How to Calculate Stitching Cost in Apparel Industry?
How to Calculate Stitching Cost in the Apparel Industry?
Stitching is the joining process of two or more pieces of fabric together through sewing. Stitching is a process to make garments in the apparel industry. So stitching cost is the main parameter of the garment manufacturing cost. This article is about How to Calculate Stitching Cost in the Apparel Industry.
Estimation of Stitching Cost in the Apparel Sector:
Before calculating stitching cost, the responsible person must have to know some key factors of stitching cost such as apparel style, fabric types, number operations, etc. Otherwise, stitching costs will be increased which ultimately decreases the profit percentage of an apparel export order.
Stitching Calculation Method in the Apparel Manufacturing Industry:
Calculate the apparel stitching cost and costing rate from the given charts:
Chart-01:
| SL No. | Parameters | Quantity and Cost |
| 01 | Order quantity | 10000pcs |
| 02 | Production per shift | 1250pcs |
| 03 | 1 day | 2 shifts |
| 04 | Single needle lock stitch machine (SNLS) | 10 |
| 05 | Over lock machine | 15 |
| 06 | Flat lock machine | 5 |
| 07 | Total helpers | 15 (SNLS- 03, Over Lock- 10, Flat Lock- 02) |
Chart-02: (Worker wages per shift):
| Worker | SNLS | Over Lock | Flat Lock |
| Operator | Rs. 200 | Rs. 150 | Rs. 175 |
| Helper | Rs. 100 | Rs. 100 | Rs. 100 |
Chart-03:
Solution:
The below formula has to apply in stitching cost calculation.
Stitching cost per apparel,
Direct material + Direct labor + Direct expense + Overhead
= ………………………………………………………………..…… … ………….. (1)
Total stitching production
Total Stitching Production Calculation:
Total production = 10000 apparel
Total Stitching Production Time Calculation:
Total production time,
= (Total stitching production / Production per shift)
= (10000/1250)
= 8 shifts
Direct Material Cost Calculation:
In case of sewing thread,
Sewing thread cost,
= (Total production × consumed sewing thread × cost)
= {10000×60m× (40/5000)}
= Rs. 4800
In case of twill tape,
Twill tape cost,
= (Total production × consumed twill tape × cost)
= (10000×1m× Rs. 2)
= Rs. 20000
In case button,
Button cost,
= (Total production × consumed button × cost)
= {10000×4× (90/144)}
= Rs. 25000
So,
Total direct material cost stands at,
= (Rs. 4800 + Rs. 20000 + Rs. 25000)
= Rs. 49800
Direct Labor Cost Calculation:
Operator wages:
SNLS = (No. of operators × operator wage × no. of shifts) = (10× Rs. 200 × 8) = Rs. 16000
Over lock = (No. of operators × operator wage × no. of shifts) = (15× Rs. 150 × 8) = Rs. 18000
Flat lock = (No. of operators × operator wage × no. of shifts) = (5× Rs. 175 × 8) = Rs. 7000
Helper wages,
= (No. of labors × labor wage × no. of shifts)
= (15× Rs. 100 × 8)
= Rs. 12000
Total direct labor cost stands at,
= Rs. 16000 + Rs. 18000 + Rs. 7000 + Rs. 12000
= Rs. 53000
Direct Expense Cost Calculation:
Button sewing cost,
= Total production × Cost for sewing
= 10000× Rs. 2
= Rs. 20000
Again,
Re-stitching cost,
SNLS = (No. of operator × Cost × No. of shift = 3× Rs. 200×5) = Rs. 3000
Helpers = (No. of helper × Cost × No. of shift = 2× Rs. 100×5) = Rs. 1000
So,
Total direct expense cost,
= Rs. 20000 + Rs. 3000 + Rs. 1000
= Rs. 24000
Overheads Cost Calculation:
In case of power,
= (Cost × 10 shift) / (30days × 2 shifts in a day) = {(25000 × 10)/60} = Rs. 4167
In case of rent,
= (Cost × 10 shift) / (30days × 2 shifts in a day) = {(20000 × 10)/60} = Rs. 3333
In salary cost calculation,
= (Cost × 10 shift) / (30days × 2 shifts in a day) = {(150000 × 10)/60} = Rs. 25000
In case of other expense,
= (Cost × 5 shift) / (30days × 2 shifts in a day) = {(60000 × 5)/60} = Rs. 5000
So,
Total overhead cost calculation,
= Rs. 4167 + Rs. 3333 + Rs. 25000 + Rs. 5000
= Rs. 37500
Now, from equation-01,
Stitching cost per apparel,
(Rs. 49800 + Rs. 53000 + Rs. 24000 + Rs. 37500)
= …………………………………………………………..
10000
= Rs. 16.40
After adding 15% profit,
Stitching rate stands at
= {16.40/ (1-15%)}
= Rs. 19.00
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