Garment Costing: How to Calculate Garment Cost using available Information

Question:  I am a merchandising management student, I want to know how to calculate the cost of a garment using the following details.

1. Fabric consumption: 0.8 yards per garment.
2. Fabric wastage allowance 3%
3. Fabric price: $2.7per yard.
4. Total charges for insurance & fright $ 0.3 (per yard). Fabric is being ordered from Hong Kong.
5. Finance charges for fabric purchasing is 15%.
6. Trim cost: $ 1.5 per garment (excluding thread cost).
7. 5000 meter of thread cones being used for sewing, 210 meters of threads needed for a garment and the price of a thread cone is $6.
8. Garment SMV is 40.
9. Labour rate: the selling price of a minute is $ 0.03

... by OCS reader.

To calculate the cost of the garment, I will first create a table in excel sheet. Then I will calculate the material cost and labour cost.

Garment costing method

Finally, sum up all cost together to calculate the total cost of the garment. In the following, I have shown you step by step process for calculating the cost of the garment using the information provided on the above.

Step 1: Arrange information in the excel table, provided on the above problem. See the following table, where I have arranged all required information to find the final garment cost. I have given code number to each information A, B, ...J.

I added extra rows where I need to calculate something to calculate sub costs and necessary information. Like M, N, O and P.  

Step 2: Calculate total fabric consumption including wastage percentage (M)
Total fabric consumption per garment = Calculated fabric consumption (1+Wastage%)
Or M=A(1+B)

Step 3: Calculate fabric cost per garment (N): Factory has incurred a cost in insurance and freight and finance charge. I have calculated the fabric-related costs together. 

So, Fabric cost per garment (including freight and finance charge) = (M*(C+D))+(M*C*E)

Step 4: Trim cost: Total cost of the trims has been given.  

Step 5: Calculate thread cost (O): From the thread rate (unit 5000 meters) and thread consumption, thread cost per garment is calculated. 
Here thread cost per garment = G*H/5000

Step 6: Calculate labour cost per garment (P): Labor cost per garment is calculated using garment SMV (standard time) and labour cost per minute.

Labor cost per garment (P) = Garment SMV * Labor cost per minute

Step 7: Calculate the total garment cost (GC):
I have calculated all sub costs required to find total garment cost. 
Total garment cost = (Fabric cost + Trim cost + Thread cost + Labor Cost)

Total garment cost = ($2.81 + $1.50 + $0.25 + $1.20) = $5.76

Prasanta Sarkar

Prasanta Sarkar is a textile engineer and a postgraduate in fashion technology from NIFT, New Delhi, India. He has authored 6 books in the field of garment manufacturing technology, garment business setup, and industrial engineering. He loves writing how-to guide articles in the fashion industry niche. He has been working in the apparel manufacturing industry since 2006. He has visited garment factories in many countries and implemented process improvement projects in numerous garment units in different continents including Asia, Europe, and South Africa. He is the founder and editor of the Online Clothing Study Blog.

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