Top Banner
Costing of Apparel Products MF TECH-(08-10) NIFT, New Delhi 1 Subject name: Costing of Apparel Products An Assignment On “Cost Analysis of a Garment” Garment Type: Womens 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
16

Costing of Skirt

Mar 03, 2015

Download

Documents

mishrar
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript

Costing of Apparel Products Subject name: Costing of Apparel Products

An

AssignmentOn Cost Analysis of a Garment Garment Type: Womens Gypsy SKIRTSubmitted by: Anand Bhargava (06) Anoop Mammen (07) Abhishek Gattani (09) Sankar Chatterjee (30)

Master of Fashion Technology-II

National Institute Of Fashion Technology: New DelhiMF TECH-(08-10) NIFT, New Delhi 1

Costing of Apparel Products

Costing in Production Houses and Product DevelopmentCosting 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

2

Costing of Apparel ProductsCost 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 elementsof 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 GoodsTo 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 ProductsFirst 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 Product Name- Women Flared Gypsy Skirt Order Qty: 1000 Pcs

MF TECH-(08-10)

NIFT, New Delhi

4

Costing of Apparel ProductsProduct 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 FabricPiece 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 Width of Girth of cut pieces Length of cut pieces (cm) layer (Cm) (Cm) 1 2 3 100 100 163 206 227 287 347 372 9 30 16 16 16 16 16 9 102 102 47 105 50 87 167 95 120 105 90 87 184 95 95 95 93 119

4

MF TECH-(08-10)

NIFT, New Delhi

5

Costing of Apparel ProductsInterlining FabricPiece Name Interlining Type layer Knitted Solid dyed Width of of Girth of cut pieces Length of cut pieces (cm) layer (Cm) (Cm) 1 2 3 107 63 109

4

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 1 Style of Garment Order Qty(No) 1000 Spreading Time 17hrs Cutting Time 4.5hrs Ticketing &Bundling Time 3.5hrs

Women Long Skirt

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 ProductsSewing 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) Average bundle size=10 pcs 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 stitch60 sec (1m/c with 1 operator)

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 of cut pieces to make complete layer by lock stitch

Placing top layer under next layer on 1cm on seamStitching on 1cm across and providing gathers to match end seam

Attaching interlining and shell fabric with waist band by lock stitchSeam finish of interlining cut piece on 1cm & hem finish

Completion of attachment of layers

Finishing of waist band by putting elastic and giving top stitch

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

7

Costing of Apparel ProductsTotal Direct Labor Cost Calculation

Operation Spreading Cutting Sewer (operator) Sewer (Helper) Sewer (Floater) Finishing Ironing/Packing QC Total

Operator Number 2 1 38 7 4 2 2 2 24

AVG salary/day (Rs) 100 120 120 100 100 120 100 200

Effective operating days 3 1 3 3 3 3 3 3

Total cost (Rs) 600 120 13680 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 ProductsMarker planning for dyed fabric (Width 58)

Marker planning for dyed fabric (Width 52)

MF TECH-(08-10)

NIFT, New Delhi

9

Costing of Apparel ProductsIn 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= 0.94mtFabric Cost (Per kg of yarn) (Polyester) Yarn Weaving Dyeing (Yellow shade Only) Compaction Shrinkage 4% Profit margin of fabricator (15%) Total Rs30/Kg 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 ProductsMarker 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= 0.93mtFabric Cost (Per kg of yarn) (Polyester) Yarn Weaving Dyeing (Yellow shade Only) Printing cost (Polka dot) Compaction Shrinkage 4% Profit margin of fabricator (15%) Total Rs30/Kg 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 ProductsMarker 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= 1.26mtFabric Cost (Per kg of yarn) (poly viscose) Yarn Knitting Dyeing (Yellow shade Only) Compaction Shrinkage 4% Profit margin of fabricator (15%) Total Rs45/Kg 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 ProductsCost 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 ProductsCost sheetProduct code: Product Name:

SKR06070930 Women Flared Gypsy Skirt

Description Dyed Fabric Cost ( Including Wastage) Polka Dot printed fabric Interlining fabric CMT Sewing thread Elastic Hanger Poly Bag Cartons Overhead & Margin 20% Total

Average 0.157 0.157 0.195

Cost (Rs) 15.50 28.00 21.00 20.22 1.00 1.00 6.00 2.00 2.00 18.54 115.26

Dyed Fabric Cost (Per kg of yarn) Yarn Weaving Dyeing (Yellow shade Only) Compaction Shrinkage 4% Profit margin of fabricator (15%) Total Rs30/Kg Rs15 Rs25 Rs8 Rs3 12 Rs93

Printed Fabric Cost (Per kg of yarn) Yarn Weaving Dyeing (Yellow shade Only) Rs30/Kg Rs15 Rs25 Rs60 Rs8 Rs6 Rs22 Rs166

CMT

Cost (Rs) 0.60 0.12

Printing cost (Polka dot) Compaction Shrinkage 4% Profit margin of fabricator (15%) Total

Spreading Cutting Sewer (operator)

13.68

Sewer (Helper) Sewer (Floater) Finishing Ironing/Packing QCTotal

2.10 1.20 0.72 0.60 1.20 20.22

Interlining Fabric Cost (Per kg of yarn) Yarn Knitting Dyeing (Yellow shade Only) Compaction Shrinkage 4% Profit margin of fabricator (15%) Total Rs45/Kg Rs15 Rs25 Rs8 Rs4 Rs15 Rs112

MF TECH-(08-10)

NIFT, New Delhi

14

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 operators 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

16