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How to Find Labor Cost for Garment Manufacturing Using Work Measurement Data?

How to Find Labor Cost for Garment Manufacturing Using Work Measurement Data?


Question: Explain how we would use work measurement data in garment costing. ... asked by Nishani Snajana.

Using work measurement data you can estimate only direct labor cost of garment making. Other cost parts of the total garment cost such as factory overheads and material costs need to be calculated separately. Here I will show you how to use work measurement data to find labor cost.

Please note cutting cost and finishing labor cost have not been included here. These costs are considered as factory overheads. I am not saying that you can’t measure work content of cutting and finishing operations. You can also measure direct labor cost for sections.

Procedure to calculate garment labor cost

Measure garment SAM: First calculate garment sewing wok content in standard minutes. You can use Time Study method or synthetic data for calculating standard minute of your specimen garment. If you are new to calculate garment SAM, read our post “How to calculate SAM of a Garment Operation”

So, you got garment sewing SAM.

You need additional information such as

1. Daily labor wages

2. Line efficiency

Daily labor wages: Find minimum labor wages of your region or check with your human resource (HR) department for daily wages of skilled labors (sewing operators). From the daily wages, calculate per minute labor cost. Assume that, daily labor wages is USD 4.0 and calculated per minute labor cost is 4.0/480 = USD 0.00833.

Line Efficiency: Calculate line efficiency of your sewing lines. Suppose one of line is running at 50% efficiency.

Use following formula to calculate direct labor cost per garment

Labor cost per garment = (Garment SAM X Labor cost per minute)/ Line Efficiency%

For example: Suppose your product SAM is 20 minutes. Line efficiency and Labor wages of skilled labors are as the above.

Therefore direct labor cost of the garment

= US$ (20 X 0.00833)/50%

= US$ 0.3333 (or equal to Indian Rupees 18.00)