Costing of Apparel Products Subject name: Costing of Apparel Products
An
Assignment On “Cost Analysis of a Garment” Garment Type: Women’s Gypsy SKIRT Submitted by: Anand Bhargava (06) Anoop Mammen (07) Abhishek Gattani (09) Sankar Chatterjee (30)
Master of Fashion Technology-II
National Institute Of Fashion Technology: New Delhi MF TECH-(08-10)
NIFT, New Delhi
1
Costing of Apparel Products
Costing in Production Houses and Product Development ―Costing is the process of estimating and then determining the total cost of producing a garment, including the cost of materials, labor and general expenses of indirect costs.‖ The increased number of seasons or offerings per year has put tremendous pressure on product development and the costing process. Constant style changes require constant feedback and adjustments for whichever costing strategy a company chooses to adopt. This has resulted in a multilevel costing process, which includes: • Quickie costing (cost estimating) • Costing for sale (cost calculating) • Production costing (cost monitoring) • Accounting costing (cost reporting)
Cost Estimating: Cost estimation is the forecast of costs made before the item is manufactured. The first step in the costing process can also be called as pre-costing. Pre-costing is a preliminary estimate or ―best guess‖ of what it will cost to produce the garment, based on judgment and past experience. This quick cost is usually accurate within 10 to 15% of the actual cost and gives the manufacturer some idea of whether the style can be produced and sold at a profit. The quick cost helps the manufacturer decide whether to reject the style, accept it as a part of the line, or send it back to the designer or merchandiser for changes to reduce its cost. For a proposed new style, summarized cost data, previous garments cost sheets and fabric requirement approximations are used to prepare cost estimates. Cost estimates are standing at an important step of product development. Product development process is shown at Fig.
MF TECH-(08-10)
NIFT, New Delhi
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Costing of Apparel Products Cost Calculation: Cost calculation is the computation of the actual cost of manufacturing. This process is a detailed calculation of the costs required to manufacture a style based upon available data. A detailed analysis is made based upon prototypes. This level of costing is important in determining price values.
Production Costing: Production costing is related with the actual costs of production but does not take into consideration the overhead costs and profit margins.
Accounting Costing: accounting costing is used to make the final adjustments to all elements of costing and pricing processes.
Here as we are considering the garment is finished in all respect so we are doing the cost calculation that is actual costing of the garment.
Unit Cost of Goods To provide a highly effective cost system, costs in companies should be categorized and be searched according to some categories. The main cost categories in apparel companies can be classified into these titles and sub categories: • Assignment to a cost object Direct costs / Indirect costs • Behavior pattern in relation to changes in the level of activity or volume Variable costs / Fixed costs • Components (elements) Material costs / Labor costs / Overhead costs • Business function Administration costs / Sales costs / Purchasing costs / Production costs • Aggregate or average Total costs / Unit costs • Assets or expenses Inventorable costs / Period costs To define the unit cost of goods each component (element) of a garment should be defined clearly. The unit cost of goods includes all expenses involved in the manufacture of an apparel product. The cost of goods is summarized under the categories of material cost, labor cost and overhead costs.
Material costs: Material costs include fabric and accessory costs. Fabric is the most costly material in most garment styles. Fabric accounts for 45% of a garment according to the statistical data. Since fabric is the most significant factor in costing a garment, an accurate calculation for the required amount of fabric per garment is essential. There are two stages to determine fabric expenditure. MF TECH-(08-10)
NIFT, New Delhi
3
Costing of Apparel Products First of all, unit fabric price is defined. Accordingly, the expenditure of fabric per unit garment is determined. To accurately determine the average amount of fabric needed for a garment style, marker plans are prepared by using the size scale and the fabric width. After determining the consumption of fabric required to produce a style, including a waste factor, total cost of the fabric is defined by multiplying the expenditure value by the price per square meter. For all other direct materials such as trim, thread, buttons, zippers, labels, shoulder pads and poly bags, quantities per garment are measured in units, sets or meters. Waste factors are also calculated to accommodate materials that are dropped, broken or damaged during the manufacturing process.
Labor Costs: Labor costs include those costs that change the condition or physical appearance of raw materials. Examples of direct labor functions are cutting, bundling, folding, sewing and finishing. Labor accounts for a large portion of the total cost of garments and sewing is the most costly process. Regarding this, each individual operation in the production of a garment should be defined and total time of sewing operations should be carefully calculated.
Overhead costs: Overhead costs include all the costs except material and labor costs. Manufacturing overhead, general and administrative expenses are all included in overhead costs. Marketing and selling expenses, merchandising, design or product development expenses and distribution expenses can be examples of this group.
Method of Actual costing in Production houses: Product ID-SKR06070930
Order Qty: 1000 Pcs
Product Name- Women Flared Gypsy Skirt
MF TECH-(08-10)
NIFT, New Delhi
4
Costing of Apparel Products Product Description: Women skirt having 7 bottom down layers, consistently flared towards bottom hemline. Shell fabric of skirt is made of crushed fabric of pale yellow colour provided with printing in two alternate layers. Interlining fabric is knitted which is dyed with yellow colour. Printed fabric is polka dot printing and technology used is screen printing. Hem finishing of each layer done by 3thread over lock with dark pink colour for giving aesthetic appeal.
Cutting room operation: Requirement of fabric cut pieces: Shell Fabric Piece Name waist band 1st layer 2nd layer 3rd layer 4th layer 5th layer 6th layer 7th layer
Type of layer Woven Solid dyed Woven Printed Woven Solid dyed Woven Solid dyed Woven Printed Woven Printed Woven Solid dyed Woven Printed
MF TECH-(08-10)
Width of Girth of cut pieces Length of cut pieces (cm) layer (Cm) (Cm) 1 2 3 100
9
102
100
30
102
163
16
47
120
206
16
105
105
227
16
50
90
93
287
16
87
87
119
347
16
167
184
372
9
95
95
NIFT, New Delhi
95
4
95
5
Costing of Apparel Products Interlining Fabric Width of of Girth of cut pieces Length of cut pieces (cm) layer (Cm) (Cm) 1 2 3
Piece Name Interlining
Type layer Knitted Solid dyed
107
63
4
109
In the whole garment all the fabric cut pieces are of rectangular shape, which leads to lesser fabric consumption and lesser cutting time.
Time taken for the operations: Sl.No
Style of Garment
Order Qty(No)
1
Women Long Skirt
1000
Spreading Time
Cutting Time
Ticketing &Bundling Time
17hrs
4.5hrs
3.5hrs
Flared
Considerations: 1) Fabric width 58‖ 2) Table length is 8mt 3) Lay length is 4) Lay height 154 (Reference to assignment on ―capacity utilization of cutting room‖ during sem-1) (Consideration: 8hr shift, 2 operators for spreading fabric roll, 1 spreading table) Spreading operator day require= (17/8) x2 = 4.25 working day (Consideration: 8hr shift & 1 operator for cutting fabric lay in one table) Cutting operator day require= (4.5/8) = 0.56 working day (Consideration: 8hr shift & 2 operator for cutting fabric lay in one table) Spreading operator day require= (3.5/8) = 0.44 working day
MF TECH-(08-10)
NIFT, New Delhi
6
Costing of Apparel Products Sewing room operation: Garment construction is taking place in assembly line (PBU system) Standard Allowed Minute (SAM) of different garments parts Hem finish of cut pieces-- 428 sec (8 m/c with 8 operator) Attaching of cut pieces to make complete layer— 614 sec (10m/c with 10 operator) Stitching on 1cm across and providing gathers— 856 sec (14m/c with 14 operator)
Finishing of waist band by putting elastic— 150 sec (3m/c with 3 operator) Seam finish of interlining cut piece on 1cm – 20 sec (1m/c with 1 operator) Hem finish of interlining -- 45sec (1m/c with 1 operator)
Attaching interlining and shell fabric with waist band by lock stitch—60 sec (1m/c with 1 operator)
Average bundle size=10 pcs
WIP between operation=1 bundles (10 pcs.)
Existing operation sequence as under: Hem finish of cut pieces of each layer by 3-T O/L
Attaching interlining and shell fabric with waist band by lock stitch
Attaching of cut pieces to make complete layer by lock stitch
Completion of attachment of layers
Placing top layer under next layer on 1cm on seam Stitching on 1cm across and providing gathers to match end seam
Finishing of waist band by putting elastic and giving top stitch
Seam finish of interlining cut piece on 1cm & hem finish
First piece will come out after = 2173(1+10) sec = 6.64hrs (Through put time) For total order quantity of 1000pcs time require= 6.64hrs+60sec X 999= 23.29hrs=24hrs Here we conceder 1 assembly line with 7 operation. So total construction of 1000pcs of garments will be finished by = 3 operating days. So there will be 38 operators, 7 helper and 4 floater (Consider cutting, sewing, finishing, packing will overlap in operation flow)
MF TECH-(08-10)
NIFT, New Delhi
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Costing of Apparel Products Total Direct Labor Cost Calculation
Operation Spreading Cutting Sewer (operator) Sewer (Helper) Sewer (Floater) Finishing Ironing/Packing QC Total
Operator Number 2 1 38
AVG salary/day (Rs)
Effective operating days
Total cost (Rs)
100 120 120
3 1 3
600 120 13680
7 4 2 2 2 24
100 100 120 100 200
3 3 3 3 3
2100 1200 720 600 1200
20220
Material inputs: Fabric Input: In the skirt, crushed fabric has been used for shell fabric. Some layers are solid dyed and some are of polka dotted printed with adhesive. Dyeing and printing had been out sourced. Due to three different type of fabric as solid dyed shell fabric, printed shell fabric and knitted interlining had been laid in three different tables. We make the marker planning in Tukamark for finding out maximum efficiency for lesser wastage during cutting. Marker planning has been done for dyed fabric, printed fabric and interlining.
MF TECH-(08-10)
NIFT, New Delhi
8
Costing of Apparel Products Marker planning for dyed fabric (Width 58‖)
Marker planning for dyed fabric (Width 52‖)
MF TECH-(08-10)
NIFT, New Delhi
9
Costing of Apparel Products In case of 52‖ fabric width the marker efficiency is better so we chose to purchase fabric of 52‖ width fabric. Per garment dyed fabric consumption = 7.54mt/8= 0.94mt Fabric Cost (Per kg of yarn) (Polyester) Yarn
Rs30/Kg
Weaving Dyeing (Yellow shade Only) Compaction Shrinkage 4% Profit margin of fabricator (15%) Total
Rs15 Rs25 Rs8 Rs3 12 Rs93
Total consumption of yarn in fabric per garment (120gsm) = 0.157Kg Cost of 0.94mt fabric = 93x 0.157= Rs15 Marker planning for Printed fabric (Width 58‖)
MF TECH-(08-10)
NIFT, New Delhi
10
Costing of Apparel Products Marker planning for Printed fabric (Width 52‖)
In case of 58‖ fabric width the marker efficiency is better so we chose to purchase fabric of 58‖ width fabric. Per garment printed fabric consumption = 7.47mt/8= 0.93mt Fabric Cost (Per kg of yarn) (Polyester) Yarn
Rs30/Kg
Weaving Dyeing (Yellow shade Only) Printing cost (Polka dot) Compaction Shrinkage 4% Profit margin of fabricator (15%) Total
Rs15 Rs25 Rs60 Rs8 Rs6 Rs22 Rs166
Total consumption of yarn in fabric per garment (120gsm) = 0.157Kg Cost of 0.93mt fabric = 166x 0.157= Rs26
MF TECH-(08-10)
NIFT, New Delhi
11
Costing of Apparel Products Marker planning for interlining fabric (Width 44‖)
In case of 44‖ fabric width the marker efficiency is better so we chose to purchase fabric of 44‖ width fabric. Per garment interlining fabric consumption = 7.57mt/6= 1.26mt Fabric Cost (Per kg of yarn) (poly viscose) Yarn
Rs45/Kg
Knitting Dyeing (Yellow shade Only) Compaction Shrinkage 4% Profit margin of fabricator (15%) Total
Rs15 Rs25 Rs8 Rs4 Rs15 Rs112
Total consumption of yarn in fabric per garment (140gsm) = 0.195Kg
MF TECH-(08-10)
NIFT, New Delhi
12
Costing of Apparel Products Cost of 1.26mt fabric = 112x 0.195= Rs21 So total consumption of fabric in 1000 pieces of skirt Solid dyed fabric = 0.94mt x 1000=940mt Polka Printed fabric = 0.93mt x 1000=930mt Interlining fabric = 1.26mt x 1000=1260mt [Consideration Woven crush fabric role is available in 120mt/ Roll & Knitting role is available in 60mt/Roll] Total requirement of fabric role in solid dyed fabric= 8 roll=960mt Total requirement of fabric role in printed fabric= 8 roll=960mt Total requirement of fabric role in interlining fabric= 21 roll=1260mt So modified cost Dyed fabric= Rs15.5 Printed fabric= Rs28 Interlining fabric= Rs21 (No change)
Sewing Thread Input: Here three kinds of thread have been used. First is dark pink thread for baby three threads over lock (504) on the hem. Second is white thread for over lock on the hem (wrong side of garments). Third is dye to match yellow thread for lock stitch in whole garments. Consumption of thread has been calculated through SPI and stitch length. Dye to match yellow thread require: 9200yards White thread for over lock: 60100yarda Pink thread for baby over lock: 60100yards Total thread consumption for 1000 pieces = 12kg Total cost of thread= Rs75x 12= Rs900 So cost of thread/garments= Rs1
MF TECH-(08-10)
NIFT, New Delhi
13
Costing of Apparel Products Cost sheet Product code:
SKR06070930
Product Name:
Women Flared Gypsy Skirt
Description Dyed Fabric Cost ( Including Wastage) Polka Dot printed fabric
Average
Cost (Rs)
Dyed Fabric Cost (Per kg of yarn)
0.157
15.50
Yarn
Rs30/Kg
0.157
28.00
Weaving
Rs15
Interlining fabric CMT Sewing thread
0.195
21.00 20.22 1.00
Dyeing (Yellow shade Only) Compaction Shrinkage 4% Profit margin of fabricator (15%) Total
Rs25 Rs8 Rs3
1.00 6.00 2.00 2.00
Elastic Hanger Poly Bag Cartons Overhead & Margin 20% Total
CMT
Spreading Cutting
18.54 115.26
Printed Fabric Cost (Per kg of yarn) Yarn Weaving
Rs30/Kg Rs15
Dyeing (Yellow shade Only)
Rs25
Cost (Rs)
Printing cost (Polka dot)
Rs60
0.60
Compaction
Rs8
0.12
Rs6
13.68
Shrinkage 4% Profit margin of fabricator (15%)
2.10
Total
Rs166
Sewer (operator) Sewer (Helper) Sewer (Floater) Finishing
12 Rs93
Rs22
1.20 0.72
Interlining Fabric Cost (Per kg of yarn)
Ironing/Packing QC
0.60
Yarn
Rs45/Kg
1.20
Knitting
Rs15
Total
20.22
Dyeing (Yellow shade Only)
Rs25
Compaction
Rs8
Shrinkage 4% Profit margin of fabricator (15%)
Rs4
Total
Rs112
MF TECH-(08-10)
NIFT, New Delhi
Rs15
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Costing of Apparel Products
TOTAL COST CALCULATION IN PRODUCTION HOUSE FOR 1000PCS OF SKIRT:
Material cost: 76.5 X 1000 = Rs76500
Labor cost : Direct/variable = Rs20.22 x 1000 = Rs20220
Processing cost & over head & margin 10%: 10% of (Rs76500 +Rs20220) = Rs9672
Cost of production: Rs106392
Cost of production per garment : Rs 106.4
FOB for production house (10% margin on cost of production): Rs115260
FOB per garment: Rs115
MF TECH-(08-10)
NIFT, New Delhi
15
Costing of Apparel Products
Conclusion: During the study of costing we get the following findings:
Maximum share of cost incurred is by raw material and which is around 55-60% of final cost price. Labor cost is the second share holder towards total cost incurred, which is around 2530%. Among that sewing room operator’s contribution towards the cost is maximum. In this garment we saw that cutting room efficiency is quite high and marker efficiency is also very high as because this garment cut pieces are of rectangular shape. Higher the order quantity leads to reduction of cost of garment.
References:
China is The Big Winner in the U.S. - Jordan Free Trade Agreement by
Texport Industries Pvt. Ltd. (Cost sheet collected from Production House). Development of a Software about Calculating the Production Parameters in Knitted garment Plants by Ender Bulgun, and Arzu Vuruskan. Gene Barbee & Association Ltd. (1993, October 4). Product costing for small to medium sized manufacturers.
MF TECH-(08-10)
NIFT, New Delhi
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