Embroidery Cost Calculation Process in Garments Industry with Easy Simple Steps: 3 Example

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Introduction

This article is about how to calculate embroidery cost in garments industry. Before going to the main embroidery cost calculation process, lets come to learn about embroidery. A good example of ornamental stitching is embroidery. Embroidery is used to make garments more attractive and fashionable look according to buyer requirements. Today, it is very widely used in garments industry. It is hardly seen that there are not order get without embroidery. It is an essential part for decorating garments. Merchandising should take embroidery into account when he makes costing garments in his garments industry. Therefore, it is necessary that she or he knows how to calculate embroidery cost in the garments industry.

Key factors of Embroidery Cost Calculation Process

The following are the factors affecting embroidery cost calculation Process

Type of embroidery should me consider when calculate embroidery cost.
Identify how many colour of threads are in the embroidery design.
Identify the place of embroidery because embroidery cost me be vary place to place.
Any restriction on the selection on the embroidery machine
Any restriction on the use of embroidery thread
Number of stitches should be calculate.
Time require to complete one batch
Resource and hand involvement in doing embroidery.
Any compliance requirement
Any lab test requirement.

Standard Location of Embroidery

Here the prime location of embroidery of polo shirt is mentioned below.

Standard Location of Embroidery of polo shirt back side — Figure 4: Standard Location of Embroidery (Back side)

Embroidery Cost Calculation Formula

Below given embroidery cost calculation formula which is use to calculate embroidery cost in garments industry.

Embroidery Cost per garments= {(Stitch quantity ÷ 1000) × Rate per unit}
Embroidery Cost per dozen = {(Stitch quantity ÷ 12,000) × Rate per unit}×12

Note: There are generally 1000 stitches in a unit. For a dozen garments, a unit is usually 12,000 stitches.

Exercise: Embroidery Cost Calculation Process

Example 1: Textile trainer order 15,000 T-shirt for 3 years celebration in a eco-friendly garments industry. The T-shirt contain logo of textile trainer which have to embroidery. Stitch quantity of the logo is 8000 and rate per unit design is Rs. 0.55. Now calculate embroidery cost per T-shirt.

Solution

Here,

Total order quantity= 15,000
Stitch quantity of the logo= 8000
Rate per unit design= Rs. 0.55
Embroidery cost per garments= ??

We know that,

Embroidery Cost per garments= {(Stitch quantity ÷ 1000) × Rate per unit}= {(8000 ÷ 1000) × 0.55}= Rs. 4.4
Total embroidery cost= Total order quantity × embroidery cost per garments= 15,000× 4.4= Rs. 66,000
Total embroidery cost for textile trainer logo is Rs. 66,000

Example 2: Suppose H&M buyer order 2,40,00 ladies T-shirt in a garments industry which have a embroidery flower design. If design require 10000 stitches and rate per unit is Rs. 0.45. Now, Calculate embroidery cost per dozen of garments.

Here,

Total order quantity= 2,40,000 pcs
So, order quantity in dozen= 2,40,000 ÷ 12= 20,000
Stitch quantity of embroidery flower design= 10000
Rate per unit= Rs. 0.45
Embroidery cost per dozen=?

We know that,

Embroidery Cost per dozen = {(Stitch quantity ÷ 12,000) × Rate per unit}×12= {(10000 ÷ 12,000) ×0.45}×12= Rs. 4.5
Total embroidery cost for this order= 20,000 ×4.5= Rs. 90,000

Example 3: A garments industry received an order for 10,000 polo shirts. Figure 1 illustrates the polo shirt in detail. The operator wages for the machines are Rs. 400 (over lock), Rs.300 (single needle lock stitch), and Rs.350 (flat lock). Assume the company works two shifts per day, the actual target date is 4 days from today. During manufacturing, the company rented externally the button hole and button attaching machines from a vendor for this order. A button hole-making machine is rented on a per-hour basis, whereas a button attaching machine is rented on a per-shift basis. The button attaching machine rents for Rs. 1500 per shift, while a button hole-making machine rents for Rs.200 per hour. Button can be attached about 200 garments per hour and making hole on 300 garments per hour. An average garment requires 75 metres of sewing thread, 0.45 metres of twill tape, and three buttons to be constructed. The cost of sewing thread is Rs. 70 per cone, the cost of twill tape is Rs. 3 per metre, and the cost of buttons is Rs. 80 per gross. In order to embroider the design, 8000 stitches are required. The cost of the embroidery process is Rs. 0.40. Now,

Calculate Embroidery Cost per garment
Calculate the sewing cost with 10% profit.

Polo shirt for embroidery cost calculation — Figure 5:Descripton of a polo shirt

Solution

Step 1: Calculate embroidery cost

Here, design for embroidery is requires 8000 stitches and the cost of the embroidery process is Rs. 0.40.
Embroidery Cost per garments = {(Stitch quantity ÷ 1000) × Rate per unit}= { (8000÷1000)×0.40}= Rs. 3.2
Total embroider cost for this order= Total order quantity × embroidery cost per garments= 10,000 × 3.2= Rs. 32,000

Step 2: Calculate target production per hour

The order quantity= 10,000 garments
Target date= 4 days
Target shift=4 ×2= 8 shift ( two shift per day)
Garments production per day to complete order= Order quantity ÷ target day= 10000÷4= 2,500 garments per day.
Since the company works two shifts per day.
Production require per shift= 2500 ÷ 2= 1250 garments per shift
Target production per hour= 1250÷ 8= 156.25= Almost 157 garments per hour.

Step 3: Calculation of labour cost

Due to the lack of information regarding labour in the details, we can calculate the number of hours of labour required to complete the order using the garment picture. From figure 1, we can determine how the operation will be broken up as shown in table 1.

Formula for operator required= {(SMV× Target production per hour) ÷ 60}

S/N	Operations	M/C used	SMV	Output/hour	No. of Operators
Target: 157 garments per hour
1.	Placket preparation	SNLS	0.3	200	0.785~1
2.	Placket attach	SNLS	0.6	100	1.57~2
3.	Placket finishing	SNLS	0.3	200	0.785~1
4.	Size and brand label attach	SNLS	0.25	240	0.654~1
5.	Shoulder attach (both the sides)	OL	0.6	100	1.57~2
6.	Sleeve rib attach (both the sleeves)	OL	0.3	200	0.785~1
7.	Sleeve attach (both)	OL	0.5	120	1.31 ~ 2
8.	Collar attch	OL	0.6	100	1.57~2
9.	Collar finishing	SNLS	0.4	150	1.04 ~ 1
10.	Collar tape attach	SNLS	0.5	120	1.31~2
11.	Slit preparation	OL	0.3	200	0.785~1
12.	Side seam	OL	0.6	100	1.57~2
13.	Bottom hem	FL	0.4	150	1.04~1
14.	Top stitch on arm hole	FL	0.6	100	1.57~2
		Total SMV	6.25	Total operator	21

Table 1: Operation break up and SMV allocation

To achieve the provided target, the company needs to use totally 21 operators. 8 operators for single needle machine, 10 operators for overlock machine, and 3 operators for flat lock machine.

Labour cost for single needle machine operator= Number of operator × total working shifts× wages per shift= 8×8 ×300= Rs. 19,200
Labour cost for overlock machine operator= 10× 8 ×400=Rs. 32,000
Labour cost for flat lock machine operator= 3×8×350=Rs. 8,400
Total labour cost= 19,200+32,000+8,400= Rs. 59,600

Step 4: Calculation other expenses ( machine rental cost)

Button hole machine
- Button hole machine is rented Rs. 200 per hour and average production per hour is 300Hence, total requirement of the machine= order quantity ÷ target per hour= 10000 ÷ 300= 33.33 hour= Almost 34 hours.
- Total cost for button hole machine= 34×200= Rs. 6,800
Button attaching machine
- Button attaching machine is rented Rs. 1500 per shift and average production is 200 garment per hour.Hence, the total requirement of the machine= order quantity ÷ target per hour= 10000 ÷ 200= 50 hour= 50 ÷ 8= 6.25 shifts= Almost 7 shifts
- Total cost for button attaching machine= 7 × 1500= Rs. 10,500
Total rental expenses for this order= 6,800+ 10,500= Rs. 17,300

Step 5: Calculation of raw material cost

Sewing thread
- During seing, each garment consumes 75 metres of sewing thread.Total amount of sewing thread required= 75 × 10000= 7,50,000 metresNumber of cones required= 7,50,000 ÷ 5000 = 150 cones [ 1 cone holds 5000 metre thread]
- Total sewing thread cost= 70 × 150 = Rs. 10,500
Twill tape
- During sewing, each garment consumes 0.45 metres of twill tapeTotal twill tape required= 0.45 × 10,000= 4500 metres
- Total cost of twill tape= 3 × 4500= Rs. 13,500
Button
- During sewing, each garment consumes three buttoms.Total number of button required= 3× 10,000= 30,000 buttonsCost of button per gross is Rs. 80Total number of button groos required= 30,000 ÷ 144= = 208.33 gross
- Total button cost= 80 × 209= Rs. 16,720
Total material cost= sewing thread+ twill tape cost+ button cost+ embroidery cost= 10,500+13,500+16,720+32,000 = Rs. 72,720

Note: The overhead cost is not provided in the calculation due to the lack of information. In industry, however, if the information is not available, the merchandiser will assume the overhead is 120 % of the direct labour cost (based on the risk factor associated with the order).

Step 6: Calculate sewing cost per garment

Total cost= labour cost + material cost+ other expenses + overheads= 59,600+72,720+17,300+ (59,600×120%)= Rs. 2,21,140
Total cost with profit= 2,21,140 + ( 2,21,140× 10%)= Rs. 2,43,254
Sewing cost per garment= total cost ÷ order quantity= 2,43,254 ÷ 10,000= Rs. 24.32
The sewing cost per garment is Rs. 24.32

Conclusion

Here are the embroidery cost calculations. All data is used for understanding purposes. If you calculate embroidery cost in your garment factory, be sure to consider the market price. I would, however, be happy to answer any questions you may have regarding embroidery cost calculation.

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