and Cost Accounting_2009

3.2.1 Historical  (What was the situation?)