Material Costing

“the function of ensuring that sufficient goods are retained in stock to meet all requirements without carrying unnecessarily large stocks”.

Ref: publication of the Institute of Cost and Management Accountants on Budgetary Control


• • • • • Exact quality to be ascertained no interruption price paid should be the minimum no over stocking Wastage and losses while the materials are in store should be avoided as far as possible; and • Wastage during the process of manufacture should be the minimum possible.
* information about availability of materials and stores should be continuously available so that production may be planned properly and the required materials purchased in time.


4 . or the Selective Inventory Control.Cost associated • Cost Of Purchase • Cost of keeping stocks ‘ABC’ Analysis.

• sub-stores and • departmental stores 5 .• central or main stores.

6 .The record of stores may be maintained in three forms: (a) Bin Cards (b) Stock Control Cards. (c) Stores Ledger.

cost of the loss or shortage may be treated as overheads Avoidable – (abnormal losses) should be debited to the Costing Profit and Loss Account Losses or surpluses arising from errors in documentation.Treatment of shortages in stock taking Unavoidable . 7 . posting etc.. should be corrected through adjustment entries.

INVENTORY CONTROL The main objective of inventory control is to achieve maximum efficiency in production and sales with the minimum investment in inventory. 8 .

.  Estimated cost of materials and production are the determining factors.Cost a Garment  Efficient companies cost a garment soon after the sample is completed for assistance in weighing its merit as a potential addition to the line.

about as many techniques for costing as there are individual firms. .Cost a Garment  Despite Industry looking for consistent costing methods there exist.

Staple Vs Fashion Products  What are Staple or Fashion garments  Fabric Costs increase when moving from basic/staple to fashion garments  Some trims might show very little variance in cost between staple to style  Other considerations are minimum quantities and lead times  Risks involved in fashion colors .

marketing. and manufacturing to overcome crisis  Fabric.Risks of fashion goods  Buying high fashion fabric at a premium price  Customer changing style at the last minute 50% more time spent by sales. trim carry over costs  Re-dying of trims .

Risks of fashion goods Why female gray flannel mantailored trousers have a higher retail price than comparable garments in the Men‟s department? .

but material savings of 10 cents are relatively easy to find”. . Quote: Dr.Direct Material – an Important factor For the majority of mass produced garments. material is at least 40% of the entire cost. Joseph Ludden “Engineers have to look long and hard to find a 10 cents savings opportunity in labor.

Key stoning  Key stoning establishes the Retail price by doubling the retailer’s cost.  A keystoned ten dollar garment probably bears a price tag which reads $19.  Manufacturer rather uses terms line ‘Profit Margin’ .99.

 .Dogs and Hot Numbers Most manufacturers operate somewhere between the two extremes of hot numbers and dogs therefore strive to have some rhyme and reason to their costing methods.

Essential elements of Costing process COST TO THE RETAILER 1 2 3 4 5 Factory Cost 1 2 3 GOE Profit + 4 + 5 1 + DM 2 + DL 3 Factory O/H .

.Sometimes the latter four denoted as Indirect cost are computed as percentage of the more obvious direct costs of material and direct labor………….

Elements of Material Cost      Fabric Thread Trims Accessories Packaging .

Fabric Procurement Considerations  Lead Time  Quality  Delivery  Service  Price  Order Quantity  Discounts .

quantity of bindings. is estimated Step 3 Total quantity required for a dozen garment is established . tape..How to arrive at the Cost of material. Step 1 Designer’s croquis and specification sheet is prepared A sample pattern. is estimated for single garment of one size. often called a first pattern is developed Step 2 The amount of fabric. lace and other components needed for a single size is estimated Amount of thread required per garment. Number of buttons.

• Seam margins do not exceed 3/8” in patterns for mass production but couture and custom tailored garments have generous seam margins. • Pattern measurements should first be verified to ensure that the pattern indeed does confirm in size to the specification sheet of finished garment measurements • To ensure a small percentage may be added to the pattern margins to accommodate cutting and sewing inconsistencies as a ‘manufacturing loss allowance’.Things to remember. ..

• Similar as markers.. a similar layout of patterns in in a limited representative form termed as ‘stencil’ • Inaccurate yardage estimates can be harmful to business. .Things to remember.

Quick Method of Material estimate.. the material amount may be calculated. Step 5 . Step 3 . Step 1 .An average size must be determined and then from existing sample pattern the average size should manually be produced.Representative sizes and quantities are used with the addition of a percentage for error (Say 4 %) Step 2 . . Step 4 .Any other size needed is produced by rough estimated grading.The aim is to determine area consumed by the widest and longest portions of the pattern pieces.With the preceding information and activities completed.

Step 3 – The same extra percentages may be figured. as for fabric. Step 2 – The specification chart is helpful in determining the different amounts which will be needed by different sizes.Trim estimate. .. Step 1 – Measurement or calculation of the exact amount used in the single garment.

• The buttons. • However the total cost of the garment may not vary as the method applied may invite extra time for the operator.Things to remember. • Some materials are sold in minimum quantities such as 1. 1000sets. . in order to calculate accurately the amount to cost and order.000 yds.. 100 Dozen or 10 gross. rivets and other fasteners usually remain constant for all sizes • The method for applying trims which will be used in manufacturing must be known. The cost may be accrued accordingly.

and the chances of two manufacturers arriving at the same cost for the same garment is just as unlikely as it ever was.It continues to be more art and imagination than science. Source: Garment costing – „Method or madness‟ in „Bobbin Magazine‟ .

Fabric Costing .

Fabric Costing Elements of fabric costs Value added process cost Commercial cost VAP Cost .Rate at which the fabric is selling in the marketplace. .Starts from the fiber/yarn stage and goes on till the fabric is ready. Commercial Cost .

At each stage there is finishing so that the input to the next stage ready for use and clean .VAP cost Fiber-Spinning-Dyeing-Weaving/KnittingFabric.

.Commercial cost The price at which the fabric is being sold in the market. This cost is VAP cost + Profit of the manufacturer or agent.

of colors in a print/yarn dyed fabric  Limitations of each type of fabric  Finishes / Value Addition .Fabric Costing Important to know the following:  Count/construction/weight of the fabric  Width of the fabric  Source  Quantity  The no.

Fabric Costing  Up charge for Dyeing colors  Discounts  Seconds  stock  Overruns  Consumption .

Georgette Fabric Module .Costing of Apparel Products 34 .

common 52-53” Lay Statistics Lay Height No. 35 . common 57-58"or 140 cm. of Fab Layers 4"-4.Georgette Fabric Width Range • • • 44-45" or 114 cm.5” 240-300 Handling • textured and slightly slippery hence difficult to sew. • Interweaving tissue paper or something similar keeps fabric pieces while working • Pins used with caution since georgette fabric shows pin holes.

Georgette Fabric Types of Georgette Polyester Georgette o o o o o Micro Georgette Single Georgette Double Georgette Moss Georgette Laser Georgette Viscose Georgette o 6 Kg Variant o 8 Kg Variant o 10 Kg Variant Silk Georgette o o o o o o 40 gm Variant 60 gm Variant 90 gm Variant 80 gm Variant 100 gm Variant 200 gm Variant Cotton Viscose Georgette Dobby Georgette 36 .

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