Fabric Cutting Cost Estimation:
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Fig: Fabric cutting process in apparel industry |
Fabric Cutting Cost Calculation Method in Apparel Manufacturing Factory:
Calculate the cutting cost and rate per apparel from the following chart:
SL No.
|
Parameters
|
Quantity and Cost
|
01
|
Order quantity
|
10000pcs
|
02
|
Number of cutting master
|
5
|
03
|
Wage of cutting master
|
Rs. 200 per shift
|
04
|
Production per shift
|
2000 apparel
|
05
|
1 day
|
2 shifts (1 shift= 8hrs)
|
06
|
1 bundle
|
100pcs
|
07
|
1 bundle
|
1 tag
|
08
|
1 apparel
|
5 parts
|
09
|
1 part
|
1 sticker (1 bundle= 1 part)
|
10
|
Tag price
|
Rs. 0.50
|
11
|
Sticker price
|
Rs. 10 per 100 stickers
|
12
|
1 day
|
2 shifts
|
13
|
Power
|
Rs. 5000 per month
|
14
|
Salary
|
Rs. 50000 per month
|
15
|
Rent
|
Rs. 10000 per month
|
16
|
Other expenses
|
Rs. 15000 per month
|
17
|
Profit
|
15%
|
Solution:
To find out the actual fabric cutting cost, we have to maintain the following law:
Fabric cutting cost per apparel,
Direct material + Direct labor + Direct expense + Overhead
= …………………………………………………………….………… …. (1)
Total fabric cutting production
Total Fabric Cutting Production Calculation:
Total cutting production = 10000 apparel
Total Cutting Production Time Calculation:
Total cutting production time,
= (Total production / Production per shift)
= 10000/2000
= 5 shifts
Direct Material Cost Calculation (D.M):
In case of tag,
From the chart we get,
Tag (1 bundle= 1 tag, 1 bundle= 100 parts)
Now,
Total parts = (10000×5) = 50000 parts
Total bundle = (50000/100) = 500 bundles
Total tags = (500×1) = 500 tags
Total cost = (500 × Rs. 0.50) = Rs. 250
In case of sticker,
(From the chart, we get),
(1 part= 1 sticker)
Total parts = 50000
Total stickers = 50000
Sticker cost= {(50000×10)/100} = Rs. 5000
So,
Direct material cost stands at (Rs. 250 + Rs. 5000) = Rs. 5250
Direct Labor Cost Calculation:
Operator wage,
= Number of labor × No. of shift × operator wage per shift
= 5×5× Rs. 200
= Rs. 5000
Direct Expense Cost Calculation:
Direct expense = 0
Overheads Cost Calculation:
In power cost calculation,
= (Cost × 5 shifts) / (30days × 2 shifts in a day) = {(5000 × 5)/60} = Rs. 417
In other expenses cost calculation,
= (Cost × 5 shifts) / (30days × 2 shifts in a day) = {(15000 × 5)/60} = Rs. 1251
In salary cost calculation,
= (Cost × 5 shifts) / (30days × 2 shifts in a day) = {(50000 × 5)/60} = Rs. 4167
In rent cost calculation,
= (Cost × 5 shifts) / (30days × 2 shifts in a day) = {(10000 × 5)/60} = Rs. 834
So,
Total overhead cost stands at,
= Rs. 417 + Rs. 1251 + Rs. 4167 + Rs. 834
= Rs. 6669
Now,
From equation-01, we get,
Fabric cutting cost per kg,
(Rs. 5250 + Rs. 5000 + 0 + Rs. 6669)
= ………………………………………….…..
10000
= Rs. 1.70
After adding 15% profit,
Fabric cutting cost rate stands at
= {1.70/ (1-15%)}
= Rs. 2.00