St George Fashion and Technology Centre

Unit: LMTFD4004A Calculate cost estimates for fashion products

Ungraded: AC/NC
Facilitator: Suska

LMTFD4004A- Calculate cost estimates for fashion products

Element 1- 1.1 Factors to be taken into consideration when costing fashion
products are identified.

When costing fashion garments the first thing that comes to mind is the
addition of the fabric, trims and sewing cost. This offcourse is necessary but
there are more factors that need to be paid for.
The production cost of a garment must be determined so that the wholesale
price can be set, that is, the price the retailers pay for goods they purchase
from manufacturers.

Costing functions
There are two separate costing functions: precost and the final costing.
Precost. The precost is an estimate made before the garment is adopted in
the line. From the outset the designer must keep fabric and labour costs
within limits set by the company lines price range.
The designer keeps records of all material costs on the Bill of Materials (BOM)
Or a design specification sheet.
Then, either the designer or the costing department can roughly estimate the
wholesale cost to determine wether the garment fits into the lines price
structure.

Final costing
This is an exact calculation by the costing department, utilizing final figures for
materials and labour. The costing department uses the designer’s spec or
BOM, an actual sample and the production pattern to analyse the garments
materials and construction step by step. It may consult the designer for
information or to recommend more practical or cheaper ways to make the
garment.

The cost sheet.

A detailed cost analysis is made for each garment; it includes fabric costs,
trims, labour, overhead, sales, and a sale commission and manufactures
profit. The final cost is plotted on a cost sheet.
Element 4, 4.1 Components of a fashion industry-costing sheet are identified.

1. Materials. The total meterage of each fabric is estimated and multiplied

by its cost per metre.
2. Trimmings. Unit costs are multiplied by the amount of trimmings
needed for each garment. The sum of these trimmings is the total
trimmings cost per garment. Trimmings are things like zips, buttons etc
3. Labour. The production department will decide which operation can be
done better and cheaper. The choices can be in-house, contracted out
to local factories or made offshore. The decision is usually driven by
price, quality or turnaround times. (Discussed in detail in
LMTFD5005A)
4. Production pattern making, grading and making. Most companies cost
this into the general overhead that also covers the design department.
However, if these functions are performed outside by a pattern service,
the cost is divided by the total number of units they estimate they will
cut.
5. Cutting. If the cutting is done by a contractor, the total negotiated
cutting cost is figured on the number of garments to be cut. The cost
for cutting inhouse is based on the cutters hourly wage and multiplied
by the number of hours it takes to cut the style.
6. Construction. Construction or making labour not only includes sewing
but finishing and hemming as well. Some companies break down the
labour cost by each operation. Information for such a costing structure
is gathered through time and motion studies. The cost for each
operation is determined eg the time to close a shoulder seam. Adding
the individual operations costs the garment.
7. Freight. The cost of moving the finished garments. They can be
shipped from the contractor to the manufacturer. Or from the
manufacturer to the retail stores. Domestically garments travel by road.
If the garments are imported then a percentage of the air or sea freight
must be added to each garment. Sea freight is cheaper but takes
longer than airfreight.
8. Additional costs for imported garments. These can include the quota
charge, and or import duty and agent fees.

Wholesale pricing
Adding the cost of all labour and materials and then adding a markup
determine the price. The markup covers overheads and a profit. Overhead
includes all the daily costs of running the business, such as rent, machinery,
maintenance, heat lights, staff salaries, administration, accounts, advertising,
promotion, markdowns and losses due to fire and theft.
Most companies add a markup of 100%. A professional should calculate the
markup so that costings remain accurate.
Costing exercises LMTFD4004A

Adding a mark up.

A mark up is added to pay for overheads plus profit.
Most companies add 100% to the manufacturing cost.
Supre have a mark up of 33%.
A maths reminder that a percentage 0f 33% is also written as 33/100 or 0.33

Complete the costs of the various garments according to their mark up.

Manufacturing cost Mark up percentage Mark up Direct cost

Cost
+mark up
$25 100% (25 x 1) $25 $50

$12.40 33% (12.40 x 0.33) $4.09 $16.49

$65.80 280% (65.80 x 2.8)

$87.50 100%

$33.20 50%

$2.38 33%

$17.40 25%

$6.90 100%

$36.70 200%

$24.95 160%

$255.60 180%

$18.20 33%

$725 280%
$0.54 300%

$45 100%

$72.50 150%

76c 200%

$12.85 33%

$16.80 170%

$35.86 65%

$57.98 42%

$39.07 53%

$22.01 125%

$63.98 22%

$78.25 43%

$76.23 35%

96c 135%

$56.87 33%
The US Dollar.
Most garments made offshore quote in US Dollars.
To calculate what that is in Australian dollars look at the exchange rate and
convert.
Eg if the exchange rate today is US $1.00 = AU $ 1.083254
Therefore a top that was US$8.00 would be calculated at
(8 x 1.08325 = AU$ 8.67)

Today’s exchange rate is US $1.00 = AU$..............

Calculate the Australian price for the following garments.

US$ 7.65 AU$

US$ 21.50 AU$

US$ 10.80 AU$

US$ 11.23 AU$

US$ 3.40 AU$

US$ 112.90 AU$

US$ 4.86 AU$

US$ 1.25 AU$

US$ 47.90 AU$

US$ 15.75 AU$

US$ 56c AU$

US$25.98 AU$

US$23.67 AU$

US$18.25 AU$

US$12.35 AU$

US$65.34 AU$

US$43.20 AU$
General costings of garment components.
So that you become accustomed to costing the various trims and fabrics
calculate the following amounts in Australian dollars.

Fabric / Accessory Quantity Price Cost

1. Red buttons 3mm 400 5c each

2. Shell buttons 5mm 150 $2.30 per

hundred
3. Delustered satin 3000m US$4.25

4. Cotton jersey 250m $4.50 m

5. Silk georgette 385m US$ 5.60m

6. Printed cotton 125m $3.45m

7. 6mm black buttons 575 $5.20 per

hundred
8. Cotton voile 870m $3.70m

9. Silk organza 48m $10.45m

10. Printed t-shirt 250 US$2.55ea

11. 25cm zippers 134 $15.80 pk

(packs of 10)

12. Vilene 125m $3.35

13. Shoulder pads 38prs $2.35pr

14. Beaded dresses 125 US$45.50 ea

15. Sequin tape- must 168m $18.70 per

buy whole cards of card
25m each

16. 3mm buttons – 670 $8.20pk

packs of 100

17. French lace – 4m 5.7m $380 card

per card.

18. Silk dupion 345m $17.85m

19. Elsegoods silk- min 8m $14.30m

10m purchase