Cost Analysis in Garments Industry
Noor Ahmed Raaz
Faculty Member, Dept. of Textile Engineering,
Atish Dipankar University of Science & Technology
Email: raju.uttara105@gmail.com
Cost Analysis of Garments:
Costing is the procedure of determination of production and marketing cost of each product in the line. Costing decisions include every functional division of an industry. Pricing is the process of determination of selling price of the products that are manufactured. It is based on information given in the costing process, the value customers will place on the product, and the competition in the retail market.
Costing of garment is a very important task for a garment factory which runs for business purposes. Costing of the garments considering the raw materials expenditure, salary and wages of officers and workers, distributions and advertisement expenses etc. all direct and indirect expenses is done in this factory. Cost analysis in garments industry, as the topic implies, deals with the work of costing a garment which involves the expenses for fabric, trims, cuttings, labor, overhead, sales commission, manufacturer’s profit and transportation. It is determined by a troop of accountants with advice and consultancy of executive director.
Components of Garments Costing
Normally, the costing is prepared by considering the raw material cost, market demand, operating cost of the industry and forecasted profit of the firm and also considering the expectations of the buyer. The various elements in garment costing are
- Fabric
- Trims and accessories
- CMT (cut, make and trim) charges
- Embroidery, appliqué, printing, washing and other value added processes
- Garment testing
- Logistics and transportation cost
- Profit of the industry
Factors of Garments Costing:
The following factors are considered for costing any dyed product.
- Total dyes and chemical cost.
- Total utility cost
- Salary
- Lunch
- Entertainment cost
- Government cash incentive
- Yarn cost
- Knitting cost
- Cost of dyeing
- Cost of finishing
- Cost of cutting, sewing, accessories etc
- Cost of printing (If any)
- Labor cost (direct & indirect)
- Factory cost
- Sales and caring cost
Price of the Product:
Generally price of product is determined by the required profit adding to the total expenses. So,
Price of products = (Direct expenses + Indirect expenses + Factory Overhead) + Required profit
Conclusion:
The costing of the product is a secret matter of the garemnt industry. They are not interested to flash up the cost related data. So I could not collect the price of product and costing of the product
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Founder & Editor of Textile Learner. He is a Textile Consultant, Blogger & Entrepreneur. He is working as a textile consultant in several local and international companies. He is also a contributor of Wikipedia.
