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Garments CM (Cost of Manufacturing) Calculation

 


In apparel trade, CM means Cost of Manufacture. It actually refers to Manufacturing Cost of 1 Dozen (12 pcs garments). To calculate Manufacturing Cost of 1 dozen garments for a specific order we’ve to know the factors below:


1. Monthly expense of factory,

2. Total running machines,

3. Machine quantity to execute the layout of mentioned order,

4. Daily (8 hour per day) productivity of the order,

5. Dollar conversion rate (if monthly expense is different from US$)


 

Suppose,

Monthly Factory Expense = 50,00,000 BDT (Bangladeshi Taka)

Working days of the month=26 days

Daily Factory Expense: 50,00,000 ÷ 26 = 1,92,307.69 BDT

(Formula: monthly factory expense ÷ working days in the month)

Total running machine quantity in factory =150

Daily Expense of 1 Machine: 192307.69 ÷ 150 = 1282.05 BDT

(Formula: daily factory expense ÷ total running machine)

Machine quantity of layout for mentioned order = 27

Daily cost for the layout: 1282.05 × 27 = 34,615 BDT

(Formula: daily expenditure of 1 machine × Machine qty of the layout)

Suppose,

Hourly production of the layout = 125 pcs

Normal daily working hours = 8 hours

So, Daily Production of the layout: 125 × 8 =1000 pcs

(Formula: hourly production of the layout × normal daily working hour)

Manufacturing cost of 1pcs: 34615 ÷ 1000 = 34.62 BDT

(Formula: daily cost of the layout ÷ daily production of the layout)

So, CM (Manufacturing Cost of 12 pcs garments): 34.62 × 12 = 415.44 BDT

(Formula: manufacturing cost of 1pc × 12)

Dollar conversion rate: 1 US Dollar = 78.26 BDT (Bangladeshi Taka).

So, CM (Manufacturing Cost of 12 pcs garments) in US Dollar: 415.44 ÷ 78.26 = 5.30 US$

20% profit will be added with CM: 5.30 × 20% = 1.06 US$

So, Final CM = 5.30 + 1.06 = 6.36 US$.

 

Written By-

Sabbir Ahmed
Merchandiser (Shrabony Knitwear Ltd.)


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