Garment Costing

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Garments, Fashion & Retail

Costing technique in clothing industry

In order to achieve perfect garment costing, one must know about all the activities including purchase of fabrics, sewing, packing, transport, overheads, etc and also about their costs, procedures, advantages and risk factors, advocates C Vigneswaran.

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. However, during last 10 years, the industry's actions, government policies as well as market events have begun to converge, providing several growth opportunities for the sector domestically as well as in the global market.

As the MFA quota-regime ended, India presented many opportunities for buyers, suppliers and investors to collaborate with its textile industry, and to profit from the partnership. While the industry recorded a remarkable growth in a protected market environment, it faces a series of challenges that have come to the fore in the post-quota situation, 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".

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

Costing is the deciding factor for fixing of prices and the important thing to follow in all stages like purchase, production, marketing, sales, etc. Also update knowledge about everything related to garments, is essential to make perfect costing. Costing includes all the activities like purchase of fabrics and accessories, processing and finishing of fabrics, sewing and packing of garments, transport and conveyance, shipping, over heads, banking charges and commissions, etc.

We must be aware that there are always fluctuations in the costs of raw materials and accessories, charges of knitting, processing, finishing, sewing and packing, charges of transport and conveyance. The method of making costing will vary from style to style. As there are many different styles in garments. Hence let us take men's basic T-shirt style as example which is in regular in use.

To find out the costing of a garment, the following things should things be calcuated:

 Fabric consumption.

 Gross weight of other components of garment.

 Fabric cost per kg.

 Fabric cost per garment.

 Other charges (print, embroidery, etc).

 Cost of trims (labels, tags, badges, twill tapes, buttons, bows, etc).

 CMT charges.

 Cost of accessories (hangers, inner boards, polybags, cartons, etc).

 Cost of a garment.

 Price of a garment. Fabric consumption

The garments manufactured in many sizes to fit for everybody. Generally they are in sizes Small (S), Medium (M), Large (L), Extra large (XL) and Double Extra Large (XXL). The quantity ratio or assortment can be any one of the following approximate ratio.

S: M: L: XL: XXL - 1:2:2:2:1 S: M: L: XL: XXL - 1:2:1:2:1 S: M: L: XL: XXL - 1:2:3:2:2

As the price is the same for all these sizes of garments, the author have taken the centre size large(L) for average calculation. Generally, the quantity of L size will be higher or equal to the quantity of each of other sizes.

Men's Basic T-shirt

Description: Men's Basic T-shirt-short sleeves- 100% Cotton 140 GSM Single jersey - 1 x 1 ribs at neck - solid dyed - light, medium and dark colours in equal ratio.

Sizes: S, M, L, XL, XXL Ratio: 1: 2: 2: 2: 1

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with 2 nylon straps.

Measurements in cm: (Finished garment) Size: L

Chest - 60 cm Length - 78 cm Sleeve length - 24 cm

Neck rib width - 3 cm Hem - 3 cm

Patterns are generally made with the seam allowance and cutting allowance. Generally, 12 cm is added with the total of body length and sleeve length.

That is,

Fabric consumption =(Body length + Sleeve length + allowance) * (Chest + allowance) * 2 * GSM 10000

= (70 + 24 + 12) * (60 + 3) * 2 * 140

10000 = 187 grams

Body & Sleeves : 187 grams

Neck rib : 10 grams (approximately)

Gross weight : 197 grams Therefore, the fabric consumption per garment is 197 grams. Gross weight & net weight

The above weight is the gross weight of fabric. It means the weight of the fabric bits cut in tubular form without taking shapes is called gross weight. This is the consumed fabric for the particular garment. Hence costing is to be made as per this gross weight. The weight of the cut pieces after taking the shape according to the pattern is called net weight of fabric. Fabric cost per kg (in Rs) (all charges approximately)

Cost of fabric per kg is calculated and given in

Particulars

Light colours

Medium colours

Dark colours

34's combed yarn

Rs.135.00

Knitting charge

Rs.8.00

Dyeing charge

Rs.35.00

Rs.45.00

Rs.55.00

Compacting charge

Rs.6.00

Fabric wastage @ 5%

Rs.9.20

Rs.9.70

Rs.10.70

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Fabric cost per kg

Rs.193.20

Rs.203.70

Rs.224.70

Fabric consumption per

garment

197 gms

Fabric cost per garment

Rs.38.06

Rs.40.13

Rs.44.27

Cost of trims

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

Now the author have taken Men's Basic T-shirts, as example. Let us see what are the trims required for this style. Labels: Woven main label (2.5 cm width x 7 cm length): Rs 0.35

Polyester printed wash care label: Single colour print: Rs 0.10 Hang tag: Rs 0.40

So the total cost of trims is Rs 0.85 per garment. Cost of accessories:

Polybags: Normal - Rs 0.30 per garment

Master Polybag: Rs 2 per master polybags to contain 8 garments - Rs 0.25 per garment. Export carton: Normal: Rs 40 per carton to contain 48 garments - Rs 0.80 per garment.

So the total cost of accessories is Rs 1.35 per garment. Garment costing

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

Table 2: The freight charges for the Men's Basic T-shirt. Price of garment estimation is given

Particulars

Light colours

Medium colours

Dark colours

34's combed yarn

Rs.135.00

Fabric cost per garment

Rs.38.06

Rs.40.13

Rs.44.27

Cost of Trims

Rs.0.85

CMT Charges

Rs.11.00

Cost of accessories

Rs.1.35

Rejection of garments (commonly

3%)

Rs.1.50

Cost of Garment

Rs.52.76

Rs.54.83

Rs.58.97

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Profit@15% appro.

Rs.7.90

Rs.8.20

Rs.8.90

Commission/ pc

Rs.2.00

Price of Garment

Rs.63.66

Rs.66.03

Rs.70.87

Shipping charges

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

The author expresses his thanks to Dr R Rudramoorthy, Principal and Dr K Ramachandralu, Professor & Head-Fashion Technology, PSG College of Technology, Coimbatore for their continuous encouragement. He also extends his thanks to Mr M Ravi, Costing Manager, Stallion Garment, Tirupur and Mr Jagadeesh, Production Manager, Apple Clothing Limited, Coimbatore for their help towards the practical approach in bringing out this paper.

Note: For detailed version of this article please refer the print version of The Indian Textile Journal May 2009 issue.

C Vigneswaran.

Lecturer, Daprtment of Textile of Fashion Technology,

PSG College of Technology, Coimbatore 641 004. Email : [email protected]. published May , 2009

Reader Comments

muthu

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8/26/2010 4:04:49 PM

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Roshni

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8/25/2010 2:58:02 PM

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Ayush

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8/20/2010 5:08:24 PM

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suhas

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8/4/2010 3:16:59 PM

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Table of Contents Most Recent Issues Write to Editor

Calculate the consumption of knit garments

Learn Apparel Merchandising, Learn Fashion design.

Dear All,

For calculating the consumption of your knit garments pls

follow the below instruction. The following information you

need at first, as listed below:

(During the consumption pls used measurement of middle size for calculation or used the size which have

most of the qty. If the style have 6 sizes then used size number 04 for consumption. Here we will consider

the size: "L" for calculate the consumption)

i. Body length of the garments in cm.

Say it is - 73 cm

ii. Sleeve length of the garments in cm.

Say it is - 19.5 cm

iii. Approximate sewing allowance at body hem, shoulder joint, sleeve hem & armhole joint (in cm).

Say it

is - 10 cm

iv. Chest width (1/2) in cm.

Say it is - 52 cm

v. Approximate sewing allowance at both side seam (in cm).

Say it is - 4 cm

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vii. Approximate

fabric

wastage in various stage.

Say it is - 10%

(In this regards pls note that, fabric wastage depend on how many

additional elements the garments have,which may changed in any time.If

the garments has rotary print, enzyme stone wash etc than

the fabric wastage will be more than normal wastage)

If you already have all the above information then,now just put the following information and get the fabric

consumption.http://knitgarmentsconsumption.blogspot.com/

otherwise you can follow the below

rules

Rules:

{(B/length + S/length + Sewing Allowance) X (1/2 Chest + Sewing Allowance)}X 2 X GSM X 12 /

10000000 + Wastage

= {(73 + 19.5 + 10) X (52 + 4)} X 2 X 160 X 12 / 10000000 + 10%

= (102.5 X 56) X 2 X 160 X 12 / 10000000 + 10%

= 5740 X 2 X 160 X 12 /10000000 +10%

= 22041600 / 10000000 + 10%

= 2.20416 + 10 %

= 2.424576

= 2.43 kg per dozen. (Consumption)

How to Calculate Product CM Cost at the Time of

Order Booking?

One of my popular posts,

Garment CM cost estimation using SAM or SMV

gives partial

answer of this question. I have explained it further to make it clear how you can quickly

calculate CM of a product at the time of order booking or initial stage of product

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Garment Sample image courtesy: Jabong.com

CM is referred to fabric cutting and garment sewing (making) labor cost per unit. Actually,

all labor costs like cutting, sewing, pressing, folding and packing are included into CM. If

one asked you what would be the CM of a product, you may find it is very difficult to answer

with correct figure due to complexity in calculation. But if you follow logical method and

keep your database ready and updated you can determine CM of a product with no time.

Preparation of a database is onetime job and you need to update regularly or when updating is

required.

Following steps will help you to determine product CM cost. Sewing process has much

variation in terms of work contents (time required to make a garment) than cutting and

finishing process. So for cutting and finishing process there is less variation in labor cost per

unit.

Step 1: Make database for labor cost per pieces for cutting and finishing

Just get last six months labor wages for cutting and finishing departments (excluding staffs) and total

units cut and finished in lat six months. Calculate labor cost per pieces for cutting and finishing

department.

Cutting labor cost per piece = Total salary paid to cutting labors in a time period / Total pieces cut in that

time period

Finishing labor cost per piece = Total salary paid to finishing labors in a time period / Total pieces packed

in that time period.

If you want accuracy in cutting and finishing cost then calculate product wise labor cost per piece.

Step 2: Determine sewing labor cost per minute

Per minute cost of a factory depends on line efficiency. And average line efficiency of a style depends on

style run (order quantity). First thing first, to calculate sewing labor cost create database for average style

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efficiency according to order quantity. See Table-1 for example. This database needs to be updated

regularly. To calculate efficiency of a style use following formula -

= (Order qty. * Garment SMV * 100) / (Total man hours spent to complete the style * 60)

Instead of quantity you can use actual total production quantity in the style.

Table-1: Line efficiency at different order quantity

Order qty.

Average style

Efficiency

100-500

30%

501-1000

35%

1001-3000

40%

3001-8000

50%

8001-10000

55%

10000 plus

60%

Once you have average efficiency based on order quantity calculate sewing labor cost per minute. Collect

updated list of minimum wages for skilled labor or get average employee rates from Human Resource

(HR) department.

Cost per minutes = (Minimum wages of high skilled labor / 480)/Efficiency%

See following Table-2, where it shows style efficiency is 55%, minimum daily wages (for high skilled

operator) INR 340 and work shift time 8 hours (480 minutes). So, cost per minutes is INR 1.29

Table -2: Factors to calculate sewing labor cost per minutes

Order

qty

Minimum

wages (high

skilled)

Minutes/day

Efficiency

level

Labor

Cost/minutes

8001-10000

340

480 55%

1.29 Step-3: Calculate CM cost of the product

SMV is one very important component for product cost calculation. For the correct SMV of a product,

consult with industrial engineering department. Or create your database for product SMV with style

variations. Once you get product SMV add certain percentage on it as buffer.

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Sewing labor cost per piece = Product SMV X labor cost per minute (@ predefined efficiency)

Product CM = (Cutting cost + Sewing cost +Finishing cost)

For safety, add allowances on the calculated CM prior to offering cost to your buyer.

Cutting

rate per

unit

Finishing

rate per unit

Sewing SMV

Cost

allowances

CM (INR)

2

4

14 5%

25.23 In the above example, cutting cost is INR 2, finishing cost INR 4 and sewing SMV taken 14 minutes. Later,

5% allowances are added to the calculated cost to reach to final CM cost.

To make the calculation easier I have made CM cost calculator on an excel sheet. This sheet can be

downloaded based on your demand.

Garment CM cost estimation using SAM or SMV

By Prasanta Sarkar

85

I

n the clothing manufacturing, supplier gives final manufacturing cost to buyer prior to order

confirmation. For that factory prepares cost sheet estimating costs in different cost heads. Cost heads like

Fabric, Trims and Packing materials, Labor cost and Overheads.

At costing stage, supplier only get one sample of the garment and specification of fabric and trims for the

reference. For raw material cost suppliers directly take price quote from fabric and trim suppliers. For

labor cost it is very important to estimate as near as it will be during actual production.

The scientific method for estimating CM (Cut and make) cost of a garment involves following steps

1. Determine SAM of the garment (refer garment SAM calculation)

2. Calculate average line efficiency and

3. Calculate direct labor cost per minute

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