A to z glossary of apparel costing free e book by anjuli g

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A-Z Glossary on Apparel Costing
Here is an attempt to share useful information in easy digestible format for apparel and
fashion professionals. An A-Z Glossary on Apparel Costing.
Sr
No.
Term Definition
1 AGOA The African Growth and Opportunity Act, or AGOA (Title I,
Trade and Development Act of 2000; P.L. 106–200 [2]) is a legislation
that has been approved by the U.S. Congress in May 2000. The
purpose of this legislation is to assist the economies of sub-Saharan
Africa and to improve economic relations between the United States
and the region.[3] Effective October 1, 2000, the United States
established a preferential program that grants duty-free and quota-free
duty status for apparel products manufactured in certain Sub-Saharan
Africa countries After completing its initial 15-year period of validity,
the AGOA legislation was extended on 29 June 2015 by a further 10
years, to 2025.[4]
Links-
https://en.wikipedia.org/wiki/African_Growth_and_Opportunity_Ac
t
http://trade.gov/agoa/
http://agoa.info/
2 ALC Actual Landed Cost
3 CAFTA The Dominican Republic–Central America Free Trade
Agreement (CAFTA-DR) is a free trade agreement (legally a treaty
under international law, but not under U.S. law). Originally, the
agreement encompassed the United States and the Central American
countries of Costa Rica, El Salvador, Guatemala, Honduras, and
Nicaragua, and was called CAFTA. In 2004, the Dominican Republic
joined the negotiations, and the agreement was renamed CAFTA-DR.
Links -
http://bit.ly/291fimO
http://1.usa.gov/290v7GN
4 CBM CBM is the volume of the carton used for shipping goods. The freight
rates by shipping companies are charged based upon per CBM. You
need to know the dimensions of the carton – L X B X H in meters to
arrive at the cubic meter volume or CBM. Freight cost per item will
depend on number of units of that item placed inside that garment.

For Garments, the formula is –
Volume per Carton X Freight Charge or rate per CBM ÷ No of
garments in a carton
OR
Volume per Carton ÷ No of garments in a carton X Freight Charges per
CBM
For air freight purposes, one needs to calculate what is known as
volumetric weight. Air Freight rates are based on either gross weight
or volumetric weight whichever is higher.
Links –
http://www.ginifab.com/feeds/cbm/
http://www.dhl.com.sg/en/tools/volumetric_weight_express.html
http://www.online-calculators.co.uk/volumetric/weight.php
5 CBTPA Caribbean Basin Trade Partnership Act (CBTPA)
CBTPA was implemented on October 5, 2000, and expires on
September 30, 2020. CBTPA generally provides for duty-free entry of
goods into the United States from designated Beneficiary
Countries. CBTPA applies to both textile goods and certain non-textile
goods. Nevertheless, the majority of CBTPA claims are for textile
imports.
Links –
http://1.usa.gov/294Ao1V
6 CVC CVC refers to “Chief Value Cotton” fabrics that are made from
combining cotton with polyester. Cotton is a naturally derived fabric,
and when it is combined with synthetic fibers like polyester, the fabric
is called CVC. Usually, the cotton content is more than 50 percent of
the total combination with polyester. A CVC fabric may be made of 55
percent or 80 percent cotton with the remaining percentage indicating
the amount of polyester used. CVC fabrics are cheaper than pure
cotton fabrics.
Link –
http://www.qwhatis.com/what-is-cvc-fabric/
7 CM CM refers to the Cut and Make cost component of an apparel/garment
costing. CM covers labor costs, overheads, profit margins of apparel
manufacturers.
8 CMT CMT refers to Cut, Make and Trim cost component of an apparel /
garment costing.
9 CMTP CMTP refers to Cut, Make, Trim and Pack component of an apparel /
garment costing.

10 CMTP
Q
CMTPQ refers to Cut, Make, Trim, Pack and Quota cost components of
an apparel / garment costing. Since 2005 abolition of apparel quotas,
the Q component has become redundant as an apparel cost
component.
11 CPM CPM or Cost Per Minute is the cost of manufacturing the garment
expressed in per minute terms. This covers the labor and overheads
costs involved in making of the garment. Based on Cost per minute
established, the CM cost of the garment is determined. CM cost
depends on –
SMV -Standard Minute Value
Overheads (direct and indirect labor)
Productivity
Cost per minute
Profit Margin
Link –
http://bit.ly/296pmIV
12 Duty Duty is the government imposed tax on import of goods. It is a % of the
FOB value of goods declared on the Purchase Order. One of the best
source of information to figure out what’s the duty rate for different
products and different countries is - https://www.dutycalculator.com/
13 ELC ELC stands for Estimated Landed Cost. A Landed Cost estimate
includes any applicable duties, fees, taxes, and transportation costs
that may apply based on origin, destination, and products in a
shipment. The most common components of ELC cost in the apparel
products include –
FOB
Commissions – Buying / sourcing office commission as a % of FOB
Duty - % of FOB
Freight Cost per garment (sea or air or land)
In land freight (port to shop floor)
Warehouse Distribution charges
Misc. (insurance, banking, admin, testing etc.)
Link –
http://bit.ly/292OorO
14 FCL FCL refers to Full Container Load. This relates to the space usage in a
container. Shipping Companies or Sea Freight forwarders usually
quote freight charges based on Full Container Loads or LCL – Loose
Container Load. Based on FCL the different sizes of containers used
for shipping are –
20’ = 28 CBM
40’ = 56 CBM

40’ high cube= 64 CBM
45’ = 75 CBM
Link –
http://bit.ly/29dXXE6
15 Freight A freight rate (historically and in ship chartering simply freight) is a
price at which a certain cargo is delivered from one point to another.
The price depends on the form of the cargo, the mode of transport
(truck, ship, train, aircraft), the weight of the cargo, and the distance to
the delivery destination.
Link -
https://en.wikipedia.org/wiki/Freight_rate
16 FOB Free On Board is the term used to define the buyer/seller’s obligation
based on Incoterms in the purchase order/contract, used in apparel
industry. The seller delivers the goods on a ship nominated by the
buyer at the named port of shipment or procures goods already
delivered there. Risk of loss or damage passes when the goods are
resting on or in the vessel, not when they are hanging from a crane or
being handled over the ship's side. Most of the apparel suppliers quote
prices on FOB terms to their buyers.
Link -
http://bit.ly/2a7Ew3A
17 FTA Free Trade Agreements are signed between countries to reduce trade
barriers – import quotas and tariffs- and to increase trade of goods
and services with each other. In apparel trade FTAS can impact
sourcing decisions of Apparel brands / buyers to a great extent.
Link –
http://www.trade.gov/fta/
18 FVCA Full Value Cost Analysis is the concept of taking into account of a
product cost, not just direct costs associated with the product- in our
case apparel, but also take into account all the indirect or hidden costs.
These could even be macro or country costs like corruption,
miscommunication.
Link-
http://bit.ly/2a7Qgmy
19 GATT General Agreement on Tariffs and Trade is a multilateral treaty system
that lowers trade barriers among nations.
The General Agreement on Tariffs and Trade (typically abbreviated
GATT) was negotiated during the UN Conference on Trade and
Employment and was the outcome of the failure of negotiating
governments to create the International Trade Organization (ITO).

GATT was signed in 1946 and lasted until 1993, when it was replaced
by the World Trade Organization in 1995. The original GATT text
(GATT 1946) is still in effect under the WTO framework, subject to the
modifications of GATT 1994.
Link -
www.wto.org
20 GSD GSD is the tool developed by a UK based company which determines
the labor content of making a garment. It does that by using a pre-
determined motion-time system developed by them. Many
organizations use their standards to calculate labor costs.
Link-
http://www.gsdhq.com/about-gsd/
21 GSM Grams per Square Meter is the weight of one square meter of fabric in
grams. Metric measurements are generally the most common place but
some clothing items are still marked in Imperial weights (OZ or oz/yd2
= ounces per yard squared)
The important thing to state here is that all of the terms above are
measurements of weight, specifically the fabric weight when talking
clothing. For example, a t-shirt may be listed as 185gsm and another
may be listed as 5.5oz the outcome is that these are basically the same
as 5.5oz = 186gsm
Link-
http://bit.ly/2a69hll
22 HOPE Haitian Hemispheric Opportunity through Partnership
Encouragement Act of 2006 (HOPE Imports of certain Haitian
manufactured textile and apparel goods are eligible for duty-free
treatment under the Caribbean Basin Trade Partnership Act (CBTPA).
Additional benefits under CBTPA have been created through the
Haitian Hemispheric Opportunity through Partnership
Encouragement Act of 2006 (HOPE), the Food Conservation and
Energy Act of 2008 (HOPE II) and the Haiti Economic Lift Program of
2010 (HELP).
CBTPA and HOPE established unlimited duty-free treatment for
various apparel products, with certain restrictions regarding the
source of the yarns and fabrics used in the apparel, and duty-free
treatment for certain apparel up to certain annual quotas, known as
tariff rate quotas (TRQs). HOPE II and HELP expand these existing
preference programs by allowing additional textile and apparel articles
to qualify for duty-free treatment, as well as increasing some of the
TRQs.

Link –
http://bit.ly/1QPyLPn
23 HTS An HS code or HTS code stands for Harmonized System or
Harmonized Tariff Schedule. Developed by the World Customs
Organization (WCO), the codes are used to classify and define
internationally traded goods. In most cases, in order to import or
export a product internationally, the traded good must be assigned an
HTS code that corresponds with the Harmonized Tariff Schedule of the
country of import.
For Apparel Industry the information regarding HTS codes can be
found on the following links –
For USA - http://usitc.gov/tata/hts/bychapter/index.htm
Refer to chapter 61 and 62 for apparel and textiles
For EUROPE – chapter 61 and 62 for apparel can download from
http://www.wcoomd.org/en/search.aspx?q=chapter%252061
The best website for help
http://www.dutycalculator.com/dc/48858235/clothes-for-men/t-
polos/shirts-of-woven-cotton/import-duty-rate-for-importing-men-
woven-cotton-shirts-from-nepal-to-united-states-is-19.7/
24 IMU Initial Mark Up is the difference between the cost and selling price of a
product. It is and must be expressed as a % of the Selling price or the
Retail Price. An initial retail price must obviously cover the cost of the
product, and any other selling expense associated with the product. It
must also cover overhead expenses, markdowns and then leave some
money on the table as profit.
Link –
http://www.the-retail-advisor.com/imu_gross_margin.html
25 LCL Loose Container Load or Less than Container Load is a shipping term
used to denote that the shipper does not have enough cargo or goods to
accommodate in one full container and he has to consolidate his goods
with other shippers to make a full container. Usually LCL costs more
than FCL per unit of freight.
Link –
https://www.flexport.com/learn/ship-by-lcl-or-fcl/
26 LDP Landed Duty Paid is the incoterm which means that a seller quotes the
price to buyer on the terms that the seller will be responsible for not
only shipping the goods, paying the freight but also delivering the
goods to the port of destination, custom cleared and duty paid.

Link –
http://www.walkerchb.com/WCB%20COMMON%20TERMS%20OF
%20SALE.pdf
http://www.incotermsexplained.com/the-incoterms-rules/the-eleven-
rules-in-brief/delivered-duty-paid/
27 Margi
n
Margin is the difference between the selling price (retail price) and the
cost price expressed as a percentage of selling price (retail price).
Margin% =Retail Price – Cost Price / Retail Price x 100
Margin is a more preferable and sensible measure of profitability used
in the industry although It’s commonly termed as markup. Mark up
often tends to overstate the profitability and can be misleading. A
retailer cannot have 100% Gross Profit Margin (GPM)) or MU as that
means cost of goods is zero. GPM% is always a percentage of your
Retail and can never be more than 99.9%
Link –
https://www.youtube.com/watch?v=0SRFI1Rrqvk
https://www.youtube.com/watch?v=ziwXq09Zkmw
28 Mark
Up
Markup is the difference between the selling price (retail price) and the
cost price expressed as a percentage of cost price.
Markup = Retail Price – Cost Price / Cost Price x 100
While the two terms Mark Up and Margin are often used
interchangeably, it is very important to know the difference between
the two accounting measures.
Link –
http://www.accountingcoach.com/blog/gross-margin-markup
29 MMF Man Made Fiber – Fiber whose chemical composition, structure and
properties are significantly modified during the manufacturing
process. MMFs are spun and woven into huge number of consumer
and industrial products including garments such as shirts, hosiery,
home furnishings etc. The chemical compounds from which MMFs are
made are called polymers. The duty structure for MMF differs from
CVC or Chief Value Cotton Fabrics in the apparel industry.
Link –
https://global.britannica.com/technology/man-made-fiber

30 NAFT
A
The North American Free Trade Agreement (NAFTA) is a trade
agreement among the United States, Canada, and Mexico that
liberalizes restrictions on trade among the three countries. Under the
NAFTA, U.S. textile and apparel exporters benefit from duty-free entry
on all qualifying products into Canada and Mexico, the two largest
export markets for U.S. textile and apparel products. NAFTA promotes
opportunities for U.S. fiber, textile and clothing manufacturers to
expand sales and increase production, to make full use of economies of
scale and take advantage of complementary resources in the three
countries to enhance export potential.
Tariff Elimination
Under the NAFTA, qualifying U.S. textile, apparel, footwear, leather
and travel goods enter into Canada and Mexico duty-free. To qualify
for duty-free entry, these products must meet origin criteria as set out
in the Agreement (see Qualifying Products/Rules of Origin section
below). However, for textile and apparel products, there are exceptions
to the basic rules. One such example is the Tariff Preference Levels
(TPLs), which were developed primarily to alleviate short supply
problems, especially as they relate to manufacturers' inputs.
Tariff Preference Levels--TPLs provide duty-free access for specified
quantities of yarns, fabrics, apparel and made-up textile goods that do
not meet the origin criteria (i.e., non-originating goods), but that are
subject to significant processing in one or more NAFTA countries. The
TPLs are agreed upon annual levels that vary by product and by
NAFTA Partner as shown below. Amounts of these goods in excess of
the TPLs are subject to most-favored-nation (MFN) rates of duty
Link –
http://web.ita.doc.gov/tacgi/fta.nsf/FTA/NAFTA?opendocument&cou
ntry=NAFTA
34 PMTS A predetermined motion time system (PMTS) is frequently used to set
labor rates in labor oriented industry by quantifying the amount of
time required to perform specific tasks. The first such system is known
as Methods-time measurement, released in 1948 and today existing in
several variations, commonly known as MTM-1, MTM-2, MTM-UAS,
MTM-MEK and MTM-B. Obsolete MTM standards include MTM-3
and MMMM (4M). The MTM-2 standard has also largely been phased
out by the organization, but is still used in some commercial
applications. Predetermined motion time system is another term to
describe Predetermined Time standards (PTS).

In the Apparel Industry, GSD, SewEasy and ProSMV are more
commonly used PMTS to determine the Standard minutes for
garments costing.
Link –
https://en.wikipedia.org/wiki/Predetermined_motion_time_system
http://www.seweasy.biz/oldSite/protech.htm
36 SAH Standard Allowed Hours is the production standard used for labor
costing in apparel industry expressed in hours. It is usually expressed
in SAM or standard allowed minutes. So, SAM / 60 = SAH
37 SAM SAM is the time in minutes that it takes a worker to complete a specific
operation or to produce a specific garment. It should cover the time
taken to perform an operation at normal or standard pace, plus an
allowance for relaxation and possible stoppages. It’s called Standard
Allotted Minute (SAM) or Standard Minute Value (SMV). Often SAM
and SMV are often used interchangeably in the apparel industry.
Check out the links to improve your understanding further.
Link –
http://www.onlineclothingstudy.com/2012/09/difference-between-
sam-and-smv.html
https://www.linkedin.com/pulse/lets-get-basics-what-sam-smv-
mausmi-ambastha
38 SME Square Meter Equivalent is the notional, common unit of quantity,
constant across categories and time. Conversion Factors are used to
convert units of quantity into SME, when reporting and monitoring of
overall trade and for charges to group and aggregate limits. The SME
factors are meant to be general and historically consistent and cannot
be used to actually calculate the number of square meters of fabric
required to produce individual products.
Link –
http://otexa.trade.gov/msrintro.htm
http://otexa.trade.gov/corr.htm
39 SMV Standard Time (also referred to as the “Standard Minute Value” or
“SMV”), is the time required for a qualified worker working at
“Standard Performance” to perform a given task. The SMV includes
additional allowances for Rest and Relaxation, Machine Delay and
anticipated Contingencies.
The SMV is the universal measurement of time and its accuracy and
consistency is essential as the foundation for measurement and
organization of key business processes such as Production Targets,

Line Balancing, Production Planning, Incentive Schemes, and the
quantification of Operator Performance and Factory Efficiency.
Link-
http://www.gsdhq.com/defining-standard-time/
http://www.onlineclothingstudy.com/2012/09/difference-between-
sam-and-smv.html
40 SPI Stitch Per Inch. This is an important specification for sewn garments
and embroidery, as it has a direct impact on the seam strength, stitch
appearance, seam elasticity on stretch fabrics. Also important from the
point of view of determining thread costs for sewn garments or
embroidery costs for embellishments.
Link-
http://bit.ly/2amMbaR
41 TPP The Trans-Pacific Partnership (“TPP”) is a Free Trade Agreement
(“FTA”) between 12 countries: Australia, Brunei Darussalam, Canada,
Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the
United States and Vietnam. All 12 TPP countries are members of the
Asia-Pacific Economic Cooperation (APEC). The TPP was concluded
on 5 October 2015 in Atlanta, Georgia, USA, and signed on 4 February
2016 in Auckland, New Zealand.
The TPP has its roots in the Trans-Pacific Strategic Economic
Partnership (TPSEP), otherwise known as the Pacific 4 (P4)
agreement, which came into effect in May 2006 between Singapore,
Brunei, Chile and New Zealand. In 2008, the US, Australia and Peru
formally indicated their interest in negotiating an FTA with the P4.
This FTA became known as the TPP. In 2010, Malaysia and Vietnam
formally joined negotiations. This was followed by Mexico and Canada
in October 2012 and Japan in July 2013
Link-
http://bit.ly/20ueNlD
42 TPL Tariff Preference Levels--TPLs are part of Free Trade Agreements
(FTAs), provide duty-free access for specified quantities of yarns,
fabrics, apparel and made-up textile goods that do not meet the origin
criteria (i.e., non-originating goods), but that are subject to significant
processing in one or more FTA countries. The TPLs are agreed upon
annual levels that vary by product and by FTA Partner. Amounts of
these goods in excess of the TPLs are subject to most-favored-nation
(MFN) rates of duty.
Link-
http://otexa.trade.gov/agoa-cbtpa/98220511_2013_TPL.htm

43 YY YY is the abbreviation for yardage yield which means marker length. In
apparel costing this term indicates the fabric consumption for a
garment. Fabric is one of the biggest component of an apparel cost and
therefore accurate YY/consumption is very important factor to
determine.
Link –
https://cutmaketrim.wordpress.com/tag/yy/
I hope you found this resource useful. Please reach out to me with your feedback and
comments at anjuli@anjulig.com .
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Anjuli Gopalakrishna

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