How to calculation CM in Garments industry ?

CM stands “Cost of Making”. Cost of making is very common word in garment sector because we get order from buyer based on CM. It depends on direct & indirect cost of making of a product. If cost of making of a product is expensive then CM will be high & cost of making of a product is low then CM will be less. So, we should carefully calculate CM of a garment otherwise we may face huge loss. According to this garments industry, we want to know accurate CM calculation in the following way.

We will apply two methods of CM calculation.

1. Mathematical method.
2. Operation Breakdown Method by SMV.

Before CM calculation we have to know below important notes

1. Total factory monthly expenditure. Like as factory rent, utilities bill, commercial charge, transport, worker & staff wage etc.
2. Total Number of machine in the factory.
3. Total number of machine for a garments layout.
4. Production target as per layout of a garment.
5. Per month total working hours.
6. Per day total working hours.

1. Mathematical method.

We know CM formula in the following

CM = Overhead machine cost X require machine / produce quantity per day of a specific style

Overhead machine cost=Monthly total expenditure / (26 X running machine of a factory on that month

Example:

If overhead machine cost is $23 & required machine (60 machines) as per layout of a particular garment. Per day production output 1200 units then what will be CM?

CM= ($23 X 60 / 1200)
= $1380/1200
= $ 1.15

=$1.15X12(if we consider per doz)

=$13.80/dz

2. Operation breakdown method by SMV

We will calculate CM in the following way.

CM=SMVX Labor cost per minute

As we know,

Labor cost per minute=Total salary of the labors in a month / Actual minute worked in a month.

Example:

If a basic pant produced by 19 minute & labor cost is $ 0.08 then what will be CM.

Here given,

SMV=19 minute

Labor cost=$0.08

CM=SMVX Labor cost per minute

CM=19x$0.08

CM=$1.52(100% efficiency)

If we consider per dozen then

CM=$1.52×12

CM=$18.24

So, CM will be $18.24

 

Md.Mahbub-Ul Islam

RMG Consultant & Researcher