Garments -- How to calculate the CM (Cost of Making) of a Garments?

Please consider the below points first:

* Monthly Total Expenditure of the Factory (MTE): Suppose – BDT. 5,000,000.00

This expenditure is included of the below items:

a)      Factory Rent,

b)      Commercial Cost,

c)       Electricity Bill,

d)      Water Bill,

e)      Transportation cost,

f)       Worker and Staff wages (8 hours/day – WHD),

g)      Miscellaneous cost, etc.

* Number of Running Machine of the factory (NRM) of the following month (which total expenditure need to be considered here). Suppose – 100 machines.

* Number of machine to complete the layout (NML) for the relevant item. Suppose – 25 machines.

* Hourly Production Target/Capacity (PCH) of the relevant item, excluding alter & reject. Suppose – 200 pcs.

* Total working day (TWD) of the relevant month. Suppose – 26 days.

* If the CM needs to be converted in US$ , then conversion rate (CR) would be 1 US$ = BDT. 75.00

The Formula of Cost of Making:

CM = [{(MTE / TWD) / (NRM / NML)} / (PCH x WHD)] x 12 / CR)}

The Calculation will be as below:

CM = [{(5,000,000.00 / 26) / (100 / 25)} / (200 x 8)] x 12 / 75
CM = US$ 4.81 / Dz

MTE (in BDT.)	TWD (Days)	NRM (unit)	NML (unit)	PCH (pcs)	WHD (hours)	Dozen (pcs)	CR (BDT.)	CM/Dz (in US$)
5,000,000.00	26	100	25	200	8	12	75	$4.81

But after starting the new salary scale in Bangladesh, the CM might be calculated by considering the overhead sewing machine cost as below:

* For a Non-compliance Factory:
To be considered the overhead sewing machine cost (OSMC) @BDT. 1,400 to 1,600.00 per day.

* For a Compliance Factory:
To be considered the overhead sewing machine cost (OSMC) @BDT. 2,000 to 2,400.00 per day.

So, if any factory produces any item 200 x 8 = 1,600 pcs per day by using 25 machines, then the CM will be as below:

* For a Non-compliance Factory:

  CM = {(OSMC x 25 / 1,600) x 12} / 75

  CM = {(1,600 x 25 / 1,600) x 12} / 75 = US$ 4.00/Dz

     

        * For a Compliance Factory:

  CM = {(OSMC x 25 / 1,600) x 12} / 75

  CM = {(2,400 x 25 / 1,600) x 12} / 75 = US$ 6.00/Dz

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