How to Calculate Knitting Cost and Weaving Cost : Easy Process with Proper Example

Introduction

Are want to do job in apparel industry? or your dream is to be a merchandiser in the apparel industry. This article is for you. This article will be describe how to calculate knitting cost and weaving cost in the apparel industry. As part of the fabrication process, various processes are involved, including knitting, weaving, scouring, bleaching, dyeing, finishing treatments, etc. During the costing process, to estimate fabric cost, we must add all the costs associated with the process that the fabric undergoes when it is sourced and converted into fabric. As a result of the yarn cost and process cost of the fabric, the fabric cost will be the final cost. However, from this article, you will gain lots of knowledge about process cost calculation. Here, present some example of process cost calculation. Process cost calculation means not only calculation of knitting cost and calculation of weaving cost but also means other process associate with fabrication such as scouring, bleaching, dyeing etc. However, In this article will be discuss calculation of knitting cost and calculation of weaving cost as part of process cost calculation.

Factors of Calculate Knitting Cost and Weaving Cost

For the calculate knitting cost or weaving cost, one must know the following factors to estimate the cost of the knitting cost and weaving cost.

Total number of machines used.
Number of shifts per day.
Production capacity of the plant or individual machine/shift or day.
Yarn quantity used.
Waste percentage.
Number of operators or helpers.
Operator wages.
Other expenditures.

Above mentioned factors must be consider when you calculate knitting cost and weaving cost. The following some example details the cost calculation of knitting process and weaving process.

Exercise: Calculate Knitting Cost

N.B.: All data provided here are approximately. These data are used only for your understanding purpose.

Exercise 1: One of the world’s most famous company wishes to develop single jersey cotton fabric to celebrate TextileTrainer’s birthday. The company sourced 3000 kg of yarn which price is Rs. 200 per kg. The knitting industry works with 10 weft knitting machine and these industry’s production capacity is 90 kg per machine. The average waste % approximately about 2%. The company works with 7 operators and 3 helpers with the wage of Rs. 300 and Rs. 160 per shift respectively. The company sends Rs. 6000 per month for rent, Rs. 2500 per month for electricity and Rs. 20,000 per month for other expenses. Now calculate knitting cost per kg with 15% profit. (Assume company works 26 days per month)

Solution:

Step 1: Calculate the number of shifts required to complete the order

Average production capacity is 90kg per machine with wastage 2%. The number of machine is 10 Total yarn is require to complete the order is 3000 kg.

Now,

Total production per day= Average machine production × number of machine. = 90 ×10= 900 kg per shift.
The wastage percentage expected= 2%
Hence, the original quantity produced= 3,000- (2% of 3,000) = 2,940 kg
Total number of shifts required= Total yarn quantity ÷ production capacity per shift= 3000÷ 900= 3.33 shifts.

Step 2: Calculate the total labour cost

The company works with 7 machine operators and 3 helpers with the wage of Rs. 300 and Rs. 160 per shift respectively.

Cost of operators= No. of labours × No. of shifts worked to complete order × wages per shift= 7 × 3.33 × 300= Rs. 6,933
Cost of helpers= 3×3.33×160= Rs. 1,598.4
Total labour cost= Cost of operators + Cost of helpers= 6,933 + 1,598.4= Rs. 8,531.4

Step 3 : Calculation of direct material cost

Total yarn need to complete the order is 3000 kg and yarn price is Rs. 200 per kg

Yarn purchased= 3000×200= Rs. 6,00,000

Step 4: Calculation of overheads

Each month, the company pays Rs. 6000 for rent, Rs. 2500 for electricity, and Rs. 20,000 for other expenses. The company spends all these overheads every month (26 days). Since the company has one shift per day, the 1 day or 1 shift overhead is as follows:

Overheads= (6000+ 2500+ 20000) ÷ 26= Rs. 1,096.15
Since, the company works 3.33 shifts for this order.
Total overheads = 1096.15 × 3.33= Rs. 3,650.19

Step 5: The overall calculate knitting cost

The total knitted fabric cost/kg= (Material cost+ Labour cost+ Overheads )÷ original quantity production= ( 6,00,000+ 8,531.4+3,650.19) ÷ 2,940= Rs. 208.23
Knitting cost per kg= (labour cost+ overheads) ÷ total production= ( 8,531.4+3,650.19) ÷ 2,940= Rs. 4.14
Knitting rate per kg= 4.14 + (15% profit of 4.14)= Rs. 4.76

Exercise: Calculate Weaving Cost

Exercise 2: A weaving factory has received an order for 50,000 metres of plain woven fabric. The weaving factory consists of 40 auto looms with 250 RPM. There are 30 weavers and 5 helpers who are paid Rs. 500 per shift and Rs. 250 per shift respectively. 3 supervisors are paid Rs. 25,000 per month to maintain the weaving unit. If the company works at 80% efficiency and produces fabric with an average of 80 picks per inch, calculate weaving cost per metre with a 25% profit. In terms of overhead, these factory spend Rs. 4,00,000 per month on power, Rs. 2,50,000 per month on salaries of other employees, Rs. 60, 000 per month on oil and other consumables. The company aslo spend Rs. 2,00,000 a month on spares and other parts, Rs. 30,000 a month on knotting costs, and Rs. 2,50,000 as other expenses and bank interest. Assume that the company works three shifts a day and 26 days per month.

Solution

Step 1: Calculate the number of shift required to complete the order

The weaving factory consists of 40 auto looms with 250 RPM. Total order received 50,000 metres. the company works at 80% efficiency and produces fabric with an average of 80 picks per inch.

Production per machine= {RPM ÷ (Picks per inch× 39.37)} × total working hour× 60× efficiency = { 250÷ ( 80× 39.37)} × 24×60× 80% = 91.44 metres/ machine/ day
Total production/ day= 40× 91.44= 3657.6 metres/day
Total number of days required= Order quantity ÷ daily production= 50,000÷ 3657.6= 13.67days
Total number of shifts= 13.67 × 3= 41.01 shifts [As company works 3 shifts per day]

Step 2: Calculate labour cost

The number of labours used are, 30 machine operators or weavers with the wage of Rs. 500 per shift, 5 machine helper with the wage of Rs. 250 per shift and 3 supervisors with the salary of Rs. 25,000 per month.

The supervisor wage per day= 25,000÷ 26= Rs. 961.54
Cost of operator= Number of operator× total working shifts × wages per shift= 30× 41.01× 500= Rs. 6,15,150
Cost of helper= 5× 41.01× 250= Rs. 51,262.5
Cost of supervisor= 3 × 961.54×13.67 = Rs. 39,432.75
N.B. : Here, the supervisor alone works in a monthly salary basis, hence, for them the number of days is considered for cost calculation instead of shifts.
Total labour cost= 6,15,150+ 51,262.5+ 39,432= Rs. 7,05,845.25

Step 3: Calculate Overhead Charges

The factory spends Rs. 4,00,000 on power each month, Rs. 2,50,000 on salaries of other employees, Rs. 60, 000 on oil and consumables each month. Apart from spares and other parts, the company spends Rs. 2,00,000 a month, knotting costs Rs. 30,000 per month and Rs. 2,50,000 on other expenses and bank interest.

Total expenses= 4,00,000 + 2,50,000+ 60,000+ 2,00,000+30,000+2,50,000= Rs. 11,90,000
Daily Overhead= 11,90,000÷ 26= Rs. 45,769.23
Total overhead charge to complete the order= 45,769.23× 13.67= Rs. 6,25,665.37

Step 4: Calculate weaving cost

Total cost= labour cost + overheads= 7,05,845.25+6,25,665.37= Rs. 13,31,510.62
Weaving cost per metre= (13,31,510.62÷ 50,000)= Rs. 26.63/ Metre
Weaving cost with 25% profit= 26.63+ (25% of 26.63)= Rs. 33.29/ metre fabric.

Exercise 3: A weaving unit with auto looms consists of 50 looms with the capacity of 250 RPM. The company works with 80% efficiency and produces fabric with an average of 80 picks per inch, calculating a pick cost with a 20% profit. The company employs 30 weavers and 10 helpers who are paid Rs. 400 and Rs. 200 per shift, respectively. Overhead details are Rs. 4,00,000 for power, Rs. 2,50,000 for other staff salaries, Rs. 1,00,000 for oil and other consumables. Expenses for spare parts and other parts are Rs. 1,50,000 per month, knotting costs are Rs. 40,000 per month, and other expenses are Rs. 4,00,000. Assume 26 days in a month and 3 shifts per day.

Solution

Step 1: Calculate total production

Production per machine= {RPM÷ (PPI× 39.37)}×24×60× efficiency= {250÷(80×39.37)}×60×24× 80%= 91.44metres/ machine/day.
Total production/ day= 50 × 91.44= 4,572 metres per day.
Total production per month= 4,572×26= 1,18,872 metres.

Step 2: Labour cost

The number of labours used are, 30 machine operators with the wage of Rs. 400 per shift, 10 machine helper with the wage of Rs. 200 per shift.

Labour cost of machine operators= Number of labour× total working shift× wages per shift= 30×(3×26)×400=Rs. 9,36,000
Labour cost of machine helper= 10×(3×26)×200= Rs. 1,56,000
Total labour cost= Machine operators cost+ Machine helper cost= 9,36,000+1,56,000= 10,92,000Rs.

Step 3: Overhead charges

Rs. 4,00,000 per month for power.
Rs. 2,50,000 per month for other staff salary.
Rs. 1,00,000 per month for oil and other consumables.
Rs. 1,50,000 per month for spares and other parts.
Rs. 40,000 per month as knotting cost.
Rs. 4,00,000 per month as other expenses.

Total expenses= 4,00,000+2,50,000+1,00,000+1,50,000+40,000+4,00,000= Rs. 13,40,000

Step 4: Calculate weaving cost (pick cost)

Total cost= labour cost+ overheads= 10,92,000+13,40,000 = Rs. 24,32,000
Weaving cost/metre= 24,32,000÷ 1,18,872 = Rs. 20.46 per metre.
So, Pick rate= Fabric cost per metre÷ PPI= 20.46÷ 80= Rs. 0.256 per inch.
Pick cost with 20% profit= 0.256 + ( 20% of 0.256)= Rs.0.307
If we consider the above mentioned example, after calculating the cost of a single pick, from that we can derive the cost of the woven fabric per metre. Here fabric width assume 56 inch.
The cost of fabric per metre= fabric width × cost of pick= 56 ×0.307= Rs. 17.19 per metre.

Conclusion

These are the calculation of knitting cost and calculation of weaving cost. These article is tried to present the calculation of knitting cost and weaving cost in simple way. If you have any question about this article, write comments your question.

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