MO8 Perform Job Estimate and Costing

Fashion design
Level –III
Based on March 2022, Curriculum Version 1
MODULE TITLE: performing job estimate and costing

MODULE CODE: IND FAD3 M080322
NOMINAL DURATION: 50 Hours
October, 2023
Addis Ababa, Ethiopia
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Author/Copyright October 2023
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LMC production October 2023
Table of Contents
Acknowledgment..............................................................................................................................................iii
Introduction........................................................................................................................................................1
Unit one: factors of a garment in fashion industry.............................................................................................4
1.1. Identify factors to be considered when costing a garment for the fashion industry................................4
1.1.2. OHS Factors consideration fashion products costing......................................................................5
1.1.3. Most common OHS problem in Garment industry:.........................................................................6
1.1.5. Factors Affecting Costing:...............................................................................................................7
1.1.6. Components of Apparel Costing:..................................................................................................7
1.2 Market forces that affect costing for fashion industry are identified....................................................11
1.2.1. Factors Affecting Garment Costing or Factors:-............................................................................12
1.2.2. Global fashion industry..................................................................................................................13
1.2.3. Market demand for fashion labels..................................................................................................13
1.2.4. Product Analysis and Demand Analysis for Fast Fashion Brands:................................................14
1.2.5. Selecting and Documenting the Products for Fast Fashion............................................................14
Self-check .1.............................................................................................................................................15
Unit two: Cost in fashion products..................................................................................................................18
2.1. Costs of fabric and trims for sample garments and production are estimated.......................................18
2.1.1. Costs of Fabric................................................................................................................................18
2.1.2. Trims, Thread, Buttons, Zippers and other accessories..................................................................19
2.2. Compare Similar garments from different price points within fashion industry...................................19
2.3. Hidden costs in sample production are identified..................................................................................21
2.3.1. Prevent hidden costs from harming the profitability of your company?........................................23
2.4. Differences in costs for sample and bulk production garments are explained......................................23
2.4.1. Main Factors that Affect Garment Costing....................................................................................24
3. The more complex your samples are to make the more they will cost to sample!..............................26
4. Using the manufacturers 'Stock Fabrics' is always cheaper!................................................................26
2.4.2. Bulk production..............................................................................................................................27
2.4.3. Types of cost factors in garment productions.................................................................................28
Self-check.2..............................................................................................................................................36
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Unit three: calculating labor costs involved in fashion product production.....................................................38
3.1. Calculating labor cost for sample and bulk garment production...........................................................38
3.1.1. Procedure to calculate labor cost....................................................................................................39
3.2. Identifying and comparing different methods of utilizing labor in fashion industry............................47
3.2.1. Different Garment Costing Methods:-.......................................................................................47
3.2.2. Types of services given in garment industries................................................................................52
Self -check 3.............................................................................................................................................53
Unit Four: Developing costing sheets to industry standards...........................................................................55
4.1. Identifying components of fashion industry costing sheets...................................................................55
4.2. Developing costing sheets to meet fashion industry standards.............................................................57
4.3. Completing costing sheets for sample garments Cost sheet..................................................................58
4.4. Using cost sheet to develop quotation for bulk production...................................................................60
].................................................................................................................................................................64
Self-check 4..............................................................................................................................................64
References:.......................................................................................................................................................65
List of figures
Figure 1: Affect Garment Costing....................................................................................................................24
Figure 2:group costing.....................................................................................................................................25
Figure 3: Affect Garment Costing....................................................................................................................26
Figure 4: trims costing and sourcing................................................................................................................29
Figure 5: washing cost......................................................................................................................................30
Figure 6:dry costing.........................................................................................................................................30
Figure 7: wet wash or chemical cost................................................................................................................31
Figure 8:print cost and sourcing......................................................................................................................32
Figure 9: Embroidery Costing & Sourcing.....................................................................................................32
Figure 10:cost of making (CM)........................................................................................................................33
Figure 11: Testing parameter of costing...........................................................................................................34
Figure 12: commercial charge.........................................................................................................................34
Figure 13:mode of shipment.............................................................................................................................35
List of tables
Table 1: Cost of the knits fabric is represented in price per Kg.......................................................................50
Table 2:fabric consumption..............................................................................................................................52
Table 3: Format of Garment Costing Sheet.....................................................................................................59
Table 4: COST SHEET.....................................................................................................................................60
Table 5: quotation cost sheet in the fashion industry.......................................................................................63
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Acknowledgment
I would like to express my heartfelt appreciation and gratitude to the representatives of LMC
staff instructors, the department head of textile and garment, and the respective LMC College
for providing me with this opportunity to contribute to the Teaching, Training, and Learning
Materials (TTLM).
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Introduction
Apparel costing in the garment manufacturing process is one of the most important and critical procedures.
Garment costing method is called the heart of ready-made garment business. Because profit depends on
proper costing. There are many things that go into pricing a single piece of garment. A costing sheet makes
the job of garment costing easier and faster. Because a well-designed costing sheet will help to trace all
details of costing. So become a less chance to miss any particular costing items. Normally merchandiser and
the top management of a company are actively involved in deciding the cost of a garment
In a business, cost is the amount of money that is spent on the production or creation of a garment.
From a seller’s point of view, cost is the amount of money spent to produce a product. If sellers sold
their goods at the same price as they cost to produce, then they would break even.
This means that they would not lose money on their sales, but their company would not make a profit
either. Cost does not include a mark-up for profit.
As a result, the price refers to the cost of a product from the buyer's perspective. This is the amount charged
by the seller for a product, and it includes both the cost of making the product and the mark-up cost added by
the seller to generate a profit. The garment can be priced by adding the manufacturing cost plus an estimated
mark-up or profit percentage. In fashion manufacturing, costing means the process of estimating and then
determining the total cost of producing a garment or item. it generally includes raw material cost,
construction of the garment, trims, packaging, shipping and operating expenses and manpower, among
others. The cost of the garment is calculated by adding the costs of various raw materials, the company's
operating costs, and the expected profit. It is also necessary to understand the buyer's pricing expectations.
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Cost in fashion design; in this module assists to attain the learning objectives stated in the cover page.
Specifically, upon completion of this Learning Guide,
You will be able to The Concept of:-
 Cost of a Garment (cost of fashion design).

 OHS Cost in fashion design products.
 Market forces that affect costing for fashion industry.
 Estimate Costs of fabric, trims, and sample garments.
 Identified Hidden costs in sample production.
 Understand costs for sample and bulk production garments.
 Calculate Labor costs of sample and bulk production.
 Methods of utilizing labor in fashion industry.
 Components of fashion industry costing sheets are identified.
 Costing sheets are developed to meet fashion industry standards.
 Costing sheet is completed for a sample garment.
 Costing sheet is used to develop quotation for bulk production.
 This module covers the units:-

 Cost factors of a garment in fashion industry
 Cost in fashion products
 calculate labor costs in fashion production
 Developing costing sheets to industry standards
Learning Objective of the Module:-
 Understand Cost factors of a garment for the fashion industry.
 Identify Cost in fashion products

 Know how to calculate labor costs in fashion production.
 Understand developing costing sheets to industry standards.
Module Instruction
For effective use this modules trainees are expected to follow the following module instruction:
1. Read the information written in each unit
2. Accomplish the Self-checks at the end of each unit

Unit one: Factors of a Garment in Fashion Industry
This unit is developed to provide you the necessary information regarding the following content
coverage and topics:
 Factors to be taken into consideration when costing fashion products are identified
according to OHS practices.
 Market forces that affect costing for fashion industry are identified
This unit will also assist you to attain the learning objectives stated in the cover
page. Specifically, upon completion of this learning guide, you will be able to:
 Factors to consider costing fashion product
 Observe OHS requirements
1.1. Identify factors to be considered when costing a garment for the fashion industry
Introduction;

The price of a garment product depends on the all cost incurred to make it available for selling.
Whenever we talk about the garments product costing, we have to consider all costs related to that
product acquired or production. As merchandisers are responsible to negotiate with the buyers for
selling the product, they need to calculate/ costing by considering several factors of garment costing.
Basically, merchandisers have to calculate cost on a lot basis, and lot size may vary from company to
company or factory to factory.
Remember one thing is that all expenses of a factory related to the product must be included in costing.
As cost is the main determinant of product price for this reason at the time of costing in the apparel
industry more importance is given by the respective parties. After determining the cost, merchandisers
contact with the potential buyers for getting orders and negotiate about the price of garments.
Costing in Apparel Industry:

What is apparel costing? Why it is important in apparel export business? How do we evaluate the cost?
These are the most basic and essential questions to be asked while dealing with the subject of apparel
costing. This article details the steps used in the apparel costing process.
Costing is the procedure of determination of production and marketing cost of each product in the line.
Costing decisions include every functional division of an industry. Pricing is the process of
determination of selling price of the products that are manufactured. It is based on information given in
the costing process, the value customers will place on the product, and the competition in the retail
market.
Apparel costing is an essential and very important job for apparel merchandiser. Proper costing and
negotiation is very important in apparel export business. Costing of the apparel and textile product is a
complex problem, it involves numerous number of activities associated with each product. The
technique and methods to be used for ascertainment of cost vary from unit to unit depending upon the
nature of the industry, type of the product, method of production and the meaning or the sense in which
the term cost is used. Under the circumstances of untainted contest, the supply and demand of the
particular product decides the cost/price of the product. In the apparel business sector, product pricing
is the responsibility of the manufacturer. An industry’s success is mostly decided by the top

management’s perception of the company’s cost structure, the market, pricing options and source of
profit.
1.1.2. OHS Factors consideration fashion products costing.
 Safety standards: Ensuring that the materials and production processes used in creating the
fashion products meet safety standards to protect the health and well-being of workers and
consumers.
 Worker protection: Taking into account the costs associated with providing a safe and healthy
working environment for employees, including necessary safety equipment, training, and
insurance.
 Compliance with regulations: Considering the costs of complying with relevant occupational
health and safety regulations and standards, such as providing proper ventilation, fire safety
measures, and ergonomic workstations.
 Risk assessment: Conducting risk assessments to identify potential hazards in the production
process and factoring in the costs of implementing measures to mitigate those risks.
 Worker compensation: Considering the costs associated with workers' compensation insurance
and any potential claims resulting from workplace injuries or illnesses.
 Health and wellness programs: Factoring in the costs of implementing health and wellness
programs for employees, such as regular medical check-ups, counseling services, or ergonomic
assessments.
 Training and education: Considering the costs of providing ongoing training and education to
employees on occupational health and safety practices, as well as any necessary certifications
or licenses.
 Sustainability practices: Taking into account the costs associated with implementing
environmentally friendly practices, such as waste management systems, energy-efficient
technologies, or sourcing sustainable materials.
 Quality control: Considering the costs associated with maintaining quality control measures to
ensure that the fashion products meet safety standards and customer expectations.
 By considering these factors during the costing process, fashion companies can ensure that they
are not only pricing their products accurately but also prioritizing the health, safety, and well-
being of their workers and consumers.
1.1.3. Most common OHS problem in Garment industry:
A lack of awareness of occupational risks- particularly those associated with long-term exposure was
identified as an issue in all four Vision Zero Fund case studies. Garment manufacturing is often the
first formal job of workers, and therefore many workers are inexperienced in how to use the equipment
and are unlikely to have gained OSH knowledge prior to entering the job market.
Insufficient training;-is also a common issue, in areas ranging from fire-safety and machine safety
training in Myanmar to chemical and OSH officer training in Ethiopia.

Occupational health; services do not exist or have very limited capacities across Vision Zero Fund
countries.
Financial capacity; to invest in OSH improvement is limited. This factor was identified in all Vision
Zero Fund case studies. Profit margins in garment manufacturing are low for all firms, which makes
the cost of investing in OSH improvement particularly challenging for smaller firms, subcontractors
and non-exporters, who often have the lowest profit margins
1.1.4.What is Garment Costing Classification of Garment Costing

From the customer’s perspective, the costing of the apparel, which is often termed the ‘price of a
apparel’, is the price paid by the customer to own a apparel, which includes the mark-up and margin.
The received money is distributed upstream to the supply chain accordingly. The supplier is always
willing to reduce the cost of production operations and the whole supply chain in order to impact the
profitability positively.
So, practically the price of a garment is always higher than the cost to make the apparel, for the sake of
generating profit. The price of a garment is decided based on what revenue a company wants to
generate so that after paying expenses a company can earn a reasonable profit. Therefore, it is an
elementary requirement to know the cost and factors impacting cost by the manufacturer in order to set
a price for the finished apparel.
1.1.5. Factors Affecting Costing:
Since costing impacts directly on profitability, so it is decided carefully considering many factors. If
the product is new and first in the market, then the company may achieve a first-mover advantage and
set the retail price higher, as opposed to when the product becomes generic the companies will have to
reduce the prices. The factors affecting apparel costing are given below.
 Brand recognition: Popular brands can be sold at a higher price due to brand
acknowledgement and popularity.
 Nature of apparel: The quality of the merchandise will decide its price and mark-downs.
 Market pressure: Competition in the market is a major driving force behind the price decision.
One company out of two, selling the same product will not be able to set the price higher;
otherwise they will be out of the market.
 Supply and demand: In the case of low demand and high supply, the prices are to be lowered,
and vice versa.
 Other costs: Inventory control, storage cost, pilferage cost, handling cost, alteration cost,
delivering cost, etc. will also be an input in deciding the final price of merchandise.
1.1.6. Components of Apparel Costing:
Normally, the costing is prepared by considering the raw material cost, market demand, operating cost
of the industry and forecasted profit of the firm and also considering the expectations of the buyer.
The various elements in apparel costing are:
 Fabric
 Trims and accessories
 CMT (cut, make and trim) charges
 Embroidery, appliqué, printing, washing and other value added processes
 Apparel testing
 Logistics and transportation cost
 Profit of the industry.
Components of Apparel Costing: The cost accounting structure is normally planned by cost centers;
hence, the unit costs for every operation can be estimated. Manufacturing costs comprise all the
expenditures that are involved in the production of a final product. These costs are called ‘cost of
goods manufactured’ on the income statement. Manufacturing costs are split up into three parts such as
raw material cost, direct labor cost and factory overhead.
Raw materials like fabric, sewing thread and trim are called direct variable costs. Direct labor costs in
most of the apparel units comprise wages of supervisors and employees who work on an incentive,
piece rate or hourly wage basis. Factory overhead includes both variable and nonviable indirect
manufacturing costs. Factory overhead costs are exclusive to each industry; however, they are normally
subdivided into (1) indirect labor, (2) factory occupancy costs and (3) other overhead.
Indirect labor includes quality control, service personnel, material handlers, maintenance workers,
industrial engineers and security. The job of these persons is vital to efficient production of a product
line. Nonviable factory tenancy costs comprise rent, depreciation, insurance, property taxes and
security. Machine parts and repairs and needles are examples of variable factory costs and other
overhead costs include machinery and equipment costs, materials management and cost of compliance
with regulations.

General working cost/expenses or administrative overhead are indirect costs that incorporate the costs
of working the offices and all departments that are not directly concerned with the working of the
industry but are important to the operation of the firm. Cost centers such as the accounting department,
computer programming, management information systems, secretarial and clerical staff, personnel
office, design and merchandising, marketing and sales and management could be considered as part of
administrative overhead.
Stages of Costing: Costing could be carried out at various stages of production, like
 Preliminary or pre costing, which is carried out during product development before samples are
made.
 Final costing, which is done before the production and price fixing.
 Re costing is done where there is a change in machinery, production processes, materials or
apparel components.
 Actual costs are determined during production.
Preliminary Costing: The preliminary costing could be useful for the fashion product manufacturers,
who can use it in the development stage to come to a conclusion of whether the fashion design
developed by the designers is reproducible and merchantable within the established cost range.
Generally, it provides only a rough assessment of costs of manufacturing a specific apparel style based
on determination of raw materials cost as well as labor costs of previously produced similar styles.
Costing at this early phase of development of product is especially crucial for the manufacturer because
of the wider range of ideas the designer could use

2.CostEstimating;-
Cost estimating, which is done just prior to price setting and production, requires a detailed analysis of
apparel components and the specific assembly procedure for each style. Cost estimating determines the
expected investment in materials, direct labor and overhead required to produce a single unit of a style.
It requires more detail and greater accuracy than preliminary costing. Costing at this stage is based on
production samples and standard data.
3.materialcosting:-
Direct costs of fabric, trim and materials for a particular product are based on estimates arrived in the
process of sample manufacturing. The initial step in materials costing is to estimate the yardage and
materials required for the production of one apparel. Industries with computerized design systems use
the data entered for each product to estimate the required fabric yardage for a single apparel. Other
direct materials costs like inspecting and shading of fabrics are figured on a per yard basis.
Materials costs are influenced by the rate of utilization and it relies on quantity of material, which is
used compared to the total purchased. Poor use can originate from inadequately engineered designs,
inconsistent widths, imprudent cutting etc. Many industries have setup benchmarks for fabric
utilization.
4. Labor Costing: The time is the origin of production standards and labor costing and hence it should
be determined beforehand if it can be controlled and managed. A production standard reveals the
normal time necessary to finish one operation using a particular method that will give predictable
quality. Production standards are set up as a measure of productivity of labor and operators under
standard conditions. Production standards aid to develop consistency of an operator and to discover the
most cost-effective method of production.
Production standards used for estimation of labor costing are generally based on work measurement
techniques such as predetermined time (PMTS), standard data and time studies. The time values are
normally expressed in terms of standard allowed minutes (SAM). An operation breakdown represents
the complete list of all the sequence of operations involved in sewing a specific apparel style. Each

operation is recorded in the sequence in which it will be performed along with SAM of every
operation. The costing of each operation has to be done independently and could be then converted to
dollars per unit. In the apparel industry which gives hourly wages to the operators, production could be
based on production standards representing what an operator is anticipated to finish in a definite period
of time.
While estimating the direct labor cost, the production standard stipulates the SAM to finish one cycle.
The direct labor cost could be estimated by multiplying the quantity or volume that could be produced
in one hour and base rate and divided by the actual quantity produced in an hour. The certain
percentage of benefits like insurance, sick leave and vacations should be added to the above cost.
Machine time is regularly determined separately from handling time which is almost the same when an
operation is done. But, the total of time required to complete a line of stitching differs with the seam
length, stitches per inch (SPI) and the machine speed. The stitching time may be calculated by taking
into account the time variations that may occur with the stitching process.
…………………………….. seam length x stitches per inch
SAM for stitching = ————————————————————–
…………………………………..machine speed (rpm)
5.Re-costing:- Re-costing is determined after apparels are put in the production line and the working
patterns are developed. At this stage, alterations could be done to cut down the fabric and sewing time.
In a few circumstances, the pattern maker could normally advise an increase in costs in order to
improve the quality level.
6. Actual Costs: Actual costs are estimated by the collection of information from the production
department. After a particular style has reached the assembling section, an industrial engineer could
face some rates that are too tight and that more time is needed to complete specific operations. If a rate
adjustment is required, it will certainly influence the costs.

1.2 Market forces that affect costing for fashion industry are identified
Determination of price of a product is an important function of a marketing manager. Price of a product
is influenced by the cost of product and services offered, profit margin desired, prices fixed by the rival
firms and government policy. A sound pricing is an important factor for selling the products to the
customers. The price policy of a firm should be such that it attracts all types of customers of different
means. A good price policy helps in determining the varieties of a product to be made or procured to
satisfy the demands of various kinds of customers. Once the garment is manufactured it is subjected to
be sold in the market. The market may be the same as where it was manufactured or in another part of
the world. Nowadays, due to price competitiveness, normally the garments are manufactured in one
part of the world and sold somewhere else. So after the garment is manufactured in a company, various
other types of costs are involved or added before being sold to the final customer. Pricing of the
garment can be done by manufacturing cost (CM) added with estimated mark-up or profit % to it.
1.2.1. Factors Affecting Garment Costing or Factors:-
Garment pricing decisions most closely relate with regard to the image that is being put forward to
consumers. Most people perceive a relationship between price levels and quality, though not always a
linear one. Usually, the expectation is that, high quality goes with high prices and low prices reflect
low quality or possibly out-of date or out-of-season clothing.
Since pricing or costing impacts directly on profitability, so it is decided carefully considering many
factors. If the product is new and first in the market, then the company may achieve a first-mover
advantage and set the retail price higher, as opposed to when the product becomes generic the
companies will have to reduce the prices in costing sheet. There are main two factors which has
considerable effect on garment pricing. Such as-
External factors influencing pricing decisions
Internal factors influencing pricing decisions
A. External factors influencing pricing decisions:

The nature of competition in the particular market

Joint or related demand for products
The nature of the product
Other members of the distribution channel
Government policy and legislation
B. Internal factors influencing pricing decisions:

The ability to control costs
Other elements of the marketing mix
The product range.
Top 6 factors which directly affecting price of fashion:

1. Brand recognition: Popular brands can be sold at a higher price due to brand acknowledgement
and popularity.
2. Nature of garment: The quality of the merchandise will decide its price and mark-downs.
3. Garment size;- Size specification is an important point for garments costing or pricing. After
receiving an order, a garment merchandiser must confirm the correct size specification given by the
buyer with order.
4. Market pressure:-Competition in the market is a major driving force behind the price decision. One
company out of two, selling the same product will not be able to set the price higher; otherwise they
will be out of the market.
5. Supply and demand;-In the case of low demand and high supply, the prices are to be lowered, and
vice versa.
6. Other costs:-Inventory control, storage cost, pilferage cost, handling cost, alteration cost, delivering
cost, etc. will also be an input in deciding the final price of merchandise.
1.2.2. Global fashion industry
The global fashion industry is dependent on ever-changing trends that keep consumers, driven by the
need to wear the latest. However, this means that goods have a short shelf life, requiring
manufacturers, designers and retailers to meet tight production schedules and distribution deadlines.
This also gives trendsetters, such as celebrities, key roles in successful marketing and promotions. In a

global marketplace, the fashion industry is highly competitive. Though manufacturing is carried out in
developing countries of Asia and Africa due to cheap labor, China is claiming a majority stake by
offering quality goods at cheaper prices. The fashion industry is no longer solely dependent on retail
stores for sales due increase in opportunities for retail sales through e-commerce, which allows buyers
to shop and purchase online. Marketing and promotion also are expanding with the growth of such
media trends as social networking and use of technologies such as mobile devices and smart phone
applications, which allow for shopping anywhere. Product branding is an important part of gaining
recognition and customer loyalty. This segment of the market, promoted by designers and fashion
models, is among the most visible. It also presents greater challenges for lesser known product lines
[3].
1.2.3. Market demand for fashion labels
Demand forecasting in the fashion industry involves predicting future demand for fashion products
such as clothing, accessories, and footwear. This is typically done by analyzing historical sales data,
consumer behavior, market trends, and other factors that influence demand.
1.2.4. Product Analysis and Demand Analysis for Fast Fashion Brands:
1. Questionnaires and Surveys

Apart from the fashion weeks that season, TV programs, and latest movie star trends, another popular
way to do product and demand analysis for fashion brands is through surveys. Often, fast fashion is
targeted at the younger population and through multiple online and offline surveys, data are collected.
A survey about fast fashion was included in the research paper ‘’Consumer Behavior Characteristics in
Fast Fashion” by Tina Yinyin Wang. She collected data from real-time fashion shoppers and analyzed
their income, frequency of fast fashion shopping, occupation, etc. In this study, she established a
pattern between the beliefs and feelings of the buyers and how they impacted their attitudes and buying
patterns.
2. Forecast by Fashion Influencers

In the last decade, social media has gained extensive popularity. Social media influencers play a huge
role in influencing the buying decisions of fashion enthusiasts. They follow the latest fashion trends
and their followers are always influenced by the brands they endorse. Fashion houses need to study the
trends of these social media fashion influencers and quickly come up with corresponding designs that
will fly off the shelves.

3. Using Technology Judiciously
Predictive artificial intelligence (AI) tools are used to create improved fashion forecasts. Data from
various fashion portals and magazines are collected and churned by data scientists to come up with
more accurate predictions.
Ret reviews is one such application that helps fashion brands to monitor their markets, target audience
behavior, and competition with the click of a button.
1.2.5. Selecting and Documenting the Products for Fast Fashion
There are some of the methodologies which the fashion houses adapt to be at the top for fast fashion
items. The selection of the materials, design, documentation, etc. needs to take place at lightning speed.
1. Robust Supply Chain Since the prediction and demand for fast fashion rises and diminishes very
quickly, fashion houses need not waste too much time on sample batch creation and advertising. They
must focus on the speedy acquisition of raw materials like fabrics, buttons, and other accessories,
designing, and production. Fast fashion should reach the retail stores and online portals as quickly as a
trend picks up, as they have a very short demand curve.
Having a centralized distribution unit for fast fashion items will shorten the time taken for delivery.
2. Develop Designs In-House

Since fast fashion will pick up the trend fast and go out of fashion even faster, the fashion houses do
not have much time to research the designs and fabrics. It is a good idea to have a trend-setting in-
house fashion designing team that will have a quick turnaround of the designs. Documenting the right
products on the e-commerce portal too is a daunting task. There should be in-house fashion writers
who can quickly write the product descriptions for these fast fashion apparel.
3. In-House Manufacturing
For bulk production, most of the time the apparel manufacturing is outsourced. However, for fast
fashion, the fashion houses cannot take that risk. Since the items are produced in small batches, they
rely on in-house manufacturing to avoid any kind of delays.
4. New Products Twice Per Week

Your designing and production teams need to be quick enough to launch new designs at least twice a
week for fast-fashion apparel. Demand analysis plays a vital role here.
Brands, such as Forever 21, Zara, and Gap, focus a lot on fast fashion and release new products twice a
month.
5. Communication Upward from Stores
In fast fashion, demand analysis is done using the pull system. That means the feedback from the
customers is passed on to the designing teams directly from the stores and customer service teams of
the online portal.
6. Avoid Leftovers

If the demand analysis is done correctly for the fast-fashion items, then there will be fewer
requirements for organizing end-of-season sales for the leftover items. This helps in increasing
profitability and since new trends will pick up every month, the idea is to finish off the old stock before
the new one arrives.
7. Little to No Advertising
Since the fast-fashion trends will keep rapidly changing, fashion houses do not waste time and money
conducting advertisement campaigns for the products. The money saved is used to ensure fast
designing and production lines created for these clothing lines.
Self-check .1
PART I
Say true If the statement is correct and false if the statement is not correct
1.The price of a garment product depends on the all cost incurred to make it available for selling.
2.Worker protection is not the costs associated with providing a safe and healthy working environment
for employees.
3.Actual costs are estimated by the collection of information from the production department.
4.Pricing of the garment can be done by manufacturing cost (CM) added with estimated mark-up or
profit % to it.
5.Preliminary or pre costing in fashion industry which is carried out during product development after
samples are made.
Part II
Match from: columns:- A To B columns
1.The nature of competition in the particular A.Internal factors influencing pricing
market. decisions
2. Popular products can be sold at a higher B. Garment sizes

price.
3. an important point for garments costing C. Market demand for fashion labels.
or pricing.
4.Direct costs of fabrics trims and threads D. External factors influencing
for particular product. pricing decisions

5. predicting future demand for fashion E. Material costing
products
F. Brand recognition
H. Market pressure
Part III
Choose the best answers for the following questions.
1. What is apparel costing?
A. Apparel costing is the process of determining the production and marketing costs of each garment
in a line.
B. It involves calculating all expenses related to the production of the garment,
C. It including materials, labor, overhead costs, and any other expenses incurred.
D.ALL
2. Why is apparel costing important in the apparel export business?
A.because it helps determine the profitability of each garment
B. To ensure that the selling price covers all costs associated with production.
C. To help in setting competitive prices in the retail market.
D. making informed decisions about pricing, budgeting, and overall profitability.
E. All
3. How do we evaluate the cost in apparel costing?

A. The cost in apparel costing is evaluated by considering all expenses related to the production of the
garment.
B. Only by calculating the cost of materials, such as fabric, trims.
C. Disrespect of the benefits for workers involved in the production process.
D. Exclusive Overhead costs, such as factory rent, utilities, and administrative expenses.
4. The External factors influencing pricing decisions in fashion industry?

A.The nature of competition in the particular market
B. Joint or related demand for products
C. The ability to control costs
D. The product range.
E.A and B
f.None
5. The requires of a detailed analysis of apparel components and the specific assembly procedure for
each style is …..? A. Cost Estimating B. Material costing C. labor cost D. Actual costing E.
Re-costing
6. Which one is not an element of costing in apparel manufacturing industry?
A.CMT (cut, make and trim) charges B. Market pressure C. Logistics and transportation cost D.
Fabric.
7. Which one of the following are not the factors affecting apparel costing?
A. Brand recognition B. Nature of apparel C. Apparel costing test D. Supply and demand

Part VI
List out and explain
1. Product Analysis and Demand Analysis for Fast Fashion Brands
2. Stages of Costing
3. Factors Affecting Garment Costing or Factors.
4. Common OHS problem in Garment industry.
Unit two: Cost in fashion products.

2.1.Estimating cost of fabric and trims for sample garments
2.2.Comparing same garments with different price point and production
2.3.Identifying hidden costs in sample production.
2.4.Explaining the difference in costing of sample production and bulk garment production.
2.4.1. Types of cost factors in garment productions
2.1. Costs of fabric and trims for sample garments and production are
estimated.
2.1.1. Costs of Fabric

Fabric is generally the most significant factor in the costing of a garment. Fabric accounts for 60 to
70% of the total cost of basic-styled garments. The parameters that affect the fabric cost:
UOM: Unit of Measurement (UOM) is a standard measurement that is used. The UOM for woven
fabric is normally in meters or yard.
MOQ: Fabric Minimum Order Quantity (MOQ) is nothing but the smallest quantity of a product that a
fabric manufacturer can supply.
Order quantity: The cost of fabric may depend on the order quantity. This depends on the type of fabric
required and fabric manufacturer capacity along with negotiation between fabric buyer and supplier.
Incoterm used: This factor makes a huge difference in fabric cost. While importing the fabric from
another country merchandiser needs to deal with the supplier for delivery of the fabric on the basis of
incoterms like EXW, FOB, CIF, DDP etc. based on which it will be decided who covers the cost of
transportation and risk.
Other parameters that affect the fabric cost, they are also called the value added services:
Weaving or knitting cost;
Dyeing cost.
2.1.2. Trims, Thread, Buttons, Zippers and other accessories
Apart from main fabric garment construction include other materials like trims, buttons, thread,
zippers, elastics, etc. Their quality and quantity affect the cost of the garment. The size, shape, and
material used in trims like zippers, buttons, and labels also sum up the cost of making a garment.
Labels and Packaging the cost of labels depends on size and material you are choosing, in mass
production the amount of labels ordered plays a significant role too. The cost of poly bags and cartons
used for shipping is highly dependent on thickness, dimension and raw material used. The cost of
packaging is equally important as it gives a significant difference when we consider the whole order
quantity. Hand tags or price tags are used as packing material, the cost of hand tags are dependent upon
material used, printing on it, and MOQ (Minimum Order Quantity)
Cost of making;-The cost of making is based on the total cost per hour multiplied by the number of
hours it takes to make the style and divided by the number of units produced if the making is done by a
contractor. The contractor adds profit on to this amount. Shipping and Logistics Cost Whether you're

sourcing in your own country or abroad, the transport logistics of your goods from the factory to your
warehouse imply additional costs. These are usually known as freight and shipping.
Profit of the organization. This is basically what you earn when you sell your garment. This amount
includes your own pay, helps your business stay afloat and invest into developing new styles. Other
expenses come up with the amount that helps you pay the bills like rent, employees’ salaries, and
utilities and include it in the cost of your final product.
2.2. Compare Similar garments from different price points within fashion
industry
Off-Price
Low priced merchandise. This price range includes samples, close-outs, discontinued, previous season
and irregulars. Also known as: Discount. Retailers include: T.J. Maxx, Marshalls, Burlington Coat
Factory.
Budget this is the lowest price classification in which one would find advertised brand names. Prices
are below average. Promotion of this price range to consumers is often based on value. Fast Fashion
retailers such as H&M fit in this category.
Mass Market. This approach is based on volume sales, you will, no doubt, impede competition but
also produce low profit margins.
Moderate
Medium priced merchandise a step above budget. This is the price classification that most goods fall
into. Labels like Joie, Free People, Jessica Simpson, and Van Heusen for Men fall into this category.
The majority of Children’s wear falls into this category. You should be able to match competitor’s
prices, build a market position and produce reasonable profit margins. In general this will be extremely
difficult given the small quantities a start-up will be dealing with and the cost of an in-house or
independent sales rep.
Better
Medium to higher priced merchandise. These products are slightly higher profile lines that are found in
department stores like Macy’s. Promotion of this price range to consumers is often based on the
implication of higher quality. Examples of Better lines are Bailey 44, J H Collectibles or Perry Ellis.
Again, you should be able to match competitor’s prices, build a market position and produce
reasonable profit margins.
Contemporary
Contemporary is a word exchanged about the industry. It is used in many different contexts. Some
think of it as a price point, as such it is usually used with a true price point descriptor as in “better
contemporary,” which can (depending on who you are talking to) represent either Juniors moderate or
better advanced bridge merchandise. Also, there is Advance Contemporary which is a higher a price
and more adventurous design than others in the Contemporary category.

Contemporary represents street wear to fashion conscience merchandise. Contemporary lines include
Isabel Arden, Clover Canyon, Current Elliott, Milly, and Michael Alexander to name a few. This is one
of the
The most coveted categories in the industry. It is also a realm that represents some of the best retailers
in the fashion industry.
Bridge
Bridge is often the lower priced or secondary lines of designers. Bridge products have the look of
designer products but are made from less expensive fabrics. Examples are Donna Karan’s DKNY line,
Emmanuel Ungaro’s Emmanuel line and JOE for Joseph Abboud.
Designer
Designer Clothing is usually the product into which a designer pours his or her heart and soul. At this
level, the designer can give free reign to creativity without concern to cost as in a bridge line. Designer
clothing usually sells in specialty boutiques, or boutique sections in department stores. Examples of
designer clothing are Prada, Gucci, Balmain, Lanvin, Valentino, Jil Sander, Lela Rose,
and Oscar de la Renta. There is a distinct difference in price and garment construction between
designer and bridge although both may appear to carry the same designer name as in Marc Jacob’s
case. Designer products cater to the high priced prestige or luxury market.
Couture
The highest priced garments carry the classification of couture, or haute couture. According to
Wikipedia, “Haute couture (French for “high sewing” or “high dressmaking” or “high fashion”) refers
to the creation of exclusive custom-fitted clothing. Haute couture is high end fashion that is constructed
by hand from start to finish, made from high quality, expensive, often unusual fabric and sewn with
extreme attention to detail and finished by the most experienced and capable sewers, often using time-
consuming, hand-executed techniques. Couture translates literally from French as “dressmaking”….
In France, the term haute couture is protected by law and is defined.
2.3. Hidden costs in sample production are identified.

As the name implies, hidden costs are those that are involved in the production or management of a
business and are difficult to identify. Depending on their nature or magnitude, hidden costs could lead
us to make the wrong decisions about prices or business results.
 the fashion industry, there are several hidden costs that can arise during sample production.
These costs may not be initially apparent or accounted for in the budget, but they can
significantly impact a company's profitability. Some of the common hidden costs in sample
production include:

 Material wastage: During the sample production process, there is often a higher risk of material
wastage due to the trial and error nature of creating prototypes. This can lead to additional costs
for sourcing and purchasing more materials than initially planned.
 Labor costs: Creating samples often requires skilled labor, such as pattern makers,
seamstresses, and sample makers. These professionals may charge higher rates for their
expertise, which can result in increased labor costs.
 Rework and alterations: It is common for samples to require multiple iterations and adjustments
before achieving the desired outcome. This can result in additional costs for reworking the
samples or making alterations, including labor costs and potential material wastage.
 Shipping and logistics: If samples need to be sent back and forth between different locations,
there can be significant costs associated with shipping and logistics. This includes
transportation fees, customs duties, and potential delays or damages during transit.
 Quality control: Ensuring the quality of samples is crucial for the fashion industry. Companies
may need to invest in additional quality control measures, such as inspections or testing, to
identify any defects or issues that need to be addressed. These quality control processes can add
to the overall production costs.
 Time and opportunity cost: Sample production can be time-consuming, and the longer it takes
to finalize a sample, the longer it will take to move into full-scale production. This can result in
opportunity costs, such as missed sales or delayed product launches.
To mitigate these hidden costs, fashion companies should carefully plan and budget for sample
production, including allocating resources for potential rework or alterations.
It is also important to work closely with suppliers and manufacturers to minimize material wastage
and streamline the production process. Regular communication and quality control measures can
help identify and address any issues early on, reducing the risk of additional costs.
<<< Profitability: Lowering costs or increasing productivity >>>
If you are wondering how they are generated, the answer may be complicated since the causes can be
several. For example, a failure in the execution of the processes can trigger not only the delay of the
task but also the leakage of costs where the underlying problem manifested itself. A batch lost due to
poor quality is also a source of hidden costs.
<<< The cost of not knowing your costs >>>

Another cause for hidden costs is miscalculations regarding the total cost of a batch or production and
the lack of monitoring of actual production volumes about the reported volume in inventory.
Since it is so difficult to detect these hidden costs when they appear in the expenses of a company, we
show you easily and practically how to identify them.
Where do they manifest and how to identify them?

When there are inventory levels higher than necessary.
Whether it's raw materials or finished goods, the hidden cost here is financial, because inventories are
"money tied up" until they're used in production or put up for sale.
In this sense, the higher the inventory level, the more money will be immobilized that could be used for
different needs of the company and instead remains stagnant.

High inventory levels are often caused by poor production or sales planning and could lead to "product
obsolescence" (meaning when products become out of date or expire and drop in status because cease
to be marketable) if they lose their opportunity to be sold. When high-quality materials are used for a
product that competes in a low-priced market.
High-quality materials may be used to make a product but the product competes in a low-price market.
Then, the consuming public will probably opt for those conventional products that satisfy their needs
immediately and at a lower cost, if in this case, their quality is not a determining factor in deciding on
the best.
When in technical service, it's done more than budgeted.
Likewise, it often happens that an estimate is made of what a budget should cost in technical service,
for example, but it turns out that once the work is done, the specialist realizes that the time or the
service performed itself were higher in compared to the agreed amount.
Consequently, it is very feasible that the technician has to stick to the original budget, being aware of
the loss in his/her profit, but thus avoiding leaving a dissatisfied or upset customer if he/she had
charged more than expected.
When production has to be stopped due to mechanical failure because of poor maintenance.
Mechanical failures represent production delays and lost work hours, at best. In the worst case, the lost
production involves production batches from the food industry. Unexpected failures in machinery are
frequently caused by a lack of preventive maintenance.
When inappropriate means of mobility are used.
In this case, hidden costs are generated in the case of those products whose means of transport could
cause them damage, if the necessary measures are not taken with vehicles equipped to transport certain
products according to their permanence needs.
When transfers of unnecessary merchandise are generated.
Whether these transfers are generated within the plant or to their next destinations, which can be the
different shopping centers, they constitute movements that produce hidden costs, because they require
personnel to carry them out. As in the previous case, they represent a cost risk for production if they
are damaged during transit, and consequently, it will imply a greater delay in production, which will
inevitably cause additional expenses.
2.3.1. Prevent hidden costs from harming the profitability of your company?
As we pointed out previously, it is very difficult to control the total production or even the resources
that are distributed in each area for its different functions.
It takes not only thorough supervision, but also a relationship of trust and sincerity between the teams
to assume their own mistakes, when there are any, but also enough honesty to declare any fraudulent
movement inside or outside the company, which does not is duly remitted in the cost records.
In these cases, if the person responsible is found, an exemplary sanction will be applied, depending on
the seriousness of the action and the economic damage suffered by the organization. However, there
are still some less punitive alternatives that can be implemented, especially when hidden costs manifest
due to a lost production batch:

Improve supervision: detect operators who made the mistake and encourage them to pay more attention
to the work they do, since the success or failure of a company's business also depends on them.
Survey the processes: it will seek to correct the failures that caused the problem.
Adjust costs: If necessary, the usual costs will be reduced based on the raw material or production
discarded.
Some more alternatives or solutions may be implemented, but everything will depend on the specific
problem that caused the hidden costs, since, in each case, all the variables must be analyzed, the pros
and cons, of executing an action aimed at remedying problems. It's vital to identify them, and after that,
determine which will be the exit routes that best safeguard the interests of your company.
2.4. Differences in costs for sample and bulk production garments are
explained
Sampling costs can be really confusing, and it's easy to waste a lot of money in the
process. But it can be done in a cost-effective way and we're going to show you the exact steps
you need to take to save money when getting clothing samples made.
Sampling is tricky and there's so many ways in which to sample your garments. That said, whatever
route you take, the very basic principle for how manufacturers cost your samples is pretty simple:
The more complex your designs are, the more work the manufacturer has to do, and the more
the samples will cost!
Take a look at this simple example below:
2.4.1. Main Factors that Affect Garment Costing
Fabric type.
Trims and notions.
Labels and packaging.
The cost of making.
Shipping and logistics.
Profit of the manufacturing organization.
Other expenses
Figure 1: Affect Garment Costing

These parameters play a vital role when the production merchandiser does the costing of garment, as
these factors are very dynamic and keep virus as these factors are very dynamic and keep
fluctuating frequently.
The two T-shirts in the image above look really similar right? However #1 is cheaper to sample than #2
and here why...There is an obvious difference in fabric weight. Heavier fabrics are more expensive to
make and more expensive to ship so there's an obvious and easy to understand price increase between
#1 & #2. The second pricing increase for #2 is found in the graphic. Both #1 & #2 use screen print as
the means of graphic application.
Screen print works by laying a screen over a garment and passing ink through a section that hasn't been
blocked out. Each color requires its own screen. More colors equal more screens required and more
work for the manufactures and that increases sampling costs. #1 has only one color and #2 has 4 colors
making it more expensive! So, now that we're clear on the basic principle of sampling costs, let's look
in a bit more detail at how clothing samples are priced.
1. Why are sampling costs so much more than bulk manufacture costs?
The answer is pretty simple but not always so obvious!
When sampling a garment, the manufacturer has to figure out lots of things, such as:
The pattern for the garment The best method of constructing the garment.
The best fabric to use for your required fit along with graphic sizing and application.
Once this foundation work is done, it makes making the bulk production run a lot quicker and simpler,
and this is reflected in the price.
2. it’s usually cheaper to get the same base shape manufactured in different colours (when doing it at
the same time).
Let's think simple economies of scale...
When you design the same base shape in the same fabric and it's just the colour of the fabric that's
changing, the manufacturer can work on the clothing samples at the same time. That makes it quicker
for them and therefore cheaper to make. The best thing to do is sample your shape in all the colors
you'd like in one go (even if you plan to drop some of the colours later on).

Figure 2:group costing
3. The more complex your samples are to make the more they will cost to sample!

Figure 3: Affect Garment Costing
The more complex your designs are (e.g. if you've got lots of zips, panels, drawstrings etc), the more
work the manufacturer has to do, and the more the samples will cost!
If you'd like some useful tips on how to maximize your 'bang for your buck', why not read our a handy
guide on how to design your clothes in the most cost-effective way
4. Using the manufacturers 'Stock Fabrics' is always cheaper!
Manufacturers usually have stock fabrics. These are fabrics that they keep in stock or have very easy
access to. They are usually the most verified and trusted fabrics. By utilizing these fabrics it saves time
and money for the manufacture and those discounts are passed on to you!
2.4.2. Bulk production

What is bulk production? Bulk production refers to the manufacturing process of producing many identical
products using assembly-line methods and automated machinery. Various industries, including
clothing production, use this mass-production method.
Bulk production refers to the manufacturing process of producing many identical products using
assembly-line methods and automated machinery. Various industries, including clothing production,
use this mass-production method.
The bulk production process typically involves thorough project planning, from initial design to final
product, to ensure quality control. It includes creating samples and swing tags and establishing order
requirements before producing the final product.
The bulk production process aims to achieve economies of scale by producing large quantities of
products at a lower cost per unit. However, it’s crucial to maintain quality standards throughout the
production process and ensure the finished product meets all requirements.
“Bulk” refers to a large quantity or mass of something. In the context of manufacturing, bulk
production refers to producing a large number of identical products. In the context of purchasing,
buying in bulk means purchasing a large quantity of a product at a lower cost per unit. The term can
also be used in other contexts, such as shipping and storage, where bulk cargo refers to large quantities
of goods transported in one shipment, and bulk storage refers to storing large amounts of materials or
products.
2.4.3. Types of cost factors in garment productions

Garments Costing Factors: Costing is the very important & crucial part of garments sector. A smart
merchandiser thinks how to utilize save money & maximum profit of a company. He should think
many important factors for garments costing because he is the proactive person for profit earning. He
must analysis cost factors of a garment. So, I will present what are the factors related for the garments
costing. Firstly, A smart merchandiser analysis & will get accurate information from factory in the
following factors.
 Fabric description & sourcing.
 Fabric Consumption.
 Trims costing & sourcing.
 Washing information.
 Printing costing.
 Embroidery Cost.
 Cost of Making (CM).
 Testing of garment.
 Commercial charge.
 Profit %
 Mode of Shipment(Air or Sea)
 FOB.
1. Fabric description & sourcing.

Fabric description is the very important part for the costing because it is depend on fabric nature & it
will changeable during wash & it can be measurement discrepancy after making garments. So, a smart
merchandiser need follow below points when he will source fabric & advice to buyer.
 Fabric constructions.
 Fabric composition.
 Fabric Weave
 Actual Shrinkage of fabric(by mill)
Finally, a smart merchandiser will investigate & best sourcing for this fabric. He must to know below
points during souring the fabric.
 Fabric price.(Best price)
 Mode of shipment.
 Fabric Production lead time.

 Testing parameter.

 Mode of payment.
2.Fabric Consumption: Fabric consumption is one of the most important & vital role for garment
costing. A Garment costing will bear approx.: 35% to 45% price of a total garment cost. A smart
merchandiser need to more analysis about consumption. He must to know below important factors for
effective garments costing.
 Product Item.
 Sample type & fitting.
 Block pattern.
 Graded pattern.
 How many parts of a sample.
 Shrinkage(added)
 Grain line(way of garments)
3. Trims Costing & Sourcing:
Figure 4: trims costing and sourcing

A smart merchandiser must be careful about trims what will use in garments. And, he also knows how
to source. He must takes responsibilities trims sourcing where are the best price. So, a smart
merchandiser should think & dimensional oriented about trims & sourcing. He must be careful below
points in the following.
Trims items selection.
Suppliers’ selection.
Price negotiation.
Production Lead time.
Sourcing local or aboard,
Quality Assurance.
Time commitment of historical data.
4. Washing Information:

Figure 5: washing cost
A smart merchandiser must know wash instructions in buyer reference sample. He should vast
knowledge about washing process into garment. A wash can change garments looks & move into a
new product. He must know below points during costing stage.
Dry Wash or mechanical process:
Figure 6: dry costing
 Sandblasting.
 Grinding.
 Thread bare hole.
 Destroy.
 Whickering.
 Brush.
 PP spray.
 Tacking & tag pining.

 Crinkle.
 Hand Scraping.
 Chevron, hand spot.
 Ripping, pilling cuts.
 Repair patch along with bleach spot.
 Resign application.
 Local tint.
Wet wash or Chemical process:
Figure 7: wet wash or chemical cost
 Garments wash.
 Enzyme wash.
 Enzyme stone wash.
 Enzyme bleach wash.
 Acid wash.
 Pigment wash.
 Caustic Wash.
 Stone Wash.
 Bleach wash(Ice or Snow wash)
 Tie Dye wash.

5. Print Costing & Sourcing:
Figure 8:print cost and sourcing

A smart merchandiser must know what type of print in sample & what is the print cost? He should be
careful about artwork. Print factory must be near in garments manufacturing otherwise it can be
production hamper & costing will be increase. He follows below points.
 What types of print?
 Print Artwork.
 Production leads time.
 Production output.
 Mode of payment.
6. Embroidery Costing & Sourcing:
Figure 9: Embroidery Costing & Sourcing

A smart merchandiser must be careful about embroidery because sometimes sample has critical
embroidery design & production will be slow. So, during costing stage a smart merchandiser must
concern about embroidery productivity & need to developed alternative embroidery factory. An
embroidery factory must be near in garments manufacturing. So, he must be careful below points
during costing.
Types of embroidery.
Embroidery layout.
Productions lead time.
Alternative factory develop (if support emergency).
Mode of payment.
7. Cost of Making (CM):
Figure 10:cost of making (CM)
Cost of making calculation is the important part of a garment. Garments manufacturer pays their
worker salaries from this CM. A smart merchandiser calculates the production output that particular
style. A smart merchandiser gets clear idea CM from SMV & related cost of a factory. During costing
a merchandiser must careful below points.
Production output of a particular style.
Direct & indirect cost of a factory.
CMT charges are calculated as: Total available capacity per month (in minute) = 26 working days X
8 hours per day X 60=12,480 minutes.
Labor Cost per Minute
Labor cost per minute = (Monthly salary of an operators/Total minutes available in the month) at 100%
efficiency
= 6000/12480 =0.480 Rs.
Sewing cost = (SAM of the garment X Minute cost of the labor)/Line efficiency (percent)
=15* 0.480/50 =0.288 dollars
Cutting Cost
Trimming cost is considered as 0.06 dollars, as it depends upon how many operators are there for
trimming.
Production cost of garment (CMT) = sewing cost + cutting cost + trimming cost
= 0.288+0.134+0.06
= 0.482 dollars.

8. Testing Parameter of garments:
Figure 11: Testing parameter of costing

A smart merchandiser need to know what are testing parameters of the regarding buyer. So, he needs to
add testing charge into costing sheet. And, he should know what are testing parameters & testing
charge of a garment. He must follow below garments testing parameter during costing stage.
Fiber content.
Fabric weight.
Count constructions.
Shrinkage after laundering.
Fabric strength.
Seam strength.
Pilling resistance.
Color fasting to washing.
Color fastness to light.
Color fastness to rubbing.
Color fastness to perspiration.
9. Commercial Charge:
Figure 12: commercial charge

A smart merchandiser must know how to add commercial charge to import & export any goods from
aboard. So, he should maintain commercial charge to add during costing stage. He must know below
important points.
LC charge(Master LC & B2B LC)
CIF Charge.

Bank endorsement charge.
10. Profit %:
A smart merchandiser must know how to add profit% into costing stage. He needs to discuss with
management what profit % to add into costing sheet. Without profit a factory cannot develop or sustain
in the market. He should think & best profits calculate of a factory or company
11. Mode of Shipment:
Figure 13:mode of shipment

A smart Merchandiser must know what type of shipment mode? Buyer determined what type of
shipment mode. Sometimes, shipment can be sea or Air. So, on the basis he should calculate ship mode
charge added into costing sheet. He must need to know below important points.
Sea shipment, Air Shipment, Road Shipment.

Self-check.2
Part I
Say true or false
1. The cost of making is based on the total cost per hour multiplied by the number of hours it takes.
2. Single production refers to the manufacturing process of producing many identical products using
assembly-line methods and automated machinery
3. Hidden costs are those that are involved in the production or management of a business and are
difficult to identify
4. Fabric is generally the most significant factor in the costing of a garment.
5. A smart merchandiser must be not careful about trims what will use in garments.
Part II
Matching
A B
1.The cost of fabric may depend on it. A. Material wastage
2. the smallest quantity of a product that a B.MOQ
fabric manufacturer can supply.
3 Creating samples often require skilled labor, C. Order quantity

such as pattern makers, seamstresses, and
sample makers.
4.During the sample production process, there D. Labor costs
is often a higher risk of material
5. The highest priced garments classification. E. Bridge
F. Material wastage
G. couture
Part III
Multiple Choice Questions:
1. Which of the following contexts can the term "bulk" be used in?
A.Manufacturing B. Purchasing C. Shipping and storage D. All of the above
2. Which of the following is cost of fashion product?
A.costs of fabric and materials B. Cost of labor and production
C. Cost of shipping and logistics D. Cost of quality control and inspections
E. All of the above
3. Which one is incorrect cost of factors in garment productions?
A. Garments Costing Factors B. Fabric description & sourcing
C. Contemporary D. cost of washing E. Cost of Making (CM)
4. which of the following is the common hidden cost in sample production include?
A. Material wastage B. Labor costs C. Rework and alterations D. Quality control E. All
5. Which of the following is an important consideration when calculating the cost of making a
garment?
A. Production output of a particular style B. Direct and indirect cost of a factory C. Both A and B
D.None of the above.

6. Which of the following is NOT a consideration for a smart merchandiser when sourcing trims for
garments?
A. Trims items selection B. Suppliers' selection C. Price negotiation D. Production Lead time
E. Time commitment of historical data.
7. To mitigate hidden costs in fashion production, which of the following strategies should fashion
companies adopt? A. Careful planning and budgeting for sample production
B. Allocating resources for potential rework or alterations
C. Working closely with suppliers and manufacturers to minimize material wastage
D. Streamlining the production process
E. Regular communication and quality control measures
F. All of the above
PART VI
List out and discuss the following question.
1.How to prevent the hidden costs from harming the profitability of your company
2. Types of cost factors in garment productions.
3.Cost of making in fashion industry.
Unit three: calculating labor costs involved in fashion product

production.
3.1.Identifying and calculating labor cost for sample and bulk garment production
3.2.Identifying and comparing different methods of utilizing labor in fashion industry
LMC
3.4.1 Types of services given in garment industries production October 2023
3.1. Calculating labor cost for sample and bulk garment production
Labour Direct labor cost:-Labor costs equal the estimated number of man hours multiplied by the
hourly rate for each man hour. For example, if you estimate it will take 20 hours to manufacture a
product and employee wages are $15/hour, your total labor cost equals $300 (20 hours x $15/hour).
Here’s the three-step process to calculate labor costs:
Determine the number of labor hours required to produce your product. This includes time spent on
assembly, packaging, and quality control.
Multiply the number of labor hours by the hourly wages of your workers. You can use average hourly
rates if employees are paid differently, or businesses can estimate based on each employee’s
contribution to the product. For example, if each employee has a different role requiring different hours
on the project, each can be calculated separately. The labor costs of each employee are added together
for total labor costs for producing the product.
Add all other labor costs, such as benefits or taxes associated with your workers’ salaries.
Note that some businesses may also calculate overtime or peak time costs separately.
Direct material cost:-One of the most important things you can do is accurately calculate your direct
materials cost. This includes both the cost of the raw materials used in production and any shipping or
tariffs associated with those materials.
With an accurate direct materials cost, you’ll be able to price your products and make sound business
decisions about your manufacturing processes.
A lot of this information will come from your suppliers. Be sure to factor any unit discounts, cash
discounts, or net term discounts. Account for each item that goes into manufacturing your product –
including raw materials used in production.
You’ll also want to figure the costs associated with the availability of raw materials – the lead time .
Factor shipping costs and tariffs (taxes) associated with raw materials. For many manufacturers, these
costs can be high and vary widely depending. However, they’re necessary to accurately compute your
direct materials cost. Overhead cost
To determine your overhead cost, you’ll need to know your indirect costs. You’ll need to compute your
indirect, or overhead, costs.
3.1.1. Procedure to calculate labor cost

Step#1.Measure garment SAM:
First, calculate garment sewing wok content in standard minutes. You can use the 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

Daily labor wages (You can take actual data)
Line efficiency
Step#2Calculate Daily labor wages
Step#3. Calculate Line Efficiency: Calculate the line efficiency of your sewing lines.
Calculate the minimum labor wages of your region or check with your human resource (HR) Step#2.
Calculate Daily labor wages: department for daily wages of skilled labors (sewing operators). From the
daily wages, calculate per minute lab our cost.
Let's say daily labor wages is USD 4.0 and
Calculated per minute labor cost is 4.0/480
= USD 0.00833.
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
labours areas the above.
Therefore direct labour cost of the garment

= US$ (20 X 0.00833)/50%
= US$ 0.3333 (or equal to Indian Rupees 18.00)
(Considering shift time is 8 hours, which is equal to 480 minutes)

COSTING EXAMPLE: DRESS SHIRT All of the costing element described so far will now be
applied to an example dress shirt requiring 30 standard minutes production time:
Here’s the formula:

To calculate overhead cost, add up all the costs, except direct labor costs, that you’ve paid over a
specific period of time, for example, three months or a quarter of the year.
Compute the hourly cost of overhead. You’ll do this by dividing the results from above by the number
of hours for that time period (a quarter is approximately 500 hours). This will give you an hourly rate
for overhead costs.
Multiple this figure by the number of hours needed to manufacture the product.

Overhead costs include items like:
Rent,
Utilities,
Insurance,
Office supplies,
Travel,
Advertising expenses,
Professional expenses,
Depreciation.
Compute total manufacturing costs

Once you’ve calculated the individual costs associated with manufacturing your product, you can
compute the total manufacturing costs.
Product cost formula

Total manufacturing cost = direct materials +direct labor costs + manufacturing overhead
It’s important to add additional labor costs, raw material costs, product warranty expenses, and various
manufacturing costs to the total amount. We recommend adding 10% to the final number to get a more
accurate picture of how many your products are actually costing you to manufacture. Of course,
tracking your costs over time will tell you how accurate your calculations were, but this definitely will
give you a starting point. Once you know your manufacturing costs, you can use that to price products,
determine profitability, or compare costs with other manufacturers.
Before moving on, you should know there are two methods for calculating total manufacturing
cost: direct and indirect. The direct method assigns all manufacturing costs directly to the product
being manufactured. The indirect method assigns manufacturing costs based on department or
activity. We’ve outlined computing total manufacturing costs based on the direct method – this
gives you the most accurate picture of actual costs.

Elements of Apparel Costing: The material, labor and expenses are the fundamental elements of cost.
The Figure 1 explains the elements involved in the basic costing process
Diagram 1: Elements of Apparel Costing

A. Material cost:-
It is the cost of commodities supplied to an undertaking. This includes, cost of procurements, freight
inward, taxes and insurances. These activities are included in material cost because; they are directly
attributable for the acquisition of material. Here the material can be specified as any substance from
which the item is made. It might be in a crude state as raw material, e.g., fiber for fabric and raw
chemicals for dyeing, and so on. Additionally it may be also be in a made state – parts, e.g., buttons,
zippers, and so on, materials can be direct and indirect.
1.Directmaterial:
All materials which become an integral part of the finished product, the cost of which are directly and
completely assigned to the specific physical units and charged to the prime cost, are known as direct
material. The following are some of the materials that fall under this category:
Materials which are specifically purchased acquired or produced for a particular job, order or process.
Primary packing material (e.g., carton, wrapping, cardboard, etc.).
Materials passing from one process to another as inputs.
2.Indirectmaterial:
All materials, which cannot be conveniently assigned to specific physical units, are termed as “indirect
material”. Such commodities do not form part of the finished products. These items will not be a part
of the finished product (physically). Consumables, lubrication oil, stationery and spare parts for the
machinery are termed as indirect materials.

B. Labor cost: Human efforts used for conversion of materials into finished products or doing various
jobs in the business are known as labor. Payment made towards the labor is called labor cost. It can
also be direct and indirect. The labor cost is defined as
“The cost of remuneration (wages, salary, bonuses, etc.) of an employee of an undertaking” – CIMA
1.Direct-labor:
Direct labor cost is the wages, salary, or bonuses, or commission paid to the workers or employees who
directly involved in converting the raw material into the finished product. The wages paid to skilled
and unskilled workers for manual work or mechanical work for operating machinery, which can be
specifically allocated to a particular unit of production, is known as direct wages or direct labor cost.
2.Indirect-labor:
Labor employed to perform work which is not a part of manufacturing the end product but only to
assist the product or operations are known as indirect labor or those engaged for office work, selling
and distribution activities are known as “indirect labor”. The wages paid to such workers are known as
“indirect wages “or indirect labor cost.
Example: Salary paid to the driver of the delivery van used for distribution of the product.
C.Expenses:
All expenditures other than material and labor incurred for manufacturing a product or rendering
service are termed as “expenses”. Expenses may be direct or indirect. The Expenses may be defined as
“The cost of services provided to an undertaking and notional cost of the use of owned asset” – CIMA.
1.Direct-expenses.
Expenses which are specifically incurred and can be directly and wholly allocated to a particular
product, job or service are termed as “direct expenses”.
Examples of such expense are: hire charges of special machinery hired for the fob, carriage inward,
royalty, cost of special and specific drawings, etc.
2.Indirect-expenses:
All expenses excluding indirect material and indirect labor, which cannot be directly and wholly
attributed to a particular product, job or service, are termed as “indirect expenses”. Some examples of
such expenses are: repairs to machinery, insurance, lighting and rent of the buildings.
***Prime-cost
the direct cost of a commodity in terms of the materials and labor involved in its production, excluding
fixed costs
Prime cost = Direct material + Direct labor + Direct expenses

Overheads:
Indirect expenses are called overheads, which include material and labor.
Overheads = Indirect material + Indirect labors + Indirect expenses
Overheads are classified as:
1.Production or manufacturing overheads – Connected with factory production function like indirect
material labor, etc.
2.Administrative expenses – Indirect expenditures incurred in general administrative function, they

don’t have any direct connection with production or sales activity. For example stationeries used,
sweeping brooms, salary of a peon, etc.
3.Selling expenses – It is the cost of promoting the sales and retaining the customers. For example
advertisement and gifts, etc.
4.Distribution expenses – All the expenses incurred from the time of the production completion to the
time it reaches its destination. For example packing material, salary of drivers and insurance of the
goods.
5.Research and development expenses – Any expenses associated with the research and development
of a company’s goods or services.
 Factory cost = Prime cost + Factory overheads

 Cost of production = Factory cost + Office and administrative overheads
 Sales cost = Cost of production + Selling and distribution overheads
 Selling price = Cost of sales + Profit
 Cost/ unit = Selling price / Total production.

Administration Overhead
It refers to all the expenses incurred in connection with general administration. In administrative
building, following things are included:
• Salary of administrative staff
• Rent
• Rates
• Taxes of administrative accommodation
• Postage
• Telegram and telephone
• Stationery
• Lighting of administrative building
• Depreciation of office appliances Depreciation of office appliances etc. is included in
administration overhead.
Selling Overhead:
Selling overhead refers to all expenses incurred in connection with sales.
In selling overhead, following things are included:
• Salary of sales staff
• Traveler’s commission
• Advertisement
• Rent
• Rates
• Taxes of sales office
• Depreciation of sales office appliances
• Cost of participation in industrial fares and exhibitions
• Cost of free gifts
• Cost of free after sales service
• Normal bad debt
Distribution Overhead
Distribution overhead refers to all the expenses incurred in connection with the delivery of a product
after the sale is affected. In distribution overhead, following things are included:

• Delivery van expenses
• Fright and insurance
• Packing for delivery loading and unloading.
• Salary of the deliverymen
Customs duty According to behavior,
Classification of overhead expenses may be done as follows:
a. Variable Overhead the overhead expenses that vary proportionately with the output are
variable overhead.
b. Semi-Variable or Semi-Fixed Overhead the overhead expenses that vary with the output but not
proportionately are semi variable or semi-fixed overhead. It should be always kept in mind that in this
connection direct materials, direct wages and direct expenses are variable items of direct cost.
Therefore, if we classify cost according to behavior, we get the following classification
Classification of cost:
b. Fixed Costs Fixed costs include only those overhead expenses which remain fixed
irrespective of the level of output. Some of the items of fixed costs are as follows:
• Rent and rate of building
• Salary of work mangers, administrative manager, sales managers
• Depreciation of buildings
• Insurance
c. Variable costs:-Variable costs include prime cost and variable overheads. These costs
vary proportionately with the output. Some of the items of variable costs are as follows:
• Direct material
• Direct wages
• Direct expenses
• Consumable stores
• Power
• Fuel
d. Semi-Variable Costs:- Semi-variable costs include overhead expenses that vary
according to output but not proportionately, so these costs are partly fixed and partly
variable. Some of the items of semi-variable costs are as follows:

• Normal repairs and maintenance of building and plant.
• Salary of supervisors
• Charge men
• Foremen
• Service department expenses
• Depreciation of plant and machinery.
3.2. Identifying and comparing different methods of utilizing labor in fashion industry
Introduction:
Since the industrial beginnings, textiles and apparel have been the leaders in terms of cost awareness as
well as product innovations. Textile Costing includes all the activities like sourcing of raw materials
and accessories, knitting fabrics, processing and finishing of fabrics, sewing and packing of garments,
transport and conveyance, shipping, over heads, banking charges and commissions, etc.
To do perfect garment costing, one must know about all these activities thoroughly about their costs,
procedures, advantages and risk factors. Also, he must know how to solve the problems when occurred
and to take suitable alternate decision immediately in time. Generally senior garment
merchandiser do the costing of garments.
There are always fluctuations in the costs of raw materials and accessories, charges of knitting,
processing, finishing, sewing and packing, charges of transport and conveyance. Hence Knowledge
Update is required about the latest prices and charges, latest procedures, methods and quality systems,
market prices and availability, transportation (road, sea, air) and freight charges, etc.
Quality depends on price; price depends on quality. Each product will have different price according to
its quality.
3.2.1. Different Garment Costing Methods:-
Garment costing methods indicate the systems and processes involved in the estimation of costs and it
depends on the type and nature of manufacturing activity.
1. Job Costing,
2. Batch Costing,
3. Contract or Terminal Costing,
4. Single or Output Costing,
5. Process Costing,
6. Operation Costing,
7. Operating Costing,
8. Departmental Costing,
9. Multiple Costing.

Above garment costing methods are briefly described below:
1. Job Costing:-
Job Costing is done, as the name suggests, on job works which may differ from case to case basis. By
giving different job numbers and debiting the costs on the jobs, cost of each job work can be
ascertained.
2. Batch Costing or Batch Costing method:-Batch Costing is similar to job costing but pertains to
batches.
3. Contract Costing or Terminal Costing:-
Contract Costing is done for large contracts. Such businesses need not maintain costs separately as
financial accounting will indicate the costs and expenses. In such contracting firms, the cost sheets are
maintained for individual contracts. In the absence of expense budgets, inefficiencies are often hidden
in such cost sheets.
4. Single or Output Costing:-Single Costing is done when the end product is single like a colliery or a
power station. Cost sheets are maintained.
6. Process Costing:-Process Costing is useful when a product passes through various processes,
yielding different byproducts of commercial value. This is useful in industries like refineries.
7. Operation Costing:-Operation Costing is followed by mechanical engineering industries which

make products or parts. Each manufacturing operation cost is taken into account. There is no difference
between this and process costing.
8. Operating Costing:-Operating Costing method is followed when the company does not have a
specific product as output like the service industries.

8. Departmental Costing:-When an end product is ultimately manufactured by different departments
this method can be useful.
10. Multiple Costing:-Multiple Costing is useful when a product is manufactured in an assembly

line like an automobile. It is important to choose the most appropriate method of costing for
your business or industry. Most businesses do not like to engage cost accountants and leave it
to financial accountants to take care of this job. It is not recommended. There are many free-
lance cost accountants available and they can be engaged on need basis.
How to Calculate Raw Material Cost for Garments?
Material cost is the major cost component of a garment manufacturing costs. A correct cost
calculation method will give you better projection of garment cost for a style. In this article how to
calculate direct materials cost have been explained in details. Raw materials required for making a
garment is sourced from suppliers. Main materials are like fabric, labels, sewing thread, hang tags,
trims etc. So to have correct material cost you must have price knowledge of each item. Steps used for
material costing are – Preparation of material requirement sheet Material price listing Preparation of
material cost sheet Prepare material requirement sheet List down all items required and calculate
consumption per unit for all materials to be used in garments.
For an example, let you are going calculate material cost for a polo shirt. To make polo you need
knitted fabric – Single jersey/pique, cuff and collar rib. Sourcing of knitted fabric can be done three
ways – You can directly purchase dyed fabric or – You can source yarn, knit fabric and process the
knitted fabric as per your requirement or – Purchase dyed yarn and knit. Let you will purchase yarn
and get knitting and dyeing processes done by job workers. To go through this process, collect the
pricing list of different types of yarn (or at least for the yarn that you will purchase for your product),
knitting cost, knitting loss%, dyeing cost per kg and process loss% from suppliers. Material Price
listing Collect material price quote for all the material you need to purchase from different vendors.
Prepare database for the current market price of raw material

Cost of the knits fabric is represented in price per Kg
Shell Fabric Collar/Cuff
Fabric Description 2/60s single jersey 2/60s rib
Yarn cost (Rs.) 200.00 200.00
Knitting cost (Rs.) 18.00 20.00
Knitting loss (2%) 4.36 4.40
Processing cost (Dyeing) (Rs.) 80.00 80.00
Processing loss (6%) (Rs.) 18.14 18.26
Cost per Kg Rs. 320.50 Rs. 322.66
Table 1: Cost of the knits fabric is represented in price per Kg
Fabric Consumption:- Next step is to find requirement of fabric for the polo. Suppose for this polo
shirt you need shell fabric 0.32 Kg and Ribs for cuff and collar 0.080 Kg. Read how to calculate fabric
consumption for a knitted garment to know fabric consumption calculation.

Prepare material Cost Sheet Once you find fabric cost and fabric consumption prepare material cost
sheet including all other material required to make a garment ready for sale. An example of material
cost sheet has been shown below.
Rate Amount
Items Consumption UOM* Remarks
(Rs.) (Rs.)
2/60s single
1 0.32 KGs 320.5 102.56
jersey
Cuff and collar

2 0.08 KGs 322.66 25.81
ribs
3 Sewing thread 159 Meters 4 approx.
4 Buttons 3 Gross 2 approx.
5 Main label 1 Unit 1 approx.
6 Care label 1 Unit 1 approx.
7 Hang Tags 1 Unit 3 approx.

8 Price Tags 1 Unit 2 approx.
9 Poly bags 1 Unit 1 approx.
10 Kimble 1 Unit 0.5 approx.
Total Cost 142.87
Table 2:fabric consumption
So, Total fabric cost is Rs. 128.37 and including other material costs total cost of the material for
making this Polo Rs. 142.87 Now for each item merchants generally purchased extra quantity of
inventory (from 2% to 7%) as buffer.
This excess cost due to extra purchase of material is added into the garment costing.
3.2.2. Types of services given in garment industries
Fashion designer and ways to help you decide what you should do.
Different services you could offer your clients as a freelance fashion designer. I’m just spit balling
here, and keep in mind I’ve purposely made it broader than just “fashion design” to help you get
inspired and think outside the box.
Creative Services
Color direction
Trend / mood boards
Full collection design
Textile design
Trim / Finding / Hangtag / Label design
Merchandising
Catalog layout
Photo shoot art direction / management
Technical Services
Tech sketches
Tech packs
Textile repeats / specs
Spec / grading

Pattern drafting
Proto / sample review / commenting
Fittings
Vendor correspondence / follow up

Sourcing Services
New fabrics / trims
New factories / suppliers
Price / MOQ negotiation
Vendor correspondence / follow up
Consulting Services
Collection / merchandising review / analysis:
what categories are missing / not needed?
Sales analysis / reporting:
suggestions for moving forward (what styles to run again in new colors, what should be dropped, etc)
Market analysis
untapped opportunities / market segments
Distribution analysis
New sales channels (wholesale, retail, DTC, pop-up shop, email, web, etc)
Self -check 3
Part I
Say true or false
1.Human efforts used for conversion of materials into finished products or doing various jobs in the
business are known as labor.
2. Indirect cost is a commodity in terms of the materials and labor involved in its production, excluding
fixed costs
3. Variable costs include prime cost and variable overheads.
PART 2
Multiple choices
1.Which of the flowing is not Types of services given in garment industries?
A. Sourcing Services B. Consulting Services C. Technical Services D. none of the above
2. which term is not explain the variable cost?
A. Service department expenses B. Direct wages C. Direct expenses D. Power ALL

3.Which one is exclude Fixed Costs? A. Rent and rate of building B. Salary of work mangers C.
Power cost D. administrative manager.
4. which one is the best ways of perfect garment costing?
A. knows cost procedures of garment B. knows advantages and risk factors.
C, know how to solve the problems the costing of garments. D.All
5.One of the following is not include the Overheads classification ?
A.Production or manufacturing overheads B, Direct-expenses

C,Administrative expenses D,Selling expenses
PART 3
List out and discuss the following questions

1.list out and explain types of service in garment industry?
2.list and discuss Classification of cost?
3,show Elements of Apparel Costing with diagram.
4.discuss three-step process to calculate labor costs with example
5.write the elements of Technical Services
1.Operation sheet to calculate labor cost

Step#1.Measure garment SAM:
First, calculate garment sewing wok content in standard minutes. You can use the Time Study method
or synthetic data for calculating standard minute of the garment sample.
If you are new to calculate garment SAM,.
To calculate labor cost, you need additional information such as

Daily labor wages (You can take actual data)
Line efficiency
Step#2Calculate Daily labor wages
Step#3. Calculate Line Efficiency: Calculate the line efficiency of your sewing lines.
Calculate the minimum labor wages of your region or check with your human resource (HR) Step#2.
Calculate Daily labor wages: department for daily wages of skilled labors (sewing operators).
Labor cost per garment = (Garment SAM X Labor cost per minute)/ Line Efficiency%

Unit Four: Developing costing sheets to industry standards
4.1.Identifying components of fashion industry costing sheets
4.2. Developing costing sheets to meet fashion industry standards
4.3. Completing costing sheets for sample garments
4.4. Using cost sheet to develop quotation for bulk production.
4.1. Identifying components of fashion industry costing sheets

COST SHEET
Definition: A cost sheet is a statement which represents the various costs incurred at different
stages of business operations, in a tabular format. It determines the total cost or expenditure made
by the organization, along with the cost incurred on each unit of a product or service in a
particular period. A cost sheet is a report which is accumulated all of the costs associated with a
product or production job. A cost sheet is used to compile the margin earned on a product or job,
and can form the basis for the setting of prices on similar products in the future.
A Cost Sheet depicts the following facts:

1. Total cost and cost per unit for a product.
2. The various elements of cost such as prime cost, factory cost, production cost, cost of goods sold,
total cost, etc.
3. Percentage of every expenditure to the total cost.
4. Compare the cost of any two periods and ascertain the inefficiencies if any.
5. Information to management for cost control
6. Calculate and summarize the total cost of the product.
*Components
 PrimeCost
 WorksCost
 Productioncost
 Total Cost
PRIME COST
The initial cost made for manufacturing a product, i.e., raw material, labor wages and other production-
related expenses, is termed as prime cost.
Following is the equation for computing the prime cost:

Where direct material is calculated with the help of the following formula
WORKS COST OR FACTORY COST

The works cost is calculated by summing up the prime cost with the factory overheads and
simultaneously adjusting the opening and closing stocks of work in progressive be denoted as:
The various indirect overheads incurred at the factory premises can be computed with the help
of the following formula
Indirect Material
The indirect material includes all the additional items used for manufacturing products, but not
directly contribute as a raw material for the finished goods. It can be anything like the oil, fuel,
coal, stationery items and other factory utilities.
Also, the items which are though directly used for making a product, but are inexpensive and
small, are considered as indirect material. These include thread, pins, cello tape, nails, nuts, etc.
Indirect Labor

The labor or human resource engaged in all the activities other than manufacturing of goods or
services which are essential to carry out the business and assist the production operations is
called indirect labor.
It includes salary paid to cleaning staff, security staff, drivers, etc.
Indirect Expenses
All the other overheads which are neither directly contributing to the production operations,
nor they can be termed as labor or material expense, are called indirect expenses.
These are the expenses made for running the business operations smoothly.
These includes depreciation, rent, electricity, insurance, taxes, repairs and maintenance, etc.
4.2. Developing costing sheets to meet fashion industry standards

COST OF PRODUCTION
The cost of production includes all the direct and indirect cost, including the material, labor
and other expenses, i.e., production cost, factory cost and office or administration cost.
The following formula denotes the computation of cost of production:
After making an adjustment of the opening finished goods and the closing finished goods
to the cost of production, we acquire the cost of production of goods sold.
Further, to calculate the cost of production of goods sold, the opening and closing stocks of
finished products are adjusted with the cost of production. Its formula is:
TOTAL COST
The final value of a product or service can be determined after adding all the selling and
distribution expenses to the cost of production of goods sold. The formula to find out the total
cost or cost of sales is:
If the sales price of the products or service is known, the following method can be used to
determine the profit: The companies which have their production or manufacturing units along
with office premises and also carry out sales and distribution of goods, require a systematic
cost accounting procedure to determine the cost, profit and sales price.

ITEMS EXCLUDED FROM COST SHEET: The following items are of financial nature and
thus not included while preparing a cost sheet:
1. Cash discount
2. Transfer to reserves
3. Interest paid
4. Donations
5. Preliminary expenses written off
6. Income-tax paid
7. Goodwill written off
8. .Dividend paid
9. Provision for taxation
10. Profit/ loss on sale of fixed assets
11. Provision for bad debts
12.Damages payable at law, etc.
4.3. Completing costing sheets for sample garments Cost sheet

Format of Garment Costing Sheet
No. Cost Types Particulars Amount ($)
1 Primary Cost Direct Expense 132
Direct Labor 50
Direct Material 80
Total Prime Cost 262
Work Cost or Factory Factory
2 270
Cost Overheads
Primary Cost 262
Total Factory
532
Cost
3 Office Cost Office Overheads 400
Factory Costs 532
Total Office
932
Cost
4 Total Cost Selling 453

Overheads
Office Costs 932
Total Cost 1358
Table 3: Format of Garment Costing Sheet
COST SHEET
Product Women T-Shirt Yarn-dyed feeder stripes
Style no: XYZ Country USA
Viscose
Buyer: ABC Fabric jersey
GSM/width 150/34-31”
Amount
Particulars Details (INR)
Fabric Costing
Yarn Price as per supplier
list Per Kg 250.00
Knitting charges Per Kg 25.00
Greige Fabric Cost Per Kg 275.00
Average dyeing cost 20.00
Weight loss on dyed fabric: 9.00% 26.55
Fleece brushing /Peaching - -
Loss Due To Printing - -
Subtotal 321.55
Interest on yarn
prices:/margin 10.00% 32.16
Dyed Fabric Cost: 353.71
Garment costing
Avg. Fabric Consumption
(gram) 210.00 74.28
CMTP Charges

Stitching: 20.00
Cutting: 2.50
Finishing: 6.00
Packaging: 4.50
Embellishment 2.50
Trims 4.00 39.50
Sub Total 113.78

Overhead cost 12.00% 13.65
Margin (after overhead) 20.00% 25.49
Ratio/Rejection 4.00% 5.10
Charges for On Board 1.00
The total price of this apparel item 159.02
Fob prices: US$ Rate: 49.00 $ 3.25
Internal Price FOB $ 3.25
Table 4: COST SHEET
4.4. Using cost sheet to develop quotation for bulk production.

What is quotation cost sheet?
A cost sheet is a statement that shows the various costs that are incurred in the production of a product
or service. It includes the direct cost of materials, labor, and overheads, as well as indirect costs such as
administrative and selling expenses
Price quotation is an important factor in the garments manufacturing sector. There are different
types of price quotation methods as well. Usually, a clothing company is invited by different
companies/ institutions that want to avail their services, to send in their quotations . After
receiving quotations from different clothing companies, the client company takes a decision
based on various factors important to them.
A quotation cost sheet in the fashion industry:- is a document that outlines the estimated costs
associated with producing a specific garment or collection. It includes detailed information about
the materials, labor, and other expenses required for production. The quotation cost sheet is
typically prepared by the manufacturer or supplier and provided to the fashion company as part
of the sourcing and production process. It helps the fashion company understand the potential

costs involved in producing their designs and allows them to make informed decisions about
pricing, budgeting, and overall profitability.

Table 5: quotation cost sheet in the fashion industry

]
Self-check 4
Part I
Say true or false
1.A cost sheet is a report which is not accumulated all of the costs associated with a product or production
job.
2. A quotation cost sheet is the document that outlines the estimated costs associated with producing a
specific garment or collection.
3. The cost of production includes only all direct material cost and labor cost
Part II
Multiple choices
1. Which term doesn’t explain prime cost?
A. raw material, B. labor wages C. production-related expenses, D. Indirect Expenses
2. Which one is not true about Cost Sheet describes?
A .It includes Total cost and cost per unit for a product B. elements of cost such as prime cost, factory cost
C . every expenditure to the total cost. D. Not calculate and summarize the total cost of the product.
3. What is a quotation cost sheet in the fashion industry?
A. A document that outlines the estimated costs associated with producing a specific garment or collection.
B. A document that provides information about the latest fashion trends. C.adocument details a fashion style
D. All
4. Who typically prepares the quotation cost sheet in the fashion industry?
A. The fashion company B. The manufacturer or supplier C. Customers D. Merchandizer
5. What is the purpose of a cost sheet in the fashion industry?
A. To determine the total cost incurred by the organization.
B. To compile the margin earned on a product or job.
C. To set prices for similar products in the future.
D. All of the above.
Part III
1. Discuss the different between cost sheet and quotation cost sheet?
2. List out Cost Sheet depicts.
3. List out the component of cost sheets.

References:
1. Occupational safety and health improvement in the garment industry. (vision zero fund case study )
2.Çoruh, E.,2010, “Production System Approaches for Readymade Garment Industry”, Journal of Textiles
and Engineers, 17, pp. 11-19.
3. Apparel costing
4.Overview of fashion brand – By Prasad Kulkarni
5.Apparel Manufacturing Technology by T. Karthik, P. Ganesan and D. Gopalakrishnan
6. Apparel Merchandising by R. Rathinamoorthy and R. Surjit
7.http://www.onlineclothingstudy.com/2012/06/how-to-calculate-raw-material-cost-for.html
N Name Qualificatio Field of Organization Mobile E-mail

o n (Level) Study / Institution number
1 Kebere Belihu A- level Fashion Misrak 92077516 keberebelihu1@gmail.com
Geze Design and Polytechnic 8
Garment College
Engineerin
g
2 Eyerusalem B-Level Garment Misrak 93304201 eyerusmiliyon500@gmail.com
Miliyon Engineerin Polytechnic 0
g College
3 Tachawot A-Level Garment Misrak 92160014 tachawutl@gmail.com
Lewoyew Engineerin Polytechnic 0
g College
4 Misgana B-Level Garment Misrak 92105179 roberaabdisa@gmail.com

Abdisa Jorte Engineerin Polytechnic 1
g College
5 Meseret B-Level Garment Misrak 93782084
Getiye Technolog Polytechnic 2
y College
6 Meseret Abebe B-Level Garment Misrak 91005419
Engineerin Polytechnic 8
g College
7 Hamid Ditamo B-Level Garment Misrak 91239811 kemaldetamo@gmail.com
Engineerin Polytechnic 9
g College
8 Boja B-Level Garment Misrak 92062354 bojagarment@gmail.com
Mekonnen Technolog Polytechnic 8
y College
9 Temesgen B-Level Garment Misrak 91986643 kayoojaleta@gmail.com
Dereje Engineerin Polytechnic 2
g College
10 Bereket B-Level Garment Misrak 92332738 berekety26@gmail.com
Yohannes Technolog Polytechnic 8
y College
11 Rebuma B-Level Garment Misrak 91597667 rebuni26@gmail.com
Bedada Technolog Polytechnic 0
Beyene y College


MO8 Perform Job Estimate and Costing

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Fashion design

Based on March 2022, Curriculum Version 1

MODULE TITLE: performing job estimate and costing

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You will be able to The Concept of:-

 Cost of a Garment (cost of fashion design).

 This module covers the units:-

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1. Read the information written in each unit

2. Accomplish the Self-checks at the end of each unit

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Costing in Apparel Industry:

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1.1.3. Most common OHS problem in Garment industry:

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1.1.4.What is Garment Costing Classification of Garment Costing

1.1.5. Factors Affecting Costing:

The various elements in apparel costing are:

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…………………………….. seam length x stitches per inch

SAM for stitching = ————————————————————–

…………………………………..machine speed (rpm)

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1.2.1. Factors Affecting Garment Costing or Factors:-

A. External factors influencing pricing decisions:

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B. Internal factors influencing pricing decisions:

Top 6 factors which directly affecting price of fashion:

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1.2.3. Market demand for fashion labels

1. Questionnaires and Surveys

2. Forecast by Fashion Influencers

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1.2.5. Selecting and Documenting the Products for Fast Fashion

2. Develop Designs In-House

4. New Products Twice Per Week

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2. Popular products can be sold at a higher B. Garment sizes

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3. How do we evaluate the cost in apparel costing?

4. The External factors influencing pricing decisions in fashion industry?

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Unit two: Cost in fashion products.

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2.1.2. Trims, Thread, Buttons, Zippers and other accessories

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2.3. Hidden costs in sample production are identified.

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<<< The cost of not knowing your costs >>>

Where do they manifest and how to identify them?

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