Fabric Cutting Cost Estimation:
Fabric Cutting Cost Calculation Method in Apparel Manufacturing Factory:
Calculate the cutting cost and rate per apparel from the following chart:
Solution:
To find out the actual fabric cutting cost, we have to maintain the following law:
Fabric cutting cost per apparel,
Direct material + Direct labor + Direct expense + Overhead
= …………………………………………………………....………… …. (1)
Total fabric cutting production
Total Fabric Cutting Production Calculation:
Total cutting production = 10000 apparel
Total Cutting Production Time Calculation:
Total cutting production time,
= (Total production / Production per shift)
= 10000/2000
= 5 shifts
Direct Material Cost Calculation (D.M):
In case of tag,
From the chart we get,
Tag (1 bundle= 1 tag, 1 bundle= 100 parts)
Now,
Total parts = (10000×5) = 50000 parts
Total bundle = (50000/100) = 500 bundles
Total tags = (500×1) = 500 tags
Total cost = (500 × Rs. 0.50) = Rs. 250
In case of sticker,
(From the chart, we get),
(1 part= 1 sticker)
Total parts = 50000
Total stickers = 50000
Sticker cost= {(50000×10)/100} = Rs. 5000
So,
Direct material cost stands at (Rs. 250 + Rs. 5000) = Rs. 5250
Direct Labor Cost Calculation:
Operator wage,
= Number of labor × No. of shift × operator wage per shift
= 5×5× Rs. 200
= Rs. 5000
Direct Expense Cost Calculation:
Direct expense = 0
Overheads Cost Calculation:
In power cost calculation,
= (Cost × 5 shifts) / (30days × 2 shifts in a day) = {(5000 × 5)/60} = Rs. 417
In other expenses cost calculation,
= (Cost × 5 shifts) / (30days × 2 shifts in a day) = {(15000 × 5)/60} = Rs. 1251
In salary cost calculation,
= (Cost × 5 shifts) / (30days × 2 shifts in a day) = {(50000 × 5)/60} = Rs. 4167
In rent cost calculation,
= (Cost × 5 shifts) / (30days × 2 shifts in a day) = {(10000 × 5)/60} = Rs. 834
So,
Total overhead cost stands at,
= Rs. 417 + Rs. 1251 + Rs. 4167 + Rs. 834
= Rs. 6669
Now,
From equation01, we get,
Fabric cutting cost per kg,
(Rs. 5250 + Rs. 5000 + 0 + Rs. 6669)
= ………………………………………....…..
10000
= Rs. 1.70
After adding 15% profit,
Fabric cutting cost rate stands at
= {1.70/ (115%)}
= Rs. 2.00
Cutting department is one of the most important departments in clothing manufacturing factory.
Fabric cutting cost estimation has great impact in the total cost of
apparel manufacturing. So, to know this calculating method is mandatory
for the persons related with apparel production.
Fig: Fabric cutting process in apparel industry 
You may follow:
Fabric Cutting Cost Calculation Method in Apparel Manufacturing Factory:
Calculate the cutting cost and rate per apparel from the following chart:
SL No.

Parameters

Quantity and
Cost

01

Order quantity

10000pcs

02

Number of cutting
master

5

03

Wage of cutting master

Rs. 200 per shift

04

Production per shift

2000 apparel

05

1 day

2 shifts (1 shift=
8hrs)

06

1 bundle

100pcs

07

1 bundle

1 tag

08

1 apparel

5 parts

09

1 part

1 sticker (1 bundle= 1
part)

10

Tag price

Rs. 0.50

11

Sticker price

Rs. 10 per 100
stickers

12

1 day

2 shifts

13

Power

Rs. 5000 per month

14

Salary

Rs. 50000 per month

15

Rent

Rs. 10000 per month

16

Other expenses

Rs. 15000 per month

17

Profit

15%

To find out the actual fabric cutting cost, we have to maintain the following law:
Fabric cutting cost per apparel,
Direct material + Direct labor + Direct expense + Overhead
= …………………………………………………………....………… …. (1)
Total fabric cutting production
Total Fabric Cutting Production Calculation:
Total cutting production = 10000 apparel
Total Cutting Production Time Calculation:
Total cutting production time,
= (Total production / Production per shift)
= 10000/2000
= 5 shifts
Direct Material Cost Calculation (D.M):
In case of tag,
From the chart we get,
Tag (1 bundle= 1 tag, 1 bundle= 100 parts)
Now,
Total parts = (10000×5) = 50000 parts
Total bundle = (50000/100) = 500 bundles
Total tags = (500×1) = 500 tags
Total cost = (500 × Rs. 0.50) = Rs. 250
In case of sticker,
(From the chart, we get),
(1 part= 1 sticker)
Total parts = 50000
Total stickers = 50000
Sticker cost= {(50000×10)/100} = Rs. 5000
So,
Direct material cost stands at (Rs. 250 + Rs. 5000) = Rs. 5250
Direct Labor Cost Calculation:
Operator wage,
= Number of labor × No. of shift × operator wage per shift
= 5×5× Rs. 200
= Rs. 5000
Direct Expense Cost Calculation:
Direct expense = 0
Overheads Cost Calculation:
In power cost calculation,
= (Cost × 5 shifts) / (30days × 2 shifts in a day) = {(5000 × 5)/60} = Rs. 417
In other expenses cost calculation,
= (Cost × 5 shifts) / (30days × 2 shifts in a day) = {(15000 × 5)/60} = Rs. 1251
In salary cost calculation,
= (Cost × 5 shifts) / (30days × 2 shifts in a day) = {(50000 × 5)/60} = Rs. 4167
In rent cost calculation,
= (Cost × 5 shifts) / (30days × 2 shifts in a day) = {(10000 × 5)/60} = Rs. 834
So,
Total overhead cost stands at,
= Rs. 417 + Rs. 1251 + Rs. 4167 + Rs. 834
= Rs. 6669
Now,
From equation01, we get,
Fabric cutting cost per kg,
(Rs. 5250 + Rs. 5000 + 0 + Rs. 6669)
= ………………………………………....…..
10000
= Rs. 1.70
After adding 15% profit,
Fabric cutting cost rate stands at
= {1.70/ (115%)}
= Rs. 2.00