Scribd
Upload
1K views4 pages

9 A. Factory - Cost

The document discusses the costs involved in apparel manufacturing. It notes that total manufacturing costs include direct costs like wages, materials, utilities as well as indirect costs from quality control, compliance, downtime, borrowing, and overhead. Costs are further broken down into categories like labor, capital, utilities, quality, compliance, and operations. The document provides a hypothetical model factory and requests the user to input cost details under various parameters like number of machines, staff, area, utilities usage, salaries, statutory benefits, consumables, and other expenses. The total cost is to be calculated both with and without depreciation to determine the running cost per machine per day.

Uploaded by

DÃljït Sīñgh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
1K views4 pages

9 A. Factory - Cost

The document discusses the costs involved in apparel manufacturing. It notes that total manufacturing costs include direct costs like wages, materials, utilities as well as indirect costs from quality control, compliance, downtime, borrowing, and overhead. Costs are further broken down into categories like labor, capital, utilities, quality, compliance, and operations. The document provides a hypothetical model factory and requests the user to input cost details under various parameters like number of machines, staff, area, utilities usage, salaries, statutory benefits, consumables, and other expenses. The total cost is to be calculated both with and without depreciation to determine the running cost per machine per day.

Uploaded by

DÃljït Sīñgh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
You are on page 1/ 4

Cost of Manufacturing

Running cost for an average apparel manufacturing unit is becoming important in the era of global compe
shift” or “cost per machine per minute”. Even two companies having similar kind of technology levels and
expenditure due to the aforesaid factors.

The difference in cost per m/c shift of two companies is not only due to difference in degree of automation
utilities, cost of quality, cost of compliance, cost of downtime, cost of overheads, cost of borrowing and mo

Total cost of labour includes wages for operator, supervisor up to manager in factory; salary of office and
to non-managerial staffs. Capital cost includes cost of land, building and machineries, furniture and fixture
the capital cost equivalent to cost of borrowing the capital cost. While the depreciation of machineries
building is ignored for the reason that it does not affect the cost of manufacturing and profitability. Deprec
annum while depreciation of building is calculated as 2% per annum. It is interesting to note that depre
machinery is 10 years and above) is either zero or negligible.

Please be careful while filling up data; all data should be for a manufacturing unit not part data for
centralized cutting and centralized merchandising expenses for cutting and merchandising faci
finishing. (don't ask and fill up, please fill up actual data yourself from records as far as possible)

Categorise the total cost into different heads. Try to calculate the total cost in the following categories n
Cost of Utilities, [4] Cost of Quality, [5] Cost of Downtime, [6] Cost of Compliance, [7] Operational Expens
QA and cutting employees are 81%, 6% and 13% respectively.

In next sheet data for hypothetical model factory is given; you are supposed to r
Students name
Centre studying
Company name
Company location (Country/State/district/city)
No. of shifts
Please careful while filling up data; data should be for an unit not for whole group (don't ask and fill up, please fill up actual dat

Parameters Details unit Financial cost


Running cost
capital cost per month
No. of sewing machines 400
No. of total staff (operator to CEO) 1000
Total area reqd. 4000 sq. meters
Land area 3200 sq. meters
Power reqd. 400 KW
Working hours per day 10
Working days per month 25

Plant and Machineries (including utilities) 30000000


Land 16000000
Building 20000000

Salaries and wages (operator to CEO) 3500000


Statitury benefits (ESI, bonus etc.) 900000
Overtime (for 600 employees) 750000
Interest on capital (@ 1% per month) 660000
Depreciation on plant and machineries (@15% per annum) 375000
Depreciation on building (@ 2% per annum) 33333.333333
Maintenance (3% on building and machinery) 125000
Consumables 50000
Power & Fuel (400 kw all inclusive) 550000
Conmmunication 150000
Conveyance 500000
Travel (international) 200000
Postage & Couriers 70000
Product Development 400000
insurance & Legal 100000
Staff welfare recreation 50000
Unforeseen 150000

Total Cost (including depreciation) 66000000 8563333.3333


Running cost per machine per day (based on total cost) 0
Total Cost (excluding depreciation) 8155000
Running cost per machine per day (based on total cost) 815.5
1
and fill up, please fill up actual data from records as far as possible) 2
3
4

5
6
7

8
9

10
11
12
13
14
15
16
17
18
19
20
21
22
23

6380000
680.5333
Parameters Details

No. of sewing machines


No. of total staff (operator to CEO)
Total area reqd.
Land area

Power reqd.
Working hours per day
Working days per month

Cost of all the machines


Rent for the land

Cost of:
Salaries and wages (operator to CEO)
Statitury benefits (ESI, bonus etc.)
Overtime (for 600 employees)
Consumables
Interest on capital (@ 1% per month)
Power & Fuel
Conmmunication
Conveyance
Travel (international)
Postage & Couriers
Product Development
insurance & Legal
Staff welfare recreation
Unforeseen

You might also like