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Costing for T-Shirt Manufacturing

Costing for T-Shirt Manufacturing

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Published by shalabhs4u
Incudes the cost involved in manuacturing Tshirts. All the Cost are n exact figures but the allocation of cost is similar.
Incudes the cost involved in manuacturing Tshirts. All the Cost are n exact figures but the allocation of cost is similar.

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Published by: shalabhs4u on Dec 08, 2010
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04/26/2013

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T  shirt manufacturingRaw Materials required:1)
 
Dyed Cotton  This is purchased in bulk in the form of 100 m bundles from asupplier at a rate of Rs. 70 per bundle. A minimum of 2000 bundles per monthmust be bought according to the contract. Thus, this is a mixed cost. The cost of 2000 bundles per month is fixed and above that depends upon the level of production.2)
 
Neckbands  Neckbands are bought from a supplier at Rs 2 per neckband. This isa variable cost.3)
 
Labels - A supplier supplies customized labels at a rate of 1200 Labels for Rs2000. A minimum of 60000 labels must be ordered per month. Thus this is amixed cost as the cost of 60000 labels is fixed and above that it depends upon thelevel of production.4)
 
Tape/Seam binding  This is bought at Rs 3 per 15 m. Variable cost.5)
 
Elastic ± This is bought at a rate of Rs. 2 per 10m. Variable cost.
 6)
 
Thread ± 10000 reels are bought per month from a supplier for Rs. 50000. Anything above that is bought at a rate of Rs 10 per reel.
 
 Again a mixed cost.
 Processes:
1)
 
Styling
 This is done by designers, who create designs on computer using the
T-
Shirt Factory® Deluxe 3.0
software.The computers and software installation is a one-time cost.Once they have been bought, it is a sunk cost.The designers are paid a monthly salary of Rs. 10000 per head. This is a fixed cost.Initial cost of each computer = Rs. 30000Initial cost of Software for each system = Rs. 1500No. of Designers = 10No of computers = 10No. of Software licenses = 10The cost of computers and software is sunk cost.
2)
 
C
utting
F
ully automatic laser fabric cutting machines Golden Laser are used for cuttingthe fabric for the t-shirts. The cutting is done in batches for different sizes in the
 
standard t-shirt shape. The specifications are fed in the machine and the cuttingis done automatically for that batch.Cutting speed: 0-220mm/sThe machines have been rented with a fixed monthly payment of Rs. 2000 permachine and a per hour of usage rent of Rs 1. The number of hours of usagevaries with the quantity of fabric to be cut.Thus, this is a mixed cost, with a fixed as well as variable component.No. of machines used = 3
3)
 
 Ass
embling the t 
-
s
hirt (Serging,
s
ewing and
s
titching)
 Here the front and the back of the t-shirt are serged and sewed together. Sleevesare also sewed to the t-shirt and the hem is stitched. Shoulder seams are stitchedonto this.We have bought 2 sergersCapacity of 1 serger: 1600 stitches per minutePrice of 1 Serger: $221 = Rs. 11050Once bought, the cost of buying these sergers is a sunk cost.3 Sewing machines have been bought.Capacity of 1 sewing machine = 1000 stitches per minutePrice of 1 Sewing machine = $250 = Rs. 12500Once bought, the costs of buying these machines is a sunk cost.Labour is hired on a wage basis for feeding cut cloth into machine and sortingassembled t-shirts and carrying it to the next machine.Wages are paid on per batch basisWage per batch = Rs 20No. of people hired = 5This is a variable cost 
4
)
 
Attaching the neckband and label stitching  Neckbands and labels are sewn ontothe t-shirt using the sewing machines used in process 3. The finishing is alsodone using the same machine.
5
)
 
Pattern printing  This is done using a digital pattern printing machine.Capacity : 280 m/minPrice of 1 machine: $400 = Rs. 20000No. of machines bought = 2The machines once bought, this is a sunk cost.Ink needs to be refilled in the machine.There are inks of 6 basic colours which the machine mixes in different proportions to get the desired colour.Price of ink = Rs. 500 per 20 litres.The time that 20 litre lasts depends upon the quantity of production and theusage of that particular colour in the pattern being printed. Thus, this is avariable cost.The machine is connected to the computers from process 1 and is directly fed thepatterns to be printed.
6
)
 
Q
uality Control  10 people have been hired for manual quality check on amonthly salary of Rs. 3000. This is a fixed cost.

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