Costing Function of a Garment

COSTING FUNCTION OF A GARMENT

Definition: The Costing Function is a function of input prices and output quantity. Its value is the cost of making that output given those input prices.

Pre cost:-

1. It is an estimate made before the garment is adopted in to the line
2. Fabric, trim and labour costs for each garment is calculated
3. The merchandiser / designer usually keep a record of all materials costs on a work sheet.
4. Then the costing department can roughly estimate the cost and price structure. (Normally over head cost is 30-40%)

 Final costing:- 

1. It is an exact calculation by the costing or import department
2. Using actual figures for fabric, accessories and labour cost
3. Costing department uses-

a)      Merchandiser work sheet

b)      A proto type garment

c)      Production pattern

d)     A detailed cost analysis is made for each garment the final cost is plotted on a “cost sheet”.

COSTING OF GARMENTS (IN FOB) PRICES.

Costing of a garment for example in a shirt:

1. Fabric costing

2. Garment accessories:           1. Button

2. Interlining

3. Label

4. Thread

5. Collar bone

6. Hang tag/ price tag

3. Finishing accessories:          1. Poly bag

2. Plastic clip

3. Gum Tape

4. Neck board

5. Tag pin

6. Stiker

7. Butterfly

8. Collar insert

9. Back board

10. Neck insert

11. Scotch Tape

12. PP belt

13. Carton

4. Labor charge

5. Washing charge (If it is garment wash)

6. Commercial and transportation cost.

+ 10% profit margin.

(% of profit margins is the distortion of the exporter)

ANALYSIS A COST SHEET FOR A GARMENT ORDER

1. Materials: – total amount of material × ($ 1) / yd = total price

2. Trimming: – button (BTN), thread (THD), interlining (INT), level & packing

3. Production pattern making, grading, marking, spreading and cutting

4. Assembly and finishing:- calculated the average time of operations

5. Over head cost: – salary, rent, utilities > (30- 40%)

6. Freight: – air freight / sea freight

PRICE QUOTATION FOR BUYERS

There are following process for fixation price:-

1. FOB ( free on board) :-
   1. Exporter does not bear the cost of freight of ship or air
   2. It is buyer who him self bear the freight

1. C & F ( cost & freight)
   1. Free on board + freight = c & f
   2. In this case ship or air freight is carried by the exporter while quoting price.
   3. This price a bit higher than FOB

1. CIF ( cost, insurance & freight)
   1. C& f  + insurance = CIF
   2. In this case in addition to the bearing of freight, the cost of insurance is also borne by the exporter

1. CM ( cost of making / manufacturing)
   1. Manufacturing or exporter will get only making charge of that garment
   2. Fabric, trimming and other materials is supplied by the buyer

5. CMT (cost of manufacturing and trimming)

1. Manufacture or exporter will get the  making charge and at the same time will get the trimming cost
2. Fabric is supplied by the buyer