How to calculate CM in garments industry?

Calculating the manufacturing cost is crucial in the clothing sector to ensure profitability. The cost of producing a dozen clothing is known as the cost of manufacture (CM). A number of variables, including factory costs, the total number of operating machines, the number of machines, daily productivity, and currency exchange rates must be taken into account in order to calculate the CM for a specific order. In this blog, we'll go through how to determine a garment order's CM and the variables that play a role in that calculation.

Cost of Manufacture, or CM, is used in the clothing industry. It actually relates to the cost of producing a dozen (12) items of clothing. The following criteria must be known in order to calculate the manufacturing cost of a dozen garments for a certain order:

1. Factory's monthly operating costs,

2. The entire running machine,

3. The number of machines to carry out the design of the specified order,

4. The order's daily productivity (8 hours per day),

5. The exchange rate for dollars (if your monthly expenses are not in US dollars)

Suppose,

50,000 BDT (Bangladeshi Taka) per month for factory expenses

There are 26 working days in a month.

Daily Factory Cost: 50,000 divided by 26 equals 1,92,307.69 BDT

(Formula: factory expense per month x number of working days in the month)

There are 150 active machines in the factory as a whole.

1 machine's daily cost is 192307.69 * 150 = 1282.05 BDT.

(Formula: total running machine daily factory expense)

Layout machine number for the aforementioned order is 27

Cost of the layout every day: 1282.05 x 27 = 34,615 BDT

(Formula: Daily Machine Expenditure x Layout Machine Quantity)

Suppose,

Layout manufacturing rate per hour = 125 pieces

8 hours are the typical daily working hours.

The Daily Production of the Layout is therefore: 125 x 8 = 1000 pieces.

(Formula: Layout production hours per hour divided by the average daily working hour)

Cost of production for 1 unit: 34615 divided by 1000 is 34.62 BDT.

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

CM (Manufacturing Cost of 12 pieces of clothing) is therefore: 34.62 x 12 = 415.44 BDT

(Formula: 1PC x 12 Manufacturing Cost)

1 US Dollar is equal to 78.26 BDT (Bangladeshi Taka) in currency conversion.

Therefore, CM (Manufacturing Cost of 12 Pieces of Clothes) in US Dollars is as follows: 415.44 x 78.26 = 5.30 US$

With CM, 20% profit will be added: 5.30 x 20% = 1.06 US dollars.

Thus, Final CM = 5.30 + 1.06 = 6.36 US dollars.

In the clothing sector, it is critical to be aware of an order's manufacturing costs. Manufacturers can assess the overall cost of manufacturing and establish competitive prices by calculating the CM. It is important to consider the variables that affect the CM, such as factory costs, the total number of operating machines, machine quantity, daily productivity, and currency exchange rates. Manufacturers can calculate the CM for their orders and assure profitability by using the techniques described in this blog.