Apparel costing for merchandiser 181 of merchandiser where he or she will be provided with the fabric specifica- tions required or else with a sample swatch. In the second case, with the ex- isting fabric, merchandiser needs to work back and identify the fabric details like yam count, Ends per inch, Picks per inch in woven fabric and Course per inch, Wales per inch in case of knitted fabric, Based on those details, the merchandiser needs to arrive for the yarn requirement for the metre square or unit area of the fabric. This will help themerchandiser to estimate the approx- imate amount of yarn required for the completion of order. For that the mer- chandiser must know the consumption requirement of the cach garment. As discussed in Chapter 3, based on the measurement details, the merchandiser need to estimate the amount of fabric required to produce individual garment including the waste allowance. With that estimated fabric consumption per garment, he or she can measure the amount of fabric (for knitted in kilograms and for woven in metre) required for the order. Based on this quantity, the company will decide by considering various factors, whether to produce the fabric or to source the fabric directly. In the second case, the merchandiser’s job is little easy where he or she can coordi- nate with different fabric manufacturers and based on the quality requirement and quantity, cost and availability, merchandiser will decide the sourcing pro- cess. But in the case of the first situation, the merchandiser’s responsil increases multi-fold. Here, merchandiser has to decide, + The fabric consumption / per garment + The fabric quantity need to be purchased + Yar consumption (in kgs) per square metre Estimating the process cost like pre-treatment and dyeing Calculating the total fabric cost of the fabric Arriving at the fabric cost per garment 5.4.1 Yarn cost calculation To calculate the yarn cost, as discussed in the Chapter 3, it is necessary identify the GSM (gram per square metre) of the fabric, for both knitted and woven material. The formula mentioned in Chapter 3, is provided below, It can be used for GSM calculation. i) For woven fabric, EPI x 39.384 x 453.4 x (crimp +100) Warp weight = 7 count x 0.914 x 840 x 100 PPL x 39.384 x 453.4 x (erimp + 100) eve ————————————— Weft count x 0.9140 x 840 x 100182 Apparel Merchandising GSM of woven fabric = Warp weight + Weft weight. ii) For knitted fabrie 0.59 Length in meters Weight in Grams Count in Ne = loop density x (39.384) x (39.384) x loop length in mm 1000 0.59x yarn length in m x (100 + shrinkage) ‘Count(Ne) x 100 Yarn length in m= GSM = The following example explains the cost calculation of yarn (data provided for cost calculations are approximate values, only for example purpose). 5.1 Yarn Count Conversion Table Example 1: An apparel manufacturing company received an order to de- velop fabric with following description. The fabric is made of 100% linen in warp and 100% acrylic in the weft. The other fabric particulars are 63 EPI, 60 PPI,warp count is 2/100s and the weft count is 120 Denier, the warp and weft crimps are 4% and 8%, respectively. Calculate the cost of the yam per square metre.Consider the yam price as follows, linen yarn price per kg = Rs. 450.00, Acrylic yarn price per kg = Rs. 285.00. Solution: To calculate the warp weight,Apparel costing for merchandiser 183 PL x 39.384 x 453.4 x (crimp +100) Warp count x 0.914 x 840 x 100 __ 65x 39.384 x 453.4 x (44100) 50 x 0.914 x 840 x 100 = 31.44 gram. To calculate the welt weight, PPI x 39,384 x 453.4 x (crimp +100) Wet count x 0.9140 x 840 x 100 _ 60x 39.384 x 453.4 x (8 +100) © Weft count x 0.914 x 840 x 100 To convert the weft count from denier to English count (Ne), Warp weight = Weft weight = _ 5315 5315 4499 Denier 120 Hence, 60 x 39.384 x 453.4 x (8 +100) ~~ 44.29 x 0.914 x 840 x 100 = 34.02 grams Total weight of the fabric = 34.02 + 31.44 = 65.46 gram To calculate the cost of the warp yarn, = Weight in gram * yarn cost / kg 31.44% 2 =Rs14.148 =31¢ 1000 8.14. To calculate the cost of the weft yarn, = Weight in gram * yarn cost /kg = 34.02 x = Rs.9.69 1000 Total cost of the yarn per square metre of the fabric = Rs. 14.14 + Rs. 9.69 = Rs, 23.84, Example 2: A knit garment export company received an order to develop knitted. fabric with following description, The fabric is made of 100% combed cotton and the other fabric particulars are as follows:85CPI, 80 WPI, warp count 40s Ne and loop length of 0.95 mm. Calculate the cost of the yarn per square metre,Consider the cotton yam price as Rs, 280,00 per kg and knitting shrinkage of $%. Solution: loop density x (39.384) x (39.384) x loop length in mm. Yarn length in m= 1000184 Apparel Merchandising 85 x 80 x (39.384) x (39.384) x 0.95 1000 10020.1 metres 0.59 x yarn length in m x (100+ shrinkay Count (Ne) x 100 GSM = 0,59 x 10020.1 x (100 + 5) - 40100 = 155.19 grams per square metre To calculate the yam cost, = Yarn weight / square metre Yarn price 9 p x 280 =" qo00 = Rs. 43.45 per square metre. Based on this cost, we can estimate the total cost of the order. 5.4.2 Process cost calculation The fabrication process involvesvarious processes like knitting or weav- ing, scouring, bleaching, dyeing, finishing treatments, etc. When the yam is sourced and converted into fabric, during the costing process to estimate fab- ric cost, we have to add all the cost of processes that the fabric undergoes. The final fabric cost will be the cost of the yam along with the summation of process cost of the fabric. i) Knitting or weaving cost For the calculation of knitting or weaving cost, one must know the following factors to estimate the cost of that process. Total number of machines used Number of shifts per day Production capacity of the plant or individual machine / shift or day Yar quantity used Waste percentage Number of operators and helpers Operator wages Other expenditures. For calculating the cost of any process, the abovementioned data are nee: essary. The following example details the cost calculation ofa knitting proces Example 3; A company developed single jersey cotton fabric for the kids wear garment. The company sourced 2000 kg of yarn and the price of theApparel costing for merchandiser 185 yam is Rs. 240 / kg. The knitting industry works with 5 weft knitting ma- chine with the production capacity of 85 kg / machine. ‘The average waste percentage expected during the operation is 3%, The company works with 5 operators and 2 helpers with the wage of Rs. 250 and Rs. 150 per shift, respectively. Calculate the cost of knitting process per kilogram with 20% protit if the company spendsRs. 5000 / month for rent, Rs, 3000 / month for electricity and Rs.15,000 / month as other expenses. Assume company works 26 days per month. Solution: Step 1: Number of shifts required to complete the order. Total production per day = Average machine production x Number of machines = 85 x 5=425 kg/ shift The wastage percentage expected = 3% Hence, 2000 kg - (3% of 2000 kg) = the original quantity produced 3 2000- y= = 2000 — (2000 x io) 1940 kg Total yarn quantity Production capacity per shift aoe = 4.7 shifts. 425 Total number of shifts required = Step 2: Calculate total labour cost The labour cost = No. of labours x No. of shifts worked to complete order Rs. 15.36 / metre. Fabric cost per metre _ 15.36 ‘ i ——_rrserrr == Rs. 0. h So. pick rate PPI 70 Rs, 0.219/ inel Pick cost with 20% profit = (0.219 + (0.29 x 20/100)) = Rs. 0.26. If we consider the above-mentioned example, after calculating the cost of a single pick, from that we can derive the cost of the woven fabric per metre. The details are as follows: Solution: ‘The cost of the fabric per metre = Fabric width * cost of pick 1f we assume the fabric (loom) width is 56” then the cost of the fabric is, = 56 x 0.26= Rs.14.56 / metre. 5.4 Crimp Percentage Calculation Crimp % , C= aS * 100% where L is warp length, S is cloth length Warp length (L), L= (1 +C) x $ where C is crimp %, S is cloth length Cloth length (S), $ (1+¢) + Where L is warp length, Cis crimp %190 Apparel Merchandising ii) Pre-treatment, dyeing, In the ease of pre-treatment, dyeing and printin involved in the proe based on the several process parameters like = Types of chemicals and dyes + Lypes of fabric used and shade required © Types of dyeing machines and methods used + Labexpenditure incurred during shade development © EMuent treatment co a) Pre-treatment and dyeing cost The following examples will provide an initiative to estimate the cost of the pre-treatment and dyeing process. The data provided here are approximate and they are usgdonly for the understanding purpose. A processing mill received an order from the garment manufacturer ited fabric of 700 kg. The average daily production of the company is ~The material and the prices used in the process are listed below in Table 5.1. Calculate the dyeing cost per kg with 15% profit, ifthe company works one shift per day. The total overhead incurred for a month is Rs. 1.5 lakhs including the cost of other staff salary, electricity bill, plant rent and other expenses. Table 5.1 _Raw materials used and their prices S.No. Items used Quantity used | Price in Rs. 1 Reactive dye tke 350/ kg 2 Reactive dye B Ske 300/ kg 3 Chemical XYZ 10kg 75/kg 4 Chemical ABC ITkg 120/kg 5 | Machine operators used 5 375 / shift 6 | Machine helpers used 3 250 / shift Solution: Step 1:The total production need to be done = 700 kg Daily production of the company = 400 ky / shift (company works a shift in aday) Order quantity 700 Daily production 400 Hence, the total shifts required Step 2: Labour cost ‘The number of labours used are, 5 machine operators with the wage of Rs. 375/shift and 3 machine helper with the wage of Rs. 250/shift.Apparel costing for merchandiser 191 Hence, the total labour cost is ~ (Number of labours x Total working shifts x Wages per shift) = (5X 1.75 8375) + (3 «1.75*250) = 3281.25+ 1312.50 = Ks, 4593.75, Labour cost = Rs. 4593.75, step 3: Calculation of raw material cost 1. Reactive dye =4 x 350 = 1400 2. Reactive dye B= 8 x 300 = 2400 3, Chemical XYZ = 10 x 75 = 750 4. Chemical ABC = 17 x 120 = 2040 Total raw material cost = Rs, 6590, Step 4: Overhead cost Total overhead cost = Rs. 1,50,000 Company works for this order only 1.75 shifts. Hence, the Overhead costs for 1.75 shifts are. Overhead / day (shift*) = =Rs. 5000 1,50,000 30 Therefore. 5000 x 1.75 = Rs. 8750. (*Note: Since company works | shift per day, here, 1 day = | shift.) Step 5: Total cost of the dyeing Total cost = Labour cost + Material cost + Overheads Rs. 4593.75 + Rs.6590 + Rs. 8750 =Rs. 19,933.75 Add 15% profit = Rs. 22,923.81 Total dyeing cost / kg = =Rs. 32.7. Note: For the cost estimation of the dyeing process, company / merchandiser must quote the approximate price based on their previous experience. Afier the completion of dveing process, based on the chemicals consumed and dves utilized, the exact cost must be calculated, The above said example details the cost based on the overall consumption of all chemicals for a particular order: Example ZA processing unit received an order from the garment manufacturer to dye 16,000 metres of woven fabric. The average production per shitt in the company is 20,000 metres. The matertal and the prices used in the process are listed below in Table 5.2.Calculate the dyeing cost per kg with 10% protit, if the company works 2 shifts per day. The overhead charges incurred are, for steam — Rs, 75,000; forpower ~ Rs. 25,000; fortransport Rs. 8000; for rent — Rs. 15,000; for other expenses ~ Rs.85,000 per month (26 days).192. Apparel Merchandising Table 5.2 Raw materials used and thelr price S.No. Quantity used Price in Rs. | | ask 3507 ke 2 | Chem ~~ e0ke 250/ ke 3 | Chommeal2 | 25ky 175 / kg 4 Chemical 3 65 ky 2007 kg S Machine operators 7 375 / shift 6 Machine helpers used 10 250 shift Solution: Step 1: The total production need to be done = 1,28,000 metres Daily production of the company = 20,000 metres / shift (Company works 2 shifts in a day) Hence. the total shifts required = O™er quantity _ 1,28,000 _ ¢ 4 shifts, Daily production 20,000 Step 2: Labour cost The number of labours used are, 17 machine operators with the wage of Rs. 375/shift and 10 machine helper with the wage of Rs. 250/shift. Hence, the total labour cost is = (Number of labours x Total working shifts x Wages per shift) =(17* 6.4% 375) + (10% 6.4 x 250) = 40,800+ 16,000 = Rs. 56,800.00. Labour cost = Rs. 56,800. Step 3: Calculation of raw material cost 1. Dye A= 35 x 350 = 12,250 2. Chemical 1 = 80 x 250 = 20,000 3. Chemical 2 = 25 x 175 = 4375 4, Chemical 3 = 65 x 200 = 13,000 Total raw material cost = Rs.49,625. Step 4: Overhead cost Total overhead cost = Rs. 75,000+ Rs. 25,000+ Rs, 8000+ Rs. 15,000+ Rs.85,000 Rs. 2,08,000 / 26 days Hence, the overhead costs for 6.4 shifis are, 2,08,000 So = Rs. 800 6 Rs. 10 Therefore, 8000 x6.4 = Rs. 51,200. Overhead / day (shift*) Step 5: Total cost of the dyeing Total cost = Labour cost + Material cost + OverheadsApparel costing for merchandiser 193 Rs. 56,800 + Rs.49,625 + Rs.$1,200 = Rs. 1,57,625 Add 10% profit = (1,57,025 + (1,57,625 * 10/100)) = Rs.1,73,387.5 1,73,387.5 Total dyeing cost = 2————~ = Ry, 1.35/ metre of fabric, otal dyeing, 28,009” 7 R135! metro of fabric b) Printing and other finishing cost The following examples will provide knowledge on how to estimate the cost of the printing and finishing process. The data provided here are approximate and they are used only for the understanding purpose. case of finishing and printing cost estimation,the company / merchandiser must quote the approximate price based on their previous experience. After the completion of the process, based on the chemicals consumed and dyes utilised, the exact cost must be calculated. The following example details the cost based on the overall consumption of all chemicals for 2 particular order, Hence for both finishing and printing process, the following method can be used. Only in the case of printing, few additional charges may need to be included. Those are explained in this section. The process of printing is different from the dyeing process, in this method the colours are applied in a localised manner based on the requirement in a patterned way. In this process, the dye materials are mixed with thickeners and other chemicals to make it as a semi solid. The solution is called as printing paste. This paste is applied based on the design cither by blocks or screens or rollers, etc,. In this, based on the method used, the following processes are involved; Design development development, screen preparation, printing paste preparation, fabric preparation, printing. drying. curing and washing if needed. The factors affecting the cost of the printing process are: © Type of printing process Pigment, discharge, reactive, resist, block, foil, etc © Size of the design © Methods used ~ screen, block, roller or others © Dyes and chemicals used © Post treatment ~ curing or drying © Number of colours: To calculate the cost of the screen printing process, the following information need to be included in the costing process. i) Designing charges ~ Once the particular design is received, the manufacturer needs to reproduce the design in the printing screen. For that purpose, the designing process is carried out. The amounts charged for designing a square inch varies from Rs. 1.5 to Rs, 3.50 based on the design complic: ion,‘Apparel costing for merchandiser 195 ii) Frame charges — For serven printing process, the developed films need to be fitted on a frame to fix with a material. If the print designs differs from commercial sizes, then the manufacturer needs to make the frames for that particular onder, In that case, the cost of making frames are also included in the t Che cost varies from Rs.150 — Rs,500 (not limited) based on the size. posing and making charges — After making the designs, to transfer the designs ina film, the making or exposing process is used. The designs are transferred to the film based on colour, i.c., separate film for individual colour. An this example, the design contains six colours, Hence, six films need to be aired and to complete a Lull design, the fabric need to be passed through ix ss For this process, the exposing charges vary approximately tl cost ion — Based on the design requirement, the dyes are selected, The cost of the dye depends upon the quality of the product. In general, plastisol, pigments, discharge dyes and non-PVC dyes are commerciallly used. Example 7A sercen printing industry received an order with 25,000 T-shirts, to print a pXydo print on T-shirt chest area with six different colours. The colour details are red lu, grey, white, yellow and green (Table 5.3). For the designing purpose, the company spends Rs.3.00 per square inch, the cost of making of a single frame is Rs. 350, the exposing charges per square inch is Rs. 1.00 and curing charges, Rs.0.25 / garment. The dye quantity consumed colour wise and their price details are in Table 5.3. Calculate the cost of the print / garment with 10% profit, if the company works With 6 labours with a wage of Rs.350 per shift and 2500 garments as their average production per shift. The other overhead charges are, electricity charges Rs. 25,000 / month,transport charges Rs. 3000 / month, steam Rs. 50,000, month and other expenses Rs, 75,000 / month, Assume company works 28 days in a month. The design size is 17° 13” and the frame size is 24° 37°, — Table 5.3 Raw materials used and their prices S.No. | Particulars Col med quantit; kg | Price / kg. 1__ [Red colour 125 140 2 _ | Blue colour 15 140 3__| Grey colour 175 120 4 | White colour 250) [os 5 __| Yellow colour 125 120 6 | Green colour Ss 120 7 Binder 160 8 | Fixing agent 140196 Apparel! Merchandising Solution: Step L: Number of shifts required to complete the order, The onder quantity = 25,000 garments Daily production = 2500 garments Order quantity 25,000 Daily production — 2500 No, of days to complete the order is 10. No of'shitts equine to complete the onler = 10 shifts The company works 1 shifl per Stop 2: Calculation of labour cost Total printing personnel used are 6 with a wage of Rs.350 each. Henee, the total labour co = (Number of labours x Total working shifts x Wages per shift) = (6X350 * 10) = Rs. 21,000 Labour cost = Rs. 21,000. : Calculation of raw material cost i) Designing charges Total design area = 17 x 13 Total number of colours = 6 Charge per square inch = Rs. 3 Total cost= (17 * 13) x 6 x 3=Rs. 3978. ii) Frame charges ~ Given as Rs. 350. Since 6 colour required, for this design we need 6 frames. So total cost is, = 350 6=Rs. 2100. Note: Here the design: area is totally different from the frame area. ili) Making charges — Per square inch Rs.1 Total area is = 24 x 37 = 888 incl Since it has 6 colours = 888 * 6 = 5328 inch? (Total area) Total making cost = 5328 x | = Rs. 5328. iv) Curing charges = Rs. 0.25 / garment. Total co: 5,000 x 0.25 = Rs. 6250. Dye and chemical costs (Table 5,4) Table 5.4 Dyes and chemicals used and their total cost Consumed | price ky Total cost in Rs = quantity inkg | °°! *® | (quantity used * price) 1 | Red colour 12.5 140 1750 2 | Blue colour 15 140 2100 S.No. | ParticularsApparel costing for merchandiser 197 3__| Grey colour 75 [120 2100 White 4 | colour ee 31,250 Yellow mal ~ : 5 ‘ colour ue 120 1300 Green ce colour e bs 1800 7 | Binder 25 160 4000 S_ | Fixing 6.25 140 875 Total cost Rs. 45375 Raw material cost = 3978 + 2100 + 5328 + 6250 +45375 = Rs. 63,031. Step 4: Overhead cost a) Electricity charges Rs. 25,000 / month, b) Transport charges Rs. 3000 / month, c) Steam Rs. 50,000/ month d) Other expenses Rs. 75,000 / month. 1,53, 000 Total 008 = 55 Fas par month = RS 5464 / day For this order company works 10 days hence, the total overhead cost = Rs. 54,643. Step 5: Total cost = Labour cost + Raw material cost + Overhead = Rs. 21,000 + Rs. 63,031 + Rs, 54,643 =Rs. 1,38,674 1,38,674 _ st = = Cost per garment 25,000 Rs. 5.55, With 10% profit = 555+ {5.55% ia J=Rs. 6.10. 5.5 Fabric cost calculation The above-mentioned examples will help to understand the e: fabric cost per kilogram or per metre individually at different stages manufacturing. With the help of those methods, the merchandiser will derive the cost of the overall processes and he or she will conclude the cost of the fabric per kg or for an individual garment or for the order quantity required. With this value, the merchandiser will seek for the sources to reduce the cost in every processing stage from the yarn sourcing to the finishing. Since, the198 — Apparel Merchandising cost of the fabric or nw material iv a major driving factor for the cost of the product, the merchandiser or manufacturer will try to keep it as low as possible always to compete in the real time environment, ‘This seetion will showease the consolidated estimation of total fabric cost from the yarn to finishing including all process stages. Example 9y A woven fabric manufacturing industry received an order to seen i with following description with an order quantity of 25,000 metres. The fabric made of 100% cotton in warp and weft with 75 EPI, 70 PPI, Warp count is 60s Ne and the weft count is 40s Ne and the warp and well crimps are 5! respectively. Considering the fabric add on and the other cost details that are provided in Table 5.5, calculate the cost of the fabric per square metre. The weaving shed produces fabric width of 56 inches. Table 5.5 Fabric particulars and their costs S.No. | Particulars (add on) Price in Rs/kg 1 [60s cotton yarn 310 2 [40s cotton yarn 285 3 | Rate ofa pick 021 4 [Scouring and bleaching 125 3 | Dyeing (5%) 35 6 [Silicone finishing (8%) 65 Solution: To calculate the warp weight, EP1x39.384 x 453.4 x(orimp +100) Warp count x 0.914 x 840x100 75 x 39.384 x 453.4 x (5-+100) 60 x 0.914 x 840 x 100 = 30,52 gram. To calculate the weft weight, Warp weight = PPI x 39.384 x 453.4 Wel Weft weight = _ 70x39,384 x 453.4 x(6 +100) 40% 0.914 x840 x 100 = 43.14 grams.Apparel costing for merchandiser 199 Total weight of the fabric = 30.52 + 43,14 = 73.66 gram per square metre. To calculate the cost of the warp yarn, = Weight in gram * yarn cost / kg Ee Rs.9.46 1000 To calculate the cost of the weft yarn, Weight in gram * yarn cost / kg = 30,52* 285 = 43.14 tooo ~ Rs.12.29. 000 {) Total cost of the yarn per square metre of the fabric = Rs. 9.46 + Rs. 12.29 =Rs. 21.75. ii) Weaving cost of the fabric / sq. metre = Fabric width x Pick rate = 56 x 0.21 = Rs.11.76. iii) Cost of the grey fabric = yarn cost + Weaving cost = 21.75 + 11.76 = Rs. 33.51. iv) Processing cost Scouring and bleaching cost = Rs. 125 /kg; 73.66 (Total weight) Cost per square metre = 125 x 000 Rs. 9.20. Dyeing add on = 73.66 1.05 = 77.34 grams / square metre Dyeing cost = Rs.85/ kg: cost per square metre = 85 x A =Rs. 6.57 Finishing add on = 77.34 x 1.08 = 83.52 Finishing cost = Rs.65/ kg: cost per square metre = 65 x = = Rs. 5.42 Total processing cost = Rs.21.19 Final fabric cost = Grey fabric cost + Processing cost = 33.51 + 21.19 = Rs. 34.7. Example 10: A woven fabric manufacturing industry received an order to develop fabric with following description with an order quantity of 40,000 metres. The fabric is made of 100% mercerised cotton in warp and 100% polyester in weft with the 80EPI, 66 PPI, Warp count is 50s Ne and the weft count is 80 Denier and the warp and weft crimps are 6% and 8%, respectively. Consider that, the fabric consumption per shirt is 1.75 square metre. The fabric has been processed through souring, bleaching (2%), dyeing (4%) and finishing (6%).The weaving shed produces fabric width of 63” (Table 5.6). Note: The values inside the brackets near processing % for Dyeing and finishing and weight lass percentag eps are weight add-on or bleaching.200 = Apparel Merchandising Table 5.6 Fabric particulars and their costs Particulars ! - 7 Polyester yam [3 [ Rate ota pick | 4 [Scouring 3 | Bleaching 70 6 Mereerisation 95 7__ | Dyeing 70 8__| Silicone finishing 105 Solution: To calculate the warp weight, EPI x39.384% 453.4 x (crimp +100) Warp count x 0.914 x 840x100 80x 39.384% 453.4x(6+100) ~ 30x 0.914 x 840x100 = 39.44 gram, To calculate the weft weight, To convert the weft count from denier to English count (Ne), Warp weight = PPI x39.384x 453.4 (crimp + 100) Weft count x 0.9140 x840x 100 _ 66%39,384% 453.4% (8 +100) 66.43% 0.914 x 840x100 = 24,95 grams, Weft weight = Total weight of the fabric = 39.44¥ 24.95 ~ 64.39 gram per square metre. Weight loss after bleaching = 64.38 * 0,02 =1.28, Since it is weight loss, the final GSM is = 64.38-1.28 = 63.1 GSM afier dyeing = 63.1 x 1.04 = 65.62 GSM afier finishing = 65,62 x 1.06 = 69.56.Apparol costing for merchandiser 201 To calculate the cost of the warp yarn, Weight in gram * yarn cost / kg 465 1000 ¢ the cost of the welt yarn, Weight in gram % yarn cost / kg 39.44x Rs.18.33. 24.95% 2B Rs.7.11. 1000 Rs. 18.33+ Rs. 7.11 = Rs. 25.44. i) Total cost of the yarn per square metre of the fabri ii) Weaving cost of the fabric / sq. m = Fabric width Pick rate = 63x 0.26 = Rs.16.38. iii) Cost of the grey fabrie= yam cost + Weaving cost = 25.44 + 16.38 = Rs. 41.82. iv) Processing cost Scouring cost = Rs. 80 /kg; cost per square metre = 80x ——— om =Rs. 5.15 64. Bleaching cost = Rs. 70 /kg; cost per square metre = 70 x =Rs. 4.50 — . 63.1 Mercerisation cost = Rs. 95 /kg; cost per square metre = 95 x 7355 = Rs. 5.99 65.62 Dyeing cost = Rs.70/ kg: cost per square metre = 70x > = Rs. 4.59 “ok: 69.56 Finishing cost = Rs.105/ kg; cost per square metre = 105%7=~= Rs. 7.30 Total processing cost = Rs.27.53. Final fabric cost ~ Grey fabric cost + Processing cost = 41.82 + 2 = Rs. 69.35. If the fabric consumption per shirt is 1.75 square metre, The fabric cost per garment is = 1.75 *69.35 = Rs.121.36, ExampleA/: Find out GSM of knitted fabric, cost of yarn, fabric and quantity//f yarn to be procured for executing an order of Men’s Polo ‘T-shirt yhade out of 100% mercerised cotton with the following details as in Table 5.7.202 Apparel Merchandising Table $7 Onier details of Mon’s polo T-shirt Kot strrctuny st Yarn price (40 Ne) | Rs. 365 /kg interlock Knitting charge Rs, 26/ kg Scouring charge Rs, 67/ kg sper inch Bleaching charge 421 kg Loop lengthy 058mm | Mercerisation Rs. 65/ kg. Fabric dimensional | 8% Dyeing charge Rs. 85/ kg. shrinkage (reactive) Compacting @S% level | Wrinkle free finish Rs. 50/ kg Wrinkle free @8% level | Compacting charge | Rs. 8/ kg finish Solution: : . ; hi Yarn length in m = Oo? desityx(39.384)x(39.384)xtoop length in mm 1000 — 62x48 x (39.384) x(39.384) x 0.58 1000 = 2677.32 metres sm = £152 length in mx (100 + shrinkage) Count (Ne) x100 _ 0.59% 2677.32 «(100+8) 40x100 42.65 grams per square metre GSM after compacting = (42.65 + (42.65% 5/100))= 44.78 GSM afier finish = (44.78 + (44.78% 8/100)) = 48.36 grams To calculate the yarn cost, = Yarn weight / square metrex Yarn price = 42.65 gx a = Rs. 15.57 per square metre. Process charges: i) Knitting charge = 42.65% 26/1000 = Rs, 1.11 li) Scouring charge = 42.65 67/1000 = Rs. 2.86Apparel costing for merchandiser 203 iii) Bleaching charge = 42.65% 42/1000 = Rs. 1.79 iv) Mercerisation=42.65x 65/1000 = Rs. 2.77 v)_ Dyeing charge (reactive)=42,65%85/1000 = Rs. 3.63 vi) Wrinkle tree finish =-48,36% 50/1000 = Rs.2.42 vii) Compacting charge = 44.78% 8 /1000 = Rs. 0.36 Total fabric cost = (15.57 + 14.94) = Rs. 30.51 / sq.m. 5.6 Cost calculation in apparel production departments The process and yarn cost discussed in the previous sections are basically considered as fabric cost. So, whenever merchandisers of a company are into a situation to manufacture the fabric with their own facility, all those above mentioned criteria are necessary. In some other situation. the apparel manufacturing industry making woven or knitted garment, irrespective of the type of industry, sources the required fabric as per the buyer’s specification from the leading fabric manufacturers in the market. In that case, these calculations will help the merchandiser to work out actual cost of the fabric on their own. So, the merchandiser will seek for the correct fabric price from the available vendors. However, the foremost and important task for the merchandiser is, to arrive at the cost of various departmental activities inside an apparel manufacturing firm and to derive the overall cost of the product. Most of the time it is named as Cut Make Trim (CMT) cost or Cut Make Packing (CMP) cost. In all cases, the merchandiser job is to estimate the cost of the all activities involved in thy product manufacturing facility. This section will detail the simple cost calculation procedures norm: followed in the industry to estimate the departmental cost for any order. 5.6.1 Cutting department costs In cutting department of an apparel industry, the general process flow will be, a) Relaxing of the fabric b) Marker planning c) Spreading and marker making d) Cutting e) Bundling and sticking sticker in the pie In calculation of the cutting cost, one has to consider the various raw materials involved in the each stage of the manufacturing process and labours. involved in the process. Other than these, there are few other technical230 Apparel Merchandising 4) Mode of stupment Whether by ait, sea, road or by combination of these. HYINCO terms ENternational COmercial terms which are evolved to fulfil wertam rights and obligations imposed by a trade contract on the buyer and seller INCO terms will dictate the responsibility of the seller and the responsibility of the buyer (ey. CIE, FOB, ete). ©) Volume or size of the order ‘The space occupied by the order or the weight of the onder will influence the cost of the freight directly. al) Type of assortment ¢) Destination country 1) Govemment rules and regulations The following examples will detail the cost calculation methods involved in the shipping and forwarding sections of apparel industry. Example 20: The packing instructions of girlstop order was provided as follows, for the order quantity of 22,000 pieces, the product was packed in such a way that cach carton box contains 3 pouches of 15 pieces and the size of the carton box is $0. cm * 60 cm * 30cm. The normal freight charge for 20” container is Rs. 35,000.Documentation charges Rs. 2500, Transportation charges Rs. 7000, Port charges Rs. 10,000, Custom charges Rs. 10,000, Agent commission 1% of the calculated cost and other service charges Rs. 5000, Calculate the shipping and forwarding cost of the single garment. Solution: Freight charge The total order quantity — 22,000 garments Each carton box contains 3 pouches of 15 pieces each, Hence total garments ina box is = 45 The number of pouches required for the order quantity = a = 1466.66 ~ 1467 pouches 146 Each box contains 3 pouches. So, the number of boxes are >" 489 box to cover the order Size of the single box = 80 cm * 60 cm *30cm = 1,44,000 cm’ = 0.144 m* ‘The total area of the 489 boxes = 0.144 x 489 = 70.416 m* The normal fright charge for 20° container = Rs. 35,000 Area of the 20’ container = 28 cubic metre (cbm). 35,000 28 If | metre cube space cost Rs. 1250, the cost of 70.41 m' = 70.416 x 1250 = Rs.88,020. Hence, the cost of a cubic metre= = Rs, 1250/m*Apparol costing for merchandiser 231 Overhead costs Other administrative overhead costs ure, © Documentation charges Rs. 2500, © Transportation charge Rs. 7000, © Port charges Rs, 10,000, © Custom charges R: «© Others Total cost Total cos Freight cost + Overheads: = $8,020 + 2500 + 7000 + 10,000 + 10,000 + 5000 = 1,22,520 Agent comn ion = 1% of the total value 1 Hence, the total cost = 1,22,520 + {1,22,520« Too 1,23,745.20 The total shipment cost = Rs.1,23,745.20 The shipment cost ofa single garment = 123,745.20 _ pg 5.62, 22,000 Example 21: A company received an order quantity of 10,000 pieces. The packing instructions are as follows: Each carton box contains 150 garments, the size of the carton box is 60 cm x 40 cm x 30cm. The normal freight charge for 20° container is Rs. 75,000. Terminal handling charges 550/m*, Documentation charges Rs.5000, Transportation charges Rs.12,000, Port charges Rs,6000, Custom charges Rs. 12,000, Agent commission Rs. 2000, and other service charges Rs.2000. Calculate the shipping and forwarding cost of the single garment. Solution: Freight charge The total order quantity 10,000 garments Each carton box contains 150 garments. Hence total garments in a box ~67 Size of the single box = 60 cm * 40 cm * 30cm 2,000 em? = 0.072 mé The total are of the 67 boxes = 0,072 * 67 = 4.824 m' The normal fright charge for 20° container ~ Rs. 75,000 75,000 Area of the 20° container = 28 cbm, Hence, the cost of a cubie metre = = Rs. 2678.5 / m* If 1 metre cube space cost Rs.2678.5, the cost of 4.824 m' = 4.824 x 2678.5. = Rs.12,921.4, 28232 Apparel Merchandising Terminal handling charge The terminal handling, charges = Rs, 550/m! Total volume of space requited = 4.824 m! Total handing charges ~ 4.824 * $50 © Rs, 268 20, Overhead costs Other administrative overhead costs are, ie Rs, 12,000 Rs. 6000 ues Rs. 12,000 © Port char © Custom © Other servi © Agent commi Total cost Total cost = Freight cost + Terminal handling charge + Overheads 2,921.4 + 2653.20 + 5000 + 12,000 + 6000 + 12,000 +2000 +2000 = 54,574.20 The total shipment cost = Rs.54,574.60. The shipment cost of a single garment = 24574.60 _ pe 5.45, 10,000 5.7 Calculation of overall apparel manufacturing cost (Cut - Make - Trim/Pack and Shipping) This section consolidates the department wise calculation together. This will improve the understanding and this is the process use to happen in industry while the merchandiser receives the order. He / she have to estimate the cost department wise and consolidate the CMT or CMP cost of that particular garment. This cost excludes fabric cost (Yarn, processing and finishing). Consider the following example. Example 22; Develop a cost sheet for the following order specifications. Order quantity ~ 25,000, Style: Basic round neck T-shirt. Company works. one shift per day, cach garment consists of five components. Calculate the cost of a single garment. The department wise details are provided in lable 5.9.Apparel costing for merchandiser 233 Table §.9 Order details for ex Pan) [No.of | Wage | srrcriats used : Department | Hin |iatours —[amaty | Dlateriats used Cost in INR 100 pes / une tag 05 rae Cutter-6 | 250] 1 tag, H barcode / bundle | barcode Cutting 1785 Heiper—4 | 200 | Kiach component ~ 1 125 icker 100 sticker 15 swus-6 [300 | Perr" thread 35 155 j cone Sowing tom Yok s ]250 | saintape 0.5 m/ gmt |e 359 | Button - 3/ gmt Trimand— |, Trim-o [250 . . cheek gd Cheek - 12 | 350 T pouch — 6 gmt 1 pouch 3 Each gmt — I hanger T hanger — 5 Packing 2500 12 350 1 box — 3 pouch 1 box - 30 ach pouch with ~ 1 tag, | 1 tag~0.25 I barcode | bureode~ 1.0 Size of cartoon box — 80 cm x 90 cm * 50. cm. Shipping | Freight charge ~ Rs. 350 /1 Transport ~ Rs. 12,000: ICD charge ~ Rs. 4000; Commission — Rs. 1000, wet ~ 25,000 / 30 days: Rent — 20,000 / 30 day s— 124 Over head Power — 25,000 / 30 days; Ri 0,000 / 30 days; Other expenses - 12,000 130 days Profs [12% Solution: Cutting cost Step 1: Number of shifts required to complete the order. The order quantity = 25,000 garments Daily production = 1785 garments Order quantity Daily production =14 shifts Number of shifts required to complete the order: The company works one shifi per day Hence the number of days required to complete the order is 14. Step 2: Calculation of labour cost In this department six cutting masters and four helpers are involved in the work with the wage of Rs. 250 and Rs. 200 per shift Hence, the total labour cost is = (Number of labours x Total working shifts x Wages per shift)234 ~~ Apparel Merchandising (OS 280. 1) + (48200 x 14) = 21,000 + 11,200 = Rs. 32,200 Labour cost = Rs. 32,200, Step 3: Calculation of raw material cost The garment consists of five components and the order quantity is 25,000 garments, Bundles The cut components were made as bundle of 100 pieces. Fach garment has five parts. Hence, for 25,000 garments 5.8 25,000 = 1,25,000 parts. Sothe number of bundles = 425000 _ 1959 bundles. 100 Stickers # Totally 1,25,000 components were cut, Hence 1,25,000 stickers are used. The cost of the sticker = Rs.0.15 / sticker Hence, for 1,25,000 components = 1,25,000 x 0.15 =Rs. 18,750. Sticker cost = Rs.18,750. The price of tag = Rs.0.50 Total number of bundles = 1250 bundles I bundle = Itag. Therefore, for 1250 bundle = 1250 tags Price of tag = Rs.0.50 x 1250 = Rs.625. Barcode 1 bundle = Ibarcode. Therefore, for 1250 bundle = 1250 barcode Price of tag = Rs. 1.25 x 1250 = Rs.1562.5. Step 4: Calculation of total cutting cost Total cost = Labour cost + Material cost = Rs. 32,200 + Rs. 18,750 + Rs.625 + Rs. 1562.5 = Rs. 53,137.50. Sewing cost Step 1: Number of shifts required to complete the order. The order quantity ~ 25,000 garments Daily production ~ 1000 garments Order quantity — 25,000 Daily production 1000 Number of shifts required tocomplete the order= =25 shifis ‘The company works one shift per day, hence no. of days to complete the orders 25. Step 2: Calculation of labour cost The operators in this department are six single needle operators, five over lock machine operators and three flat lock machine operators.Apparel costing for merchandiser 235 Hence, the total labour cost is = (Number of labours x Total working shifts x Wages per shift) = (6 X 300 x 25) + (3 x 350 x 25) + (5 * 250 * 25) = 45,000+31,250 + 26,250 = Rs, 1,02,500, Labour cos! » 1,02,500, Step 3: Calculation of raw Sewing thread During sewing, each garment consumes 35 metres of sewing thread. Total number of garments = 25,000 3525,000 = 8,75,000 metres Normally, sewing thread for industrial usage comes in 5000 metre 8,75,000 5000 = 175 cones Cost of one cone is Rs.55.00, hence, the total cost of the sewing thread is, = 175 x35 = Rs. 9625. terial cost cones. So the number of cones required to finish the order = Satin tape During sewing, each garment consumes 0.5 metres of satin tape. Total number of garments = 25,000 = 0.5 x25,000 = 12,500 metres Cost of tape is Rs. 5, hence, the total cost of the twill tape is, = 5 « 12,500 = Rs. 62,500. Button During sewing, each garment consumes three buttons. Total number of garments = 25,000 = 3 x 25,000 = 75,000 buttons Cost of button / gross is Rs. 95; hence, the total number of button required is, _ 75,000 144 Hence the total button cos Total material cost = 9625 + 6; = 520.8 ~521 gross. 95 x 521 00 + 49,495, Rs. 49,495 Rs. 1,21,620, Step 4: Calculation of total sewing cost Total cost = Labour cost + Material cost = Rs. 1,02,500 + Rs. 1,21,620 = Rs, 224,120.236 Apparel Merchandising Trimming and checking cost Step L: Number of shifts required to complete the order. {he order quantity = 25,000 garments Daily production = 2500 garments. Number of shifls required to complete the order = OMer quantity _ 25,000 _ Daily production ~ 2500 10 shits The company works oneshifl per day, hence number of days to complete the onder is 10, Stop 2: Calculation of labour cost The operators in this department are 6 trimming personal and 12 checking personal with the wage of Rs, 250 and Rs.350,respectively. Hence, the total labour cost is (Number of labours x Total working shifts x Wages per shift) = (6 ¥ 250 x 10) + (12 x 350 * 10) = 57,000 Labour cost = Rs. 57,000. Step 3: Calculation of total cost The checking cost of the order is Rs. 57,000. Packing cost Step 1: Number of shifts required to complete the order. The order quantity = 25,000 garments Daily production = 2500 garments a ieteth Order quantity _ 25,000 Numberofshiftsrequiredtocompletethe order= Daily production production 2500 10 shifts The company works one shift per day, hence number of days to complete the order is 10. Step 2: Calculation of labour cost The operators in this department are 12 operators in pressing and packing with the wage of Rs. 350. Hence, the total labour cost is = (Number of labours x Total working shifis x Wages per shift) = (12 * 350 10) = Rs. 42,000 Labour cost = Rs, 42,000, Step 3: Calculation of raw material cost Pouch During packing, six garments packed in one pouch. Total number of garments = 2,5000Apparel costing for merchandiser 237 25,000 6 4167 pouches The cost of one pouch is Rs. 3, hence, the cost of the pouch is, 4167 § 3 = Rs12,501, Carton box Each carton box consists of three pouches. Hence, the number of mich) 3 Number of pouch required to complete the order carton box required to complete the order quantity is 1389 carton box. (on box is Rs, 30, hence, the total cost is, Tag The price of the tag is Rs. 0.25 Each pouch is tagged with the tag. Hence 4167 tags used for the order. The total cost is = Bullets The price of the bullet is Rs. 15 / 100 bullet. So, Rs. 0.15 per bullet Each garment is tagged with the tag. Hence 9550 bullets used for the order. The total cost is = 0.15 * 9550 = Rs.1432.50. Barcode stickers Cost of the small barcode sticker is Rs. 1 Each pouch consists of 1 barcode sticker. Hence the cost of the sticker is, =(1 * 4167) = Rs.4167. Hanger cost Each garment consists of onchanger. The cost of the hanger is Rs. 5 Hence, the total cost = 25,000 x 5 = Rs. 1,25,000. .25 x 4167 = Rs.1041.75. Step 4: Calculation of total packing cost Total cost = Labour cost + Material cost Rs.42,000 + (1,25,000 + 1250 + 41,670 + 1041.75 + 4167) Rs.2,15,128.75, Shipment cost Freight charge The total order quantity ~ 25,000 garments Size of the single box = 80 cm * 90 cm x 50 cm = 3,60,000 em! = 0.36 m For 1389 boxes = 0,36 * 1389 = 500.04 m*238 Apparel Merchandising The normal tivight change for Ln! = Rs,350 Hence, the cost ofa eubie metre = 380% 500,04 m!= Rs.1,75,014 Total shipping cost © 1,75,014 + 12,000 + 4000 + 1000 = Rs. 1,92,014, Overhead costs Other acninistiative overhead cost © Power Rs. 25,000 / 30 days * Rent Rs. 20,000/ 30 days © Other expen: 12,000/ 30 days (25,000+20,000+ 12,000) Overhead vost por day = 7 = Rs, 1900 / day The maximum working shifts = 25 Total overhead cost = 25 * 1900 = Rs. 47,500. Total cost of the garment The total cost = Cutting cost + sewing cost + trim and checking cost + pack- ing cost + shipment cost + overhead cost Total order cost = 53,137.50 + 2,24,120 + 57,000 + 2,15,128.75 + 1,92,014 + 47,500 = Rs. 7,88,900.25 8,900. 25,000 CMP cost of the garment = 1.56 Profit = 12% = 31.56 + {31.56 x mie 35.35 Cost of the garment with 12% profit = Rs. 35.35. Note: Here, the overheads can be calculated in two wavs, either the maximum number of working shifis can be accounted or the average working days (or shifis) of the particular order can be considered for the costing purpose. Some factories still calculate the overheads department wisewhere these overheads can be added in the individual department cost, based on department working shifts or days. For the above mentioned calculation, the maximum working shifts (sewing department shifis) are accounted. Selection of any one of the abovementioned way is based on the situation and competition in the costing process, the first and second method will make tight (exact) costing than the third method. Example 23: A company received an order with 12,500 garments of basic ladies top. Each garment consists of four components namely front, back, sleeve and collar. If the company works two shifts per day, calculate the total cost of a single garment. The department wise details are provided in Table 5.10.Apparel costing for merchandiser 239 Table 5.10 Order details for example 23 a Pdn/ | No.of | Wage z Department | ‘suite | tabours | /shift Materials used Cost in INR , 50 pes / bundle ai Cutter4 | 250 Nay 0% ; 502 ach ; Cutting, 1962 | fetper 2 | 200 J tag, each component | gyorg | sticker ae ‘Sewing thread ~ 55 m/ vLS mM sowing eta eeel lag ment 15) cone jewing ‘ roa 350 | Care label ~ 17 0.15 / label - _ garment 7 7 250 | The department re checks averagely 300 Ate 2082 350 | garments / shift and he works one shift per shee! 200 day | = | Packing, 2082 | 8 350 1 box ~ 45 Bach box ~ 1.5 metre | 5" 2 | of strap used eae Seer 2 Size of cartoon box ~ 90 cm * 90 em » 30m | Shipping _| Freight charge ~ Rs. 20,000 / 20 feet container: Transport ~ Rs. 10,000: ICD | charge ~ Rs. 6000; Commission ~ Rs. 2000 | ; Power ~ 15,000 / 26 days; Rent — 25,000 / 26 days: Other expenses ~ 18,000 | Overhead | 726 days | Profit % 15% Solution: Note:In this solution, the overhead cost calculated department wise is based on each departments working shifts and added with the department cost. Sometimes this method will increase the cost of the product/ garment. This is because few departments may work parallel at some point of time. Cutting cost Step 1: Number of shifis required to complete the order. The order quantity = 12,500 garments. Daily production = 1562 garments Order quantity _ 12500 __ Daily prodcution 1562 = 8 shifts Number of shifts required to complete the order ‘The company works two shifts per day, Hence the number of days required to complete the order is 4. Step 2: Calculation of labour cost In this department, four cutting masters and two helpers are involved in the work with the wage of Rs. 250 and Rs. 200 per shift. Hence, the total labour cost is240 Apparel Merchandising (Number of labours x Total working shifts x Wages per shift) (48 280 98) 4 (2-8 200 * 8) © 8000 + 3200 = Rs. 11,200 Labour cost = Rs, 11,200. ‘aw material cost rmMent consists OLY our components and the order quantity is 12,500 garments. Bundles. The cut components were made as bundle of $0 pieces. h garment has fourparts. Hence, for 12,500 garments 41 10 = 50,000 parts. 50,000 So the number of bundles = = 1000 bundles. Stickers * Totally 50,000 components were cut. Hence 50,000 stickers are used. The cost of the sticker = Rs.5 /50 sticker = Rs.0.10 / sticker Hence, for 50,000 components = 50,000 x 0.10 = Rs. 5000 Sticker cost = Rs. 5000. The piice of tag = Rs.0.80 Total number of bundles =1000 bundles 1 bundle =1tag. Therefore, for 1000 bundle = 1000 tags Price of tag = Rs. 0.80 x 1000 = Rs. 800. Total material cost = 800 + 5000 = 5800. Step 4: Overhead cost * Power— 15,000 / 26 days; * Rent ~ 25,000 / 26 days; © — Other expenses - 18,000 / 26 days Overhead cost / day = Rs. 2230.76. The cutting department works 4 days to complete the order. Hence, + © the total expenditure for 8 day = 2230.76 * 4 = Rs, 8923. Step 5: Calculation of total cutting cost jaterial cost + overhead cost Rs.11,200 + Rs.5800 + Rs.8923.04 = Rs.25,923.04, Sewing cost Step 1; Number of shifts required to complete the order, The order quantity = 12,500 garments Daily production = 104] garments