Garments Costing for Export Order
Noor Ahmed Raaz
B.Sc. in Textile Engineering (CU)
Specialized in Apparel Manufacturing
A.M.C.S Textile Ltd (AEPZ)
Garment costing is a very important part of export garments business. An important part of the management of the textile mill is the determination of the production costs. Cost involves numerous variable factors which are often hard to evaluate accurately and mathematical exactness in difficult to reach. The yarn market fluctuates, finishing materials and dyestuff, etc. changes from season to season, and equipment’s are often replaced by more modern machinery. Now I would like to discuss about general costing process for an export order in the garment industry.
Garments Costing for Export Order:
For fixation of a garment price of export order followings types of costing should be observed carefully by-
1. According to relation with production
- Direct Cost (Fabric and Accessories cost)
- Indirect Cost (Management cost, electricity cost, transport cost etc.)
2. According to Fixed and Variable System
- Fixed Cost (Building cost, Machinery cost)
- Variable Cost (Transportation, salary etc.)
3. According to Cost Element
- Material cost
- Labor cost
4. According to Function
- Production Cost
- Sales and Marketing Cost
- Administrative Cost
Generally there are many ways to find out a standard export order costing. Here the costing function of a garment is described below:
- Cost of fabric/doz. Garments (woven/knit) or cost of yarn/doz. Or Garments (sweater).
- Cost of weaving/knitting.
- Cost of Dyeing (if necessary).
- Cost of Printing (if necessary).
- Cost of embroidery (if necessary).
- Cost of accessories/doz. Garments.
- Cost of manufacturing (CM)/doz. Garments.
- Cost or transportation from factory to sea port.
- Clearing and forwarding cost.
- Commission/ profit.
Note: There are many ways of calculation the costing of a Garments such as F O B terms, C & A, C I F and some others etc. each of specific criteria.