Important Costing Tips for Garments

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Important Costing Tips for Garments

Md. Sumon Miah
Lecturer
Department of Textile Engineering
Green University of Bangladesh

Cost and costing

Cost typically can be defined as the economic value placed upon the resources
consumed to make a product.
Costing is the process of estimating and then determining the total cost of producing a
garment, including the cost of materials, labour and transportation as well as the
general expenses of the operating the business .

Costing
In order to do 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. Merchandiser 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.

Purposes for doing costing.

Merchandiser has to have thorough understanding of costing. There are several
reasons where cost plays the vital role. Merchandiser does the costing mainly for two
purposes.

Pricing of the garment: If manufacturer selling the garments directly to the end
consumers then its very important to estimate the cost very accurately. Pricing of
the garment can be done by manufacturing cost added with estimated mark-up
or profit % to it.

Order acceptance: If manufacturer is exporting the garment, the costing is base

of the business. On the basis of cost of manufacturing including wages,
operating expenses and transportation and freight charges, and profit margin of
company, merchandiser claims the cost of unit garment. With this merchandiser
negotiates cost with buyer and decides whether to accept the order or not.

Points should be considered before costing

Fabrication: We must take clear idea regarding the fabrication before taking the
order from the buyer / buying house. After then, you must ensure that, you have
strong source of the followings fabric.

Size spec: Make sure that, you have got the correct/latest size spec with the
measurement of all the sizes, which will be ordered. Many times we see that, PO
sheet has come with new bigger size which was not during the costing.

Fabric color: Try to know that, how many colors the style has & also try to know
that, color wise order qty ratio.

Qty: Take information regarding approximate order qty.

Shipment date: Asked buyer for the shipment date & check with your production
department that, they have enough space for shipped out the followings qty
within the require ship date Or tell your possible date.

Test requirement: Let you know that, the order has any test or not.

GSP: Please confirm that, buyer has need the GSP or not.

L/c payments term: Take a previous l/c copy from them & discuss with your
commercial people regarding all the terms along with payment terms.

Inspection: Please get a confirmation from the buyer that, who will inspected the
goods. If third party then who will pay their charges.

The general formula for costing

Costing = Commercial cost ( Fabric cost + Fabric finishing cost+ trimmings/
accessories cost) + Additional cost (3-15% of commercial cost) + CM cost + profit
(Normally 20% of CM cost).

Note:
1.

3% additional is taken when L/C payment terms is as sight.

2.

7.5 % additional of commercial cost is taken when L/C payment is 60 days

deferred.

3.

15 % additional of total commercial cost is taken when L/C payment is 90 days

deferred.

Fabric Cost
Fabric cost = Fabric consumption in unit (yds, kgs ) price / each unit.
Calculating the following fabric consumption and making each costing individuality if
garments have
1.

Body fabric

2.

Neck tape

3.

Rib

4.

Applique & others fabric

Estimate wastage :

Generally 9% wastage on total fabric cost is taken for knit items.

If it is with only front chest print then 9% is ok but if with all over/rotary print, with
heavy wash etc then you must increase the wastage.

Moreover, if the garments with pigments dye then add minimum 25 to 30%
wastage because in this pigment dye garments reject percentage is very high.

Fabric finishing cost

Print: If the garments have print then make sure that, you have a clear art work
of it. Check that there clearly mentioned the print quality, dimension & placement.
Send the art work to your printers for a better price idea. Also let you know from
your printers regarding the difficulties of the followings print. Many times we
found that, buyer has asked for so many type/kind prints in same body which is
so difficult for production. Such as, if buyer asked for Flock + discharge & foil
print in at the same artwork then it is not possible for production.

Embroidery: Discuss with your embroidery supplier regarding the embroidery &
take price quotation.

Wash: Take the wash price quotation from washing factory.

Test: Confirm the charges of test from the testing company.

Accessories & trims

Please try to Calculate the price of accessories individually it will reduce the percentage
of mistake. Please find below the list of some accessories item

Sewing thread: Confirm that, which thread you need 100% cotton, spun
polyester or filaments. Then ensure the count 50/2 or 40/2 or any other denier. Its
may vary on fabrications. Regarding the pigment dye garments we normally used
cotton grey color cotton thread.

Labels: Take the quotation from your supplier for the entire woven & satin/paper
label.

Tape: Calculate the consumption of tape if it has, such as Velvet, herringbone or

canvas etc.

Elastic: Make sure which denier & width it need. Then take the quotation from
supplier.

Zipper: If the garments have zippers then confirm that, from where you will
purchase that. Many time the logo zipper need to import the mold from abroad.
Make sure the zipper quality, such metal, nylon or vislon zipper. Check the zipper
measurement from your production department and get prices from your zipper
supplier.

Button: Take the button price from your supplier if the garments have it.

Inter lining: Calculate the inter lignin price if the garments need.

Patch or badge: Calculate the patch or badge or others metal item if the
garments have.

Finishing item: Tissue paper, silica gel, hang tag, barcode sticker, back board,
h/tag string, scotch tape, security tag calculate the prices of these item.

Hanger: Take the quotation of hanger.

Poly: Make the measurement of poly. Confirm the quality & with adhesive or not.

Carton: Find out the carton measurement & take the prices from carton supplier
along with top, bottom & divider.

Gum tape: Confirm the gum tape quality that, whether it is normal transparent or
with any logo. Then take the price quotation.

PP belt: Take the price quotation of pp belt if buyer asked it.

Carton sticker: Take quotation for sticker.

CM (Cost of Making)
Normally at present (after starting the new salary scale) in Bangladesh we calculate
the CM of any item consider the overhead sewing machine cost 1200 tk to 1400 tk/day
that means $15.38 to $17.95/per day.
Above is for a non-compliance factory. For a compliance factory the per day machine
cost will be 1800 tk to 2100 tk ( $23.08 to $26.92)
Example : If an items produce 1600 pcs per day using 25 machines then what would be
the CM cost ???
Solution:
CM cost = Overhead machine cost X require machine / produce quantity X 12
= (1800 X 25 / 1600 )X 12
= 337.5 Taka
= $ 337.5/78
= $ 4.32 /dozen
Calculate the CM after discussion with your production department. Its vary depends on
require machine qty & output qty.
To find out the CM of a item you must need the following 06 (six) information at
first, as listed below

Monthly total expenditure of your factory with factory rent, commercial cost,
electricity bill, water bill, transportation, repairing, worker & stuff wages etc.
(8hrs/day) in bangla taka. Suppose-50,00,000/tk

Qty of running Machine of your factory of the following month (which total
expenditure we have consider here).Suppose- 100 machine

Number of machine to complete the layout for the following Items (which CM we
are calculating). Suppose - 25 machines .

Production target/capacity of the following items, per hour from the existing
layout, excluding alter & reject. Suppose 200 pcs per hour.

Total working day of the followings month,(though the houserent,commercial

expenses,machine overhauling & some other cost remain same)Suppose- 26
days.

If you want to calculate the CM in US$ (dollar) then pls input present dollar
conversation rate BDTk.

Suppose $1 = 78 tk.

COST OF MAKING (CM)

=(SAM of the garment * Minute cost of the labor)/Line efficiency (%)
OR
= Overhead machine cost X require machine / produce quantity
= [{Monthly total expenditure of the following factory / (26 X Qty of running Machine of
your factory of the following month)}] X (Number of machine to complete the layout) /
produce quantity per day.
= [{50,00,000 / (26 X 100 )} X 25] / {(200) X 8}] X 12
= [{192307.7 / (100) X (25) } / 1600] X 12
= (48,076.9 / 1600) X 12
= 30.048 X 12
= 360.58 Taka
= $ 360.58/ 78
= $ 4.62/dozen
This is the making cost (12 pcs) garments.

Example of garment costing

The example of garment cost is given by assuming the following dimensions for polo
neck T-shirt, no. of pieces = 4000, salary of the operator =6240 tk/month=80$/month,
no. of working days = 26, line efficiency considered= 50%, sewing SAM= 15 min.,
Cutting SAM= 7 min. 1$ =78 taka, Chest = 60 cm, Length (HSP to waist) = 75 cm,
Sleeve length = 25 cm. Fabric used is 2/60s 100% cotton S/J fabric. GSM is 180
Solution
The fabric consumption can be calculated as
{(B.L +S.L + 4-10 cm) ( chest+ 2-4 cm) 2}GSM

= . + Wastage 10%
10000000
{(75+25 + 4) ( 60+ 2) 2}180
= + Wastage 10%
10000000
= 0.232 + Wastage 10%
=0.255 kg/dozen
CMT (cost of making with trimming) charges may be calculated as follows
Labour cost per minute = (Monthly salary of an operators/Total minutes available in
the month
= 6240/ (26860)
= 0.5 tk.
Sewing cost = (SAM of the garment * Minute cost of the labour)/Line eff%
= 15*0.5 / 50%
= 15 tk.
Cutting cost = (SAM of cutting * Minute cost of the labour)/cutting efficiency (%)
= 7*0.5 / 50%
= 7 tk.
Now trimming cost is considered as 3 tk. but it depends how number of operators are
there for trimming
CMT= sewing cost + cutting cost + trimming
= 15+ 7+ 3
= 25 tk.

Read more: http://textilelearner.blogspot.com/2014/12/important-costing-tips-for-garments.html#ixzz3Opbw9RHI