How to Calculate Raw Material Cost for Garments?
Material cost is the major cost component of a garment manufacturing costs. A correct cost calculation method will give you better projection of garment cost for
a style. In this article how to calculate direct materials cost have been explained in details. Raw materials
required for making a garment is sourced from suppliers. Main materials
are like fabric, labels, sewing thread, hang tags, trims etc. So to have correct material
cost you must have price knowledge of each item. Steps used for material costing are –
- Preparation of material requirement sheet
- Material price listing
- Preparation of material cost sheet
Prepare material requirement sheet
List down all items required and calculate
consumption per unit for all materials to be used in garments.
For an example, let
you are going calculate material cost for a polo shirt. To make polo you need
knitted fabric – Single jersey/pique, cuff and collar rib. Sourcing of knitted
fabric can be done three ways
-
You can
directly purchased dyed fabric or
-
You can
source yarn, knit fabric and process the knitted fabric as per your requirement
or
-
Purchase
dyed yarn and knit.
Let you will
purchase yarn and get knitting and dyeing processes done by job workers. To go
through this process collect the pricing list of different types of yarn (or at
least for the yarn that you will purchase for your product), knitting cost,
knitting loss%, dyeing cost per kg and process loss% from suppliers.
Material Price listing
Collect material price quote for all the material you need to purchase
from different vendors. Prepare database for the current market price of raw
materials.
For example here is
one Price List
Yarn: The
costs for different yarns are –
20s Combed – Rs.105/kg
30s Combed – Rs. 115/kg
50s Combed – Rs.140-145/kg
2/60s Combed – Rs.200/Kg
2/60s dyed yarn – Rs.420/Kg dark
shade
Knitting cost:
For Single Jersey – Rs.15/kg
For Rib
- Rs.18/kg
For Interlock -
Rs. 30-35/kg
Knitting loss: 2%
Dyeing cost: Rs.
80/kg for dark shades
Process loss (Dyeing): 6%
Fabric cost: Ready to use fabric cost is calculated using basic
calculation as shown in the following table. Cost of the knits fabric is represented in price per Kg.
Shell
Fabric
|
Collar/Cuff
|
|
Fabric
Description
|
2/60s single jersey
|
2/60s rib
|
Yarn
cost (Rs.)
|
200.00
|
200.00
|
Knitting
cost (Rs.)
|
18.00
|
20.00
|
Knitting
loss (2%)
|
4.36
|
4.40
|
Processing
cost (Dyeing) (Rs.)
|
80.00
|
80.00
|
Processing
loss (6%) (Rs.)
|
18.14
|
18.26
|
Cost
per Kg
|
Rs. 320.50
|
Rs. 322.66
|
Fabric Consumption: Next step is to find requirement of fabric for the polo. Suppose for
this polo shirt you need shell fabric 0.32 Kg and Ribs for cuff and collar
0.080 Kg. Read how to calculate fabric consumption for a knitted garment to
know fabric consumption calculation.
Prepare material Cost Sheet
Once you find fabric cost and fabric consumption prepare material cost
sheet including all other material required to make a garment ready for sale.
An example of material cost sheet has been shown below.
Items
|
Consumption
|
UOM*
|
Rate (Rs.)
|
Amount (Rs.)
|
Remarks
|
|
1
|
2/60s single jersey
|
0.32
|
KGs
|
320.5
|
102.56
|
|
2
|
Cuff and collar ribs
|
0.08
|
KGs
|
322.66
|
25.81
|
|
3
|
Sewing thread
|
159
|
Meters
|
4
|
approx.
|
|
4
|
Buttons
|
3
|
Gross
|
2
|
approx.
|
|
5
|
Main label
|
1
|
Unit
|
1
|
approx.
|
|
6
|
Care label
|
1
|
Unit
|
1
|
approx.
|
|
7
|
Hang Tags
|
1
|
Unit
|
3
|
approx.
|
|
8
|
Price Tags
|
1
|
Unit
|
2
|
approx.
|
|
9
|
Poly bags
|
1
|
Unit
|
1
|
approx.
|
|
10
|
Kimble
|
1
|
Unit
|
0.5
|
approx.
|
|
Total Cost
|
142.87
|
*UOM - Unit of measure
So, Total fabric cost is Rs. 128.37 and including other
material costs total cost of the material for making this Polo Rs. 142.87
