How to Find Labor Cost for Garment Manufacturing Using Work Measurement Data?

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Direct labor cost calculation method from garment SAM.

Question: Explain how we would use work measurement data in garment costing. ... asked by Nishani Snajana.
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Time study data is known as work measurement data. From time study we calculate standard time (SAM) for various activities. In garment production jobs are called as operations.

Using work measurement data you can estimate only direct labor cost of garment making. Other cost parts of the total garment cost such as factory overheads and material costs need to be calculated separately. Here I will show you how to use work measurement data to find labor cost.

Please note cutting cost and finishing labor cost have not been included here. These costs are considered as factory overheads. I am not saying that you can’t measure work content of cutting and finishing operations. You can also measure direct labor cost for these sections.

Procedure to calculate labor cost

Step#1. Measure garment SAM:
First, calculate garment sewing wok content in standard minutes. You can use Time Study method or synthetic data for calculating standard minute of the garment sample.

If you are new to calculate garment SAM, read this post “How to calculate SAM of a Garment Operation

So, you know how to get garment sewing SAM.

To calculate labor cost, you need additional information such as
  1. Daily labor wages (You can take actual data)
  2. Line efficiency
Step#2. Calculate Daily labor wages:
Calculate minimum labor wages of your region or check with your human resource (HR) department for daily wages of skilled labors (sewing operators). From the daily wages, calculate per minute labor cost.
Let's say daily labor wages is USD 4.0 and
Calculated per minute labor cost is 4.0/480 = USD 0.00833.
(Considering shift time is 8 hours, which is equal to 480 minutes)

Step#3. Calculate Line Efficiency:
Calculate line efficiency of your sewing lines.
If you know the efficiency of your sewing lines, use those data.
Let's say one line is running at 50% efficiency. We will use this data for labor cost calculation.

Use following formula to calculate direct labor cost per garment

Labor cost per garment = (Garment SAM X Labor cost per minute)/ Line Efficiency%
Example: Let's say your product SAM is 20 minutes. Line efficiency and Labor wages of skilled labors are as the above.

Therefore direct labor cost of the garment

= US$ (20 X 0.00833)/50%

= US$ 0.3333 (or equal to Indian Rupees 18.00)

Also See: Garment CM (cut and make) cost estimation using SAM or SMV

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Online Clothing Study: How to Find Labor Cost for Garment Manufacturing Using Work Measurement Data?
How to Find Labor Cost for Garment Manufacturing Using Work Measurement Data?
Direct labor cost calculation method from garment SAM.
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