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