Cost Calculation:

This part provides a first overview of cost of the products, so that we can make better decisions in
later. For this purpose, these two different versions of the product are calculated. Cost calculation is
an important factor in production and determines the first impression of the price of a product which
is included with the costs of the material, the labour, finishing and manufacturing.

Frist Product Variation (t-shirt):

Before going to the calculation, we must identify the major parts of a knitted T-shirt. A knitted T-shirt
consists of the body parts (front + back), Sleeve (left + right) and Armhole (left + right) which must
count during consumption making.

Figure: Different parts of a basic t-shirt

Fabric Description:

Fabric Design S/J knit

Fabric GSM 180
Fabric Composition 100% Recycle Polyester
Table: Fabric description

Material Costing:

Final
Title Value-1 Unit-1 Value-2 Unit-2 Final Unit
Value
Part dimension; {(body length+
sleeve length)*(half 1.1 m 0.85 m 0.935 m2
chest+armhole)}; (m*m)
Fabric areal weight 180 g/m2 180 g/m2
Fabric weight/part 0.17 kg/part

Yarn Cost (75D/72F,Recycled

3.4 Euro/kg 3.4 Euro/Kg
polyester)
1.1 Fabric cost/part Cost*weight 0.57 Euro/part

Part dimension (for lining fabric) 0.35 m 0.25 m 0.09 m2

Lining Fabric areal weight 140 g/m2 140 g/m2
Lining Fabric weight/part 0.01 kg/part
Yarn Cost for lining fabric
3.8 Euro/kg 3.80 Euro/Kg
(60D/24F, Recycled polyester)
1.2 Lining Fabric cost/part Cost*weight 0.05 Euro/part

Sewing Thread 140 m 6.5 Euro/Kg

Sewing Thread Count 40 tex count: g/1000 m
Sewing Thread weight/part 0.006 kg

1.3 Sewing Yarn Cost/part 0.04 Euro/part

Sum of materials cost 0.67 Euro/part

Material overhead 35 % 0.23 Euro/part

Total Material Cost 0.90 Euro/part
Table: Material Costs First Product Variation (Source: Own illustration, 2023)

Labour Cost:

Final
Title Value-1 Unit-1 Value-2 Unit-2 Final Unit
Value
parts/
Serial production 100000 100000 parts/year
year
Fabric m2 0.935 m2/part 93500 m2/year
For Circular Knitting Machine
Diameter 30 inch 0.76 m
R.P.M 20 20
Courses per cm 15 0.15 per m
Wales per cm 20 0.2 per m
Machine Gauge 28 28
Feerder per course 1 1
No of feeders 96 96
(R.P.M*No of Feeder)/(Course per
Knitting length 76.8 m/hr
cm*Feeder per course)
(π*Machine Dia*Machine Gauge)/Wales
Knitting width 1.32 m
per cm
Production per day 8 hrs per day 810.68 m2/day
Total production day 115.33 day
Labour cost for 1 machine, 6
months
Personal costs per year 43000 Euro/year
(Personal costs per year/ 12 months) = 1 Euro/
Personal costs month 3583.33
PM month
a) Knitting 4 PM
b) Make up & Miscellaneous 2 PM
Labour cost 6 months 21500 Euro
Labour costs per parts 0.22 Euro/Part
Overhead Labour cost 50 % 0.11 Euro/Part
Knitting Labour cost 0.33 Euro/Part

For Garmenting
Sewing machine R.P.M 1500 1500
Seam length 50 inch 50 inch
Stitch per inch (SPI) 10 10
Machine cycle time (SPI*Seam length in inch)/ Machine R.P.M 20 sec
Labour cost for 1 machine, 6
months
Personal costs per year 64000 Euro/year
(Personal costs per year/ 12 months) = 1 Euro/
Personal costs month 5333.33
PM month
a) Cutting 1 PM
b) Sewing 3 PM
c) Make up & Miscellaneous 2 PM
Labour cost 6 months 32000 Euro
Labour costs per parts 0.32 Euro/Part
Overhead Labour cost 60 % 0.19 Euro/Part
Garmenting Labour cost 0.51 Euro/Part

Knitting labour cost + garmenting labour

Total Labour cost 0.84 Euro/Part
cost
Table: Labour costs First Product Variation. (Source: Own illustration, 2023)

Finishing Cost:

Final
Title Value-1 Unit-1 Value-2 Unit-2 Final Unit
Value
Hydrophobic finishing costs-
based on weight (Regular + 14 Euro/kg 14 Euro/kg
Silicon)
Weight of one part 0.17 kg 0.17 kg
Finishing cost per part Weight per part*finishing cost per kg 2.38 Euro/Part
Table: Finishing Costs First Product Variation. (Source: Own illustration, 2023)

Product Cost Price:

Final
Title Value-1 Unit-1 Value-2 Unit-2 Final Unit
Value
Manufacturing costs (material+labour+finishing) 4.12 Euro/Part

Overhead Research &

35 % 1.44 Euro/Part
Development
Overhead Marketing 30 % 1.24 Euro/Part
Overhead Administration 35 % 1.44 Euro/Part
Sum of Overhead (=contribution
4.12 Euro/Part
margin)

Product Cost Price 8.24 Euro/Part

Table: Product Cost Price First Product Variation. (Source: Own illustration, 2023)

Second Product Variation (Shoes):

A shoe has different parts like upper part, sock liner and sole. The upper part consists with numbers
of component. During cost calculation of shoe, we consider one pair of shoes.

Figure: Different parts of a shoe.

Figure: Different components of upper part.

Material Costing:

Final
Title Value-1 Unit-1 Value-2 Unit-2 Final Unit
Value
Part dimension (upper part);
0.57 m 0.37 m 0.21 m2
(m*m)
Fabric areal weight 330 g/m2 330 g/m2
Fabric weight/part 0.07 kg/part
Yarn Cost (300D/144F,Recycled
3.2 Euro/kg 3.2 Euro/Kg
polyester)
1.1 Fabric cost/part Cost*weight 0.22 Euro/part

Shoe lace (0.80 meter) 1 piece

1.2 Shoe lace cost 0.06 Euro/piece

Euro/
1.3 Tongue 1 piece 0.4 0.4 Euro/piece
piece

Euro/
1.4 Heel support cost 1 piece 0.3 0.3 Euro/piece
piece

Eyelet 12 pieces
1.5 Eyelet cost 13 Euro/ 1000 pieces 0.16 Euro/part

Part dimension (for 100% recycle

polyester non woven lining 0.38 m 0.28 m 0.11 m2
fabric)
Fabric areal weight 110 g/m2 110 g/m2
Fabric weight/part 0.01 kg/part
Fabric cost 0.4 Euro/m2
1.6 Lining fabric cost/part Cost*Part dimension 0.04 Euro/part

Euro/
1.7 Sock Liner cost/part 1 piece 0.35 0.35 Euro/part
piece

Euro/
1.8 Sole 1 piece 0.9 0.9 Euro/part
piece

1.9 Adhesive material 30 g/part 12 Euro/kg 0.36 Euro/part

Sewing Thread 40 m 6.3 Euro/Kg

Sewing Thread Count 50 tex count: g/1000 m
Sewing Thread weight/part 0.002 kg
1.10 Sewing Yarn Cost/part 0.013 Euro/part

1.11 Decorative & miscellaneous

0.8 Euro/part
material

Sum of materials 3.60 Euro/part

Material overhead 60 % 2.16 Euro/part

Total Material Cost 5.77 Euro/part

Material Cost/Pair 11.53 Euro/pair

 Table: Material Costs Second Product Variation. (Source: Own illustration, 2023)

Labour Cost:

Final
Title Value-1 Unit-1 Value-2 Unit-2 Final Unit
Value
parts/
Serial production 160000 80000 pairs/year
year
Labour cost for 1 machine, 6
months
Personal costs per year 58000 Euro/year
(Personal costs per year/ 12 months) = 1 Euro/
Personal costs month 4833.33
PM month
a) Upper part Cutting 1 PM
b) Upper components Sewing 1 PM
c) Upper part & Sole Assembly 3 PM
c) Make up & Miscellaneous 2 PM
Labour costs of PM 7 PM 33833 Euro
Labour costs per pair 0.42 Euro/Pair
Overhead Labour cost 55 % 0.23 Euro/Pair
Labour cost 0.65 Euro/Pair
Table: Labour costs Second Product Variation. (Source: Own illustration, 2023)

Finishing Cost:

Final
Title Value-1 Unit-1 Value-2 Unit-2 Final Unit
Value
Hydrophobic finishing costs-
based on weight (Regular + 15 Euro/kg 15 Euro/kg
Silicon)
Fabric areal weight (Base) 0.14 kg/pair 0.14 kg/pair
Fabric areal weight (Lining) 0.02 kg/pair 0.02 kg/pair
Total areal weight of fabric 0.16 kg/pair
Finishing cost per pair Weight per pair*finishing cost per kg 2.44 Euro/Pair
Table: Finishing Costs Second Product Variation. (Source: Own illustration, 2023)

Product Cost Price:

Final
Title Value-1 Unit-1 Value-2 Unit-2 Final Unit
Value
Manufacturing costs (material+labour+finishing) 14.62 Euro/Pair

Overhead Research &

20 % 2.92 Euro/Pair
Development
Overhead Marketing 22 % 3.22 Euro/Pair
Overhead Administration 30 % 4.39 Euro/Pair

Sum of Overhead (=contribution

10.53 Euro/Pair
margin)

Cost Price 25.15 Euro/Pair

Table: Product Cost Price Second Product Variation. (Source: Own illustration, 2023)