Calculate
the CM of a Garments.
In apparel industry, cost of making (CM) is an
important factor for garment merchandisers. As its importance in garments
industry, every merchandiser should know the actual calculation method of it.
Otherwise, factory may fall in huge loss.
Full abbreviation of CM is Cost of Manufacture.
In garments industries, CM means cost of manufacturing for 12 garments. We
must focus in below information to calculate CM (cost of manufacturing)-
·
Total monthly expenditure
(electricity bill, rent, water bill, transportation, commercial cost, worker
& stuff wages etc.) of the factory.
·
Total running machine of the
following month
·
Total no of machine quantity to
complete the layout of mentioned order items.
·
Daily (8 hours/day) production
target of the mention order items (excluding alter & reject).
·
Total working days of the
following month.
·
Dollar conversation rate (if
expenditure amount is rather then US dollar)
Suppose,
·
Total monthly factory expense-
70,00,000 BDT
·
Total running machine of the
following month is - 180 machines
·
Total working days of the
following month- 26 days
·
Daily factory expense: 70,00,000 /
26 = 269,230.77 BDT (Formula: total month factory expenses / total working
days of the following month)
·
Daily expense of 1 machine:
269,230.77 / 180 = 1495.73 BDT (Formula: daily factory expense / total
running machine of the following month )
·
Total machine quantity to complete
the layout - 18 machines
·
Daily cost of the mention order
item's layout: 18 X 1495.73 = 26,923 BDT (Formula: machine quantity to
complete layout X daily expenditure for 1 machine )
·
Hourly production quantity of
following mention order layout - 200 pcs
·
Normal daily working hours- 8
hours
·
So, daily production of the
following layout: 200 X 8 = 1600 pcs (Formula: hourly production of the
layout X daily working hours )
·
Cost of Manufacture for 1 pcs:
26,923 / 1600 = 16.83 BDT (Formula: daily cost of the layout / daily
production of the layout )
·
So, CM (Cost of Manufacture for 12
garments ): 16.83 X 12 = 202 BDT (Formula: manufacturing cost for 1 pcs X 12 )
·
Dollar conversion rate: 1USD = 78
BDT
·
So, CM (Cost of Manufacture for 12
garments ): 202 / 78 = US $2.5897
·
Need to add 20-25% profit. So,
after 20% added: $ 2.5897 + 0.5179 = 3.11 $ US
·
So, Final CM = $ 3.11 US
CM (Cost of Making):
Formula: Overhead machine cost X require machine
/ production quantity × 12
= [{ monthly factory expenditure of following month / (total working days
of the month X total running machine of the following month) X (Number of
machine to complete the layout / Production quantity of the following layout)
}]
=
[{70,00,000 / (26 X 180) X 18) / 1800)}] X 12
=
[{1495.73 X 18 / 1800}] X 12
=
14.96 X 12
=
179.49
=
$2.30 /dzn [ 1$
= 78 BDT]
= [{ monthly factory expenditure of following month / (total working days of the month X total running machine of the following month) X (Number of machine to complete the layout / Production quantity of the following layout) }]
= [{70,00,000 / (26 X 180) X 18) / 1800)}] X 12
= [{1495.73 X 18 / 1800}] X 12
= 14.96 X 12
= 179.49
= $2.30 /dzn [ 1$ = 78 BDT]
Another
Simple example of CM (Cost of Manufacture):
After starting the new salary of Bangladesh, we
calculate the CM of any items consider the overhead sewing machine cost of 1200
BDT to 1400 BDT per day. For compliance factory we calculate per day overhead
sewing machine cost of 1800 BDT to 2100 BDT.
Q. Suppose, A compliance factory per day overhead of sewing machine is 2100
BDT. Total machine quantity to complete the layout- 18 machines. Daily
production comes from one existing layout- 1800 pcs. Dollar conversion rate is
1$ = 78 BDT. Now find out the CM for 12 pcs garments?
Solution:
CM cost = Overhead of sewing machine cost X
total require machine to complete the layout / production quantity X 12
= 2100 X 18 / 1800 X 12
= 21 X 12
= 252 BDT
= $ 3.23 / dzn
[ 1$ = 78 BDT ]
=================================================================
Q. Suppose, A compliance factory per day overhead of sewing machine is 2100 BDT. Total machine quantity to complete the layout- 18 machines. Daily production comes from one existing layout- 1800 pcs. Dollar conversion rate is 1$ = 78 BDT. Now find out the CM for 12 pcs garments?
Solution:
CM cost = Overhead of sewing machine cost X total require machine to complete the layout / production quantity X 12
= 2100 X 18 / 1800 X 12
= 21 X 12
= 252 BDT
= $ 3.23 / dzn [ 1$ = 78 BDT ]
Dear All,
My post for these people, whose are still confused
regarding the CM (cost of making) of a knit items (garments). To find out the
CM of a item you must need the following 06 (six) information at first, as
listed below:
i.
i.
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
ii.
ii.
Qty of running Machine of
your factory of the following month (which total expenditure we have
consider here). Suppose - 100 machines
iii.
iii.
Number of machine to complete the layout for the
following Items (which CM we are calculating). Suppose - 25 machines
IV.
IV.
Production target/capacity of the
following items, per hour from the existing layout, excluding alter &
reject. Suppose - 200 pcs per hour
V)
V)
Total working day of the followings month,(though the
house rent, commercial expenses, machine overhauling & some
other cost remain same) Suppose- 26 days.
VI.
VI.
If you want to calculate the
CM in US$ (dollar) then pls input
present dollar conversation rate BDT Tk. Suppose - $1 = 74 taka.
Now you should put the following information in the following form, which you will get here http://cmcostofaknitgarments.blogspot.com/
Now you should put the following information in the following form, which you will get here http://cmcostofaknitgarments.blogspot.com/
Otherwise you may follow the below rule:
COST OF MAKING (CM)
= {(Monthly total expenditure of the following factory / 26) / (Qty of running Machine of your factory of the following month) X (Number of machine to complete the layout)} / [{(Production capacity per hr from the existing layout, excluding alter & reject) X 8}] X 12 / (Dollar conversion rate)
= [{(50,00,000 / 26) / ( 100 ) X (25)} / {(200) X 8}] X 12 / 74
= [{192307.7 / (100) X (25) } / 1600] X 12 / 74
= (48,076.9 / 1600) X 12 / 74
= 30.048 X 12 / 74
= 360.58 / 74
= $4.873 / dozen (this is the making cost (12 pcs) of the following items)
However, 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 $16.216 to
$18.92/per day.
Above is for a non-compliance factory. For the a compliance factory the per day machine cost will be 1800 tk to 2100 tk ( $24.32 to $28.37)
SO, if the an items produce 1600 pcs per day using 25 machines then the CM will be
= Overhead machine cost X require machine / produce quantity X 12 / $74
= 1400 X 25 / 1600 X 12 / 74
= $3.547/DOZ
Above is for a non-compliance factory. For the a compliance factory the per day machine cost will be 1800 tk to 2100 tk ( $24.32 to $28.37)
SO, if the an items produce 1600 pcs per day using 25 machines then the CM will be
= Overhead machine cost X require machine / produce quantity X 12 / $74
= 1400 X 25 / 1600 X 12 / 74
= $3.547/DOZ
Thanks By Rubel