Garment Production Cost: Actual Cost Vs Cost Per SAM

SHARE:

One of the most important KPIs for garment manufacturing is comparison between Actual costs Vs Cost per SAM. Factories calculate these costs and compare on daily basis. The actual cost figure shows that how much money factory is paying as make up to the operators. But exactly how these measures are calculated? The different methods of calculating actual cost and garment cost per SAM has been explained in this article.

Actual Cost per Garment

1. Actual cost -1: Formula of the actual labor cost of a garment- 
Actual cost = Total Salary to be paid/Total Units Produced.
For a line, Calculate Total salary (W) to be paid on the day including direct manpower. Find total units produced (U) in shift time (output of the line). 


2. Actual cost -2: Second formula is Total salary to be paid /(Total minutes produced/SAM)

Though first method is used by most of factories, it is not true actual cost. Because, only output quantity is considered in this cost calculation, where lot of works is produced in the line as WIP. There is two main reasons why engineers prefers 1st method.

   i) It is very difficult to find how many units have been produced by individuals in a line and calculate total minutes produced in a day.

  ii) To the factory management it does not matter how much work is laid (partially stitched) in the line. How many units are completed is considered as production.

I will also suggest you, to use first method as because it simple to calculate and easy for understanding. This cost goes down day by day during learning curve. Secondly every day you will get different figures based on line output. 


Cost per SAM 

The formula used to calculate cost per SAM is Garment SAM X Cost factor. Where cost factor is per minute labor cost to the factory at factory average efficiency. Or simply instead of cost factor you can multiply Garment SAM by average labor salary per minute (which represent cost factor calculated at 100% efficiency). Whatever method you use must be clear to everyone (persons who see the report) within the factory. Cost per SAM is fixed for a style.

Cost Factor: Cost factor = Labor wages per day / (shift minute * Efficiency). E.g. Factory shift time 480 minutes, Daily operator wages INR 200.00 and factory run at 50% efficiency. Then cost factor for the factory will be 0.833.

Example: Factory Efficiency 50%, Daily wages INR 200.00 Shift time 480 minutes. See the comparison in the following table where style A and style B's Cost per SAM and actual cost have been shown. Use above formula to calculate figures.

Style
SAM
Manpower
Planned Production
Actual Production
Cost factor
Cost/SAM
Actual Cost
A
15
20
320
150
0.833
12.5
26.67
B
12
20
400
250
0.833
10
16.00




You may also like

Name

5S,3,apparel industry,56,apparel news,33,Apparel Production,30,Apparel Software,15,Bamboo Fabric,1,Bangladesh,1,Blogs,1,Books,30,Business Guides,9,Buyer,1,Buying House,4,CAD/CAM,1,Calculation & Formula,1,career,33,Change Management,1,Clothing,1,Clothing Brand,3,Compliance,3,Consumption,4,Costing,7,Cutting,17,Denim,3,Directory,3,Dyeing,1,eCommerce,1,Education,5,Event & Fair,14,Fabric,70,Fashion,5,Fashion Business,36,Fashion Design,3,Fashion Show,1,Fiber,1,Finishing,10,Garment Exporters,1,Garmenting,1,Gartex,1,Guest Post,8,Human Resource,2,Industrial Engineering,208,Infographic,5,Knitting,3,Kurti,1,Lean,27,Line layout,3,Machines,28,Manufacturing,51,Merchandising,101,MIS,23,MISC,20,Operation bulletin,14,Operator,1,Performance rating,1,PLM,2,Printing & Embroidery,11,Problem Solving,1,Production Planning,26,Project Report,1,QNA,120,Quality,61,Quality manual,2,Quality system,14,Resources,42,Retailing,3,Salary & Wages,7,Sampling,22,Scheduling,3,Sourcing,8,Spec Sheet,9,Sportswear,1,Stitching,3,Store,2,Stretch fabric,1,sustainable clothing,7,T-shirt,3,Tailor,1,Tailoring Shop,2,Technology,56,Texprocess,1,Textile processing,11,Textile testing,21,Textiles,41,Threads,1,Towel,1,Trims & Accessories,15,videos,11,Waste,1,Work Study,38,Yoga wear,1,
ltr
item
Online Clothing Study: Garment Production Cost: Actual Cost Vs Cost Per SAM
Garment Production Cost: Actual Cost Vs Cost Per SAM
http://3.bp.blogspot.com/-ZpIm_ISDhgU/T6kluLQDacI/AAAAAAAAAlQ/URVAvv2-ZXA/s200/tee%2Bshirt%2Bgarment%2Bcosting.jpg
http://3.bp.blogspot.com/-ZpIm_ISDhgU/T6kluLQDacI/AAAAAAAAAlQ/URVAvv2-ZXA/s72-c/tee%2Bshirt%2Bgarment%2Bcosting.jpg
Online Clothing Study
http://www.onlineclothingstudy.com/2012/04/garment-production-cost-actual-cost-vs.html
http://www.onlineclothingstudy.com/
http://www.onlineclothingstudy.com/
http://www.onlineclothingstudy.com/2012/04/garment-production-cost-actual-cost-vs.html
true
6551124471002606808
UTF-8
Loaded All Posts Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy