1. The document describes how to calculate the cost of manufacturing (CM) for a particular style named "X" by considering the direct labor costs, factory overhead costs, and costs for cutting, sewing, and finishing sections. 2. It provides examples of calculating the direct labor costs per minute for each section, as well as the overhead costs charged to style "X" based on input minutes. 3. The total costs per section are calculated and divided by input minutes to find the cost per minute, which is then used to calculate the cost per piece based on standard allowed minutes. The overall CM is the sum of costs across all sections.

2. Assume that we will calculate the CM of a particular style
named “X”.
To calculate the CM we have to consider three types of
costs. They are,
1. Direct Labor cost. (DLC)
2. Factory Overhead cost. (OH)
 Overhead means all other costs instead of direct labor
and material costs.

3. Suppose , administrative cost, indirect labor cost, appraisal cost,
maintenance cost, factory rent, logistics cost, utility cost,
material cost etc. are overhead cost. There are two types of
overhead.
1. Fixed Overhead Cost.
2. Variable Overhead Cost.
However the total cost of a factory for a certain period will be,
TC = DLC + OH
Now we have to estimate that, what is the fraction of the total
factory cost that is expended to produce the style named “X”
during that certain period. This fraction is the CM of that
particular style.

4. First we have to estimate the Overhead cost per minute
of that certain period.
OH/min = Total factory OH/ Total input minute of the
factory
Total input minute = Total direct labor * Total
working minute in a certain period (assume, 3 months)
For example, the factory has 950 direct labor including
cutting, sewing and finishing section.
Daily working hour 8 hr on average.
And working day per month is 26 days.

6. For example, there are 80 direct labor in cutting section in
average of 3 months and their total salary in these 3 months is
$26250. Then in cutting section,
Direct cutting labor cost per minute = $26250/(80*8*60*26*3)
= $26250/2995200
=$0.00876
Now direct labor cost that is expended to cut style “X” will be the
product of labor cost per minute and input minute to cut style
“X”.
Cutting labor cost for style “X” = Direct cutting labor cost per
min. * Cutting input min. for style “X”.
For example, let assume average 10 labor is needed to lay, cut ,
sticker & bundle the style “X”. And it need total 16 hours to
complete the total order quantity of “X”.

7. Thus the input minute for style “X” = 10*16*60
= 9600 min.
Labor cost = $0.00876 * 9600
=$84.096
Now fraction of the total factory overhead that should be
charged on the style “X” in cutting is,
Overhead fraction charged = OH/min * Input minute for
style “X”
= $0.00169*9600
= $16.224
Now we have to include the fabric cost that we got from
dyeing.

8. Thus the total cutting cost of the total order quantity of
style “X” would be,
Total cutting cost = Direct cutting labor cost + Overhead
fraction charged to style “X”
For example,
=>TCC = $84.096 + $16.224
Now we have to calculate Cutting Cost per
Minute(CCPM)for Style “X”
CCPM = TCC/ Input minute to cut style “X”

9. For example,
CCPM = ($84.096 + $16.224)/9600min.
Now we have to calculate the cutting SAM(Standard
Allowed Minute) for Style “X”.
Thus,
CC/Piece = CCPM * (SAM/Efficiency)
Where CC means Cost of Cutting

10. Sewing cost for style “X”:
Labor cost per minute in Sewing section = Total direct labor
wage in Sewing section(3 months)/ Total input minute in Sewing
section in that 3 month( without over time)
Total input minute in 3 months = Total direct labor * total
working minute in 3 months
For example, there are 740 direct labor (Operator + helper) in
sewing section in average of 3 months and their total salary in
these 3 months is $111000. Then in Sewing section,
Direct sewing labor cost per minute =$111000/(740*8*60*26*3)
=$111000/27705600
=$0.004

11. Sewing labor cost for style “X” = Direct sewing labor cost
per min. * Sewing input min. for style “X”.
For example, let assume average 22 labor is needed for
sewing the style “X”. And it need total 64 hours to
complete the total order quantity of “X”.
Thus the input minute for style “X” = 22*64*60
=84480 min.
Sewing labor cost = $0.004 * 84480 = $338.46

12. Now fraction of the total factory overhead that should be
charged on the style “X” in Sewing section is,
Overhead fraction charged = OH/min * Input minute for
style “X”
= $0.00169*84480
=$142.77
Thus the total sewing cost of the total order quantity of
style “X” would be,
Total sewing cost(TSC) = Direct sewing labor cost +
Overhead fraction charged to style “X” for sewing

13. For example,
TSC = $338.46 + $142.77
Now we will calculate Sewing Cost per Minute(SCPM)for
Style “X”
SCPM = TSC/ Input minute to sew style “X”
For example,
SCPM = ($338.46 + $142.77)/84480min.

14. Now we have to calculate the sewing SMV(Standard
Minute Value) for Style “X”.
Thus,
CS/Piece = SCPM * (SMV/Efficiency)
Where CS means Cost of Sewing

15. Finishing cost for style “X”:
There is a problem about the manpower in finishing
section. Because, which manpower will be counted as
direct labor? However I think there are a lot of avoidable
non value added processes in finishing section that can be
eliminated. So, I just count the iron man, folding man,
hand tag man, poly man and packing man as direct labor
and all others as indirect labor. You will note that there are
a lot of quality checking processes in finishing section for
the appraisal of the product. But I think they are too much
for appraisal. Because I believe that quality can not be
ensured in the product by inspection, quality should be
planned & designed into the product. However I count
these quality manpower as indirect labor and their
associated cost as appraisal cost.

16. Labor cost per minute in finishing section = Total
direct labor wage in Finishing section(3 months)/
Total input minute in Finishing section in that 3
month( without over time)
Total input minute in 3 months = Total direct labor
* total working minute in 3 months
For example, there are 130 direct labor (Operator +
helper) in sewing section in average of 3 months and
their total salary in these 3 months is $17062.5. Then
in Sewing section,

17. Direct Finishing labor cost per minute
=$17062.5/(130*8*60*26*3)
=$17062.5/4867200 =$0.00351
Finishing labor cost for style “X” = Direct finishing
labor cost per min. * Finishing input min. for style “X”.
For example, let assume average 8 labor is needed for
finishing the style “X”. And it need total 32 hours to
complete the total order quantity of “X”.
Thus the input minute for style “X” = 8*32*60
=15360 min.

18. Finishing labor cost = $.00351 * 15360 = $53.9136
Now fraction of the total factory overhead that should be
charged on the style “X” in Finishing section is,
Overhead fraction charged = OH/min * Input minute for
style “X”
= $0.00169* 15360
=$25.958

19. Thus the total finishing cost of the total order quantity of
style “X” would be,
Total finishing cost(TFC) = Direct finishing labor cost +
Overhead fraction charged to style “X” for finishing.
For example,
TSC = $53.9136 + $25.958
Now we have calculate Finishing Cost per
Minute(FCPM)for Style “X”
FCPM = TFC/ Input minute to finish style “X”
For example,
FCPM = ($53.9136 + $25.958)/15360min.

20. Now we have to calculate the finishing SAM(Standard
Allowed Minute) for Style “X”.
Thus,
CF/Piece = FCPM * (SAM/Efficiency)
Where CF means Cost of Finishing
Now the total Cost of Manufacturing per piece of style “X”
will be the summation of CC, CS & CF.
Thus, CM = CC + CS + CF