Inventory, Wastage & Parameters for Fabric Costing

7/29/2019 Inventory, Wastage & Parameters for Fabric Costing

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MATERIAL CONTROL

the function of ensuring that sufficient goods

are retained in stock to meet all requirements

without carrying unnecessarily large stocks.

Ref: publication of the Institute of Cost and Management Accountants on Budgetary Control

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MATERIAL CONTROL

Exact quality to be ascertained

no interruption

price paid should be the minimum

no over stocking

Wastage and losses while the materials are in store should be avoided asfar as possible; and

Wastage during the process of manufacture should be the minimum

possible.

* information about availability of materials and stores should be continuously available sothat production may be planned properly and the required materials purchased in time.

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Cost associated

Cost Of Purchase

Cost of keeping stocks

ABC Analysis, or the Selective Inventory Control.

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central or main stores,

sub-stores and

departmental stores

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The record of stores may be maintained in three forms:

(a) Bin Cards

(b) Stock Control Cards,(c) Stores Ledger.

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Treatment of shortages in stock taking

Unavoidable - cost of the loss or shortage may be treated asoverheads

Avoidable(abnormal losses) should be debited to theCosting Profit and Loss Account

Losses or surpluses arising from errors in documentation, posting

etc., should be corrected through adjustment entries.

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INVENTORY CONTROL

The main objective of inventory control is to

achieve maximum efficiency in production and

sales with the minimum investment in

inventory.

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Cost a Garment

Efficient companies cost a garment soon after thesample is completed for assistance in weighing its

merit as a potential addition to the line.

Estimated cost of materials and production are the

determining factors.


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Cost a Garment

Despite Industry looking for consistent

costing methods there exist, about as many

techniques for costing as there are individual firms.


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Staple Vs Fashion Products

What are Staple or Fashion garments

Fabric Costs increase when moving from

basic/staple to fashion garments

Some trims might show very little variance in

cost between staple to style

Other considerations are minimum quantities

and lead times

Risks involved in fashion colors


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Risks of fashion goods

Buying high fashion fabric at a premium price

Customer changing style at the last minute 50%

more time spent by sales, marketing, andmanufacturing to overcome crisis

Fabric, trim carry over costs

Re-dying of trims


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Risks of fashion goods

Why female gray flannel mantailoredtrousers have a higher retail price thancomparable garments in the Mens

department?


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Direct Material an Important factor

For the majority of mass produced garments,material is at least 40% of the entire cost.

Quote: Dr. Joseph Ludden

Engineers have to look long and hard to find

a 10 cents savings opportunity in labor; butmaterial savings of 10 cents are relativelyeasy to find.


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Key stoning

Key stoning establishes the Retail price bydoubling the retailers cost.

A keystoned ten dollar garment probably bears aprice tag which reads $19.99.

Manufacturer rather uses terms line Profit Margin


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Dogs and Hot Numbers

Most manufacturers operate somewhere

between the two extremes ofhot numbers and

dogs therefore strive to have some rhyme and

reason to their costing methods.


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Essential elements of Costing process

+ +

++

1 34 52

1 2 3 4 5

1 2 3

Factory Cost GOE Profit

DM DL Factory O/H

COST TO THE RETAILER


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Sometimes the latter four denoted asIndirect cost are computed aspercentage of the more obvious direct

costs of material and direct labor.


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Elements of Material Cost

Fabric

Thread

Trims

Accessories

Packaging


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Fabric Procurement Considerations

Lead Time

Quality

Delivery

Service

Price

Order Quantity Discounts


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How to arrive at the Cost of material..

Step 1

Designers croquis and specification sheet is prepared

A sample pattern, often called a first pattern is developed

Step 2

The amount of fabric, is estimated for single garment of one size.

Number of buttons, quantity of bindings, tape, lace and othercomponents needed for a single size is estimated

Amount of thread required per garment, is estimated

Step 3

Total quantity required for a dozen garment is established


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Things to remember..

Pattern measurements should first be verified toensure that the pattern indeed does confirm in sizeto the specification sheet of finished garmentmeasurements

To ensure a small percentage may be added to thepattern margins to accommodate cutting and sewinginconsistencies as a manufacturing loss allowance.

Seam margins do not exceed 3/8 in patterns formass production but couture and custom tailoredgarments have generous seam margins.


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Similar as markers, a similar layout of patterns

in in a limited representative form termed as

stencil

Inaccurate yardage estimates can be harmful

to business.


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Quick Method of Material estimate..

Step 1 - Representative sizes and quantities are used with theaddition of a percentage for error (Say 4 %)

Step 2 - An average size must be determined and then fromexisting sample pattern the average size should manually be

produced.Step 3 - Any other size needed is produced by rough estimated

grading.

Step 4 - The aim is to determine area consumed by the widestand longest portions of the pattern pieces.

Step 5 - With the preceding information and activitiescompleted, the material amount may be calculated.


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Trim estimate..

Step 1 Measurement or calculation of the

exact amount used in the single garment.

Step 2 The specification chart is helpful in

determining the different amounts which will

be needed by different sizes.

Step 3 The same extra percentages may be

figured, as for fabric.


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The buttons, rivets and other fasteners usuallyremain constant for all sizes

The method for applying trims which will be used inmanufacturing must be known, in order to calculate

accurately the amount to cost and order. However the total cost of the garment may not vary

as the method applied may invite extra time for theoperator.

Some materials are sold in minimum quantities suchas 1,000 yds, 1000sets, 100 Dozen or 10 gross. Thecost may be accrued accordingly.


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It continues to be more art andimagination than science, and thechances of two manufacturers arriving

at the same cost for the same garmentis just as unlikely as it ever was.

Source: Garment costing Method ormadness in Bobbin Magazine


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Fabric Costing


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Fabric Costing

Elements of fabric costs

Value added process cost

Commercial cost

VAP Cost- Starts from the fiber/yarn stage and goes ontill the fabric is ready.

Commercial Cost- Rate at which the fabric is selling inthe marketplace.


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VAP cost

Fiber-Spinning-Dyeing-Weaving/Knitting-

Fabric.

At each stage there is finishing so that the

input to the next stage ready for use and clean


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Commercial cost

The price at which the fabric is being sold in

the market.

This cost is VAP cost + Profit of the

manufacturer or agent.


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Fabric Costing

Important to know the following:

Count/construction/weight of the fabric

Width of the fabric Source

Quantity

The no.of colors in a print/yarn dyed fabric Limitations of each type of fabric

Finishes / Value Addition


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Fabric Costing

Up charge for Dyeing colors

Discounts

Seconds

stock

Overruns

Consumption


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Georgette

Fabric

Module - Costing of Apparel Products 34


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Georgette Fabric

44-45" or 114 cm. common

57-58"or 140 cm. common

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Width Range

Lay Statistics

Lay Height 4"-4.5

No. of Fab Layers 240-300

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textured and slightly slippery hence difficult to sew.

Interweaving tissue paper or something similar keeps fabric pieces while

working

Pins used with caution since georgette fabric shows pin holes.

Handling


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Georgette Fabric

o 40 gm Variant

o

60 gm Varianto 90 gm Variant

o 80 gm Variant

o 100 gm Variant

o 200 gm Variant

Types of GeorgettePolyester Georgette

Viscose Georgette

Silk Georgette

Cotton Viscose Georgette

Dobby Georgette

o Micro Georgette

o Single Georgette

o Double Georgette

o Moss Georgette

o Laser Georgette

o 6 Kg Variant

o 8 Kg Variant

o 10 Kg Variant

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Inventory, Wastage & Parameters for Fabric Costing

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