Standard Allowed Minute (SAM) is the time necessary to produce one complete garment including the allowances. In garment industry, particularly in production SAM is used for assessing the efficiency of work. In the garment industry, industrial engineering department determine and calculate SAM for assembling process of garments using standard calculation method (Vijayalakshmi 2009). The applications of SAM are Firm as well as individual operator’s performance could be determined by means of SAM Operator and associated cost ratios could be determined using SAM Operators payroll and incentive amount can be calculated based on acquired SAM SAM is one of the key parameter in state-of-the-art production scheduling methods such as line balancing …show more content…
Example: As per previous example factory had an order of 300 pieces. The cutting room records show cutting of 315 garments have been cut but only 290 garments were finally shipped.
Cut to ship ratio = 290/315 = 92% (8% garments were lost/ rejected in the process)
14.6.2 Labour Cost per minute:
This is a significant parameter when estimating the cost of a garment. It assists to determine the labour cost that incurred during the production of garment.
Cost per minute= (Total cost incurred on labour)/(Total available working minutes X No.of labour)
To determine the labour cost of a new style or order its SAM value is estimated and then multiplied to cost per minute and efficiency to get the actual labour cost.
Example: A garment Industry has 500 direct sewing operators and helpers. The cost to company for the 500 operators is Rs. 39,00,000. The company works for 8 hours per day for 26 days in a month. Therefore,
Total working minutes per operator = 12480 minutes.
Cost per minute = 39,00,000 / ( 12480 X 500) = Rs. 0.625 per minute
14.6.3 Plan Performance Index:
This demonstrates the percentage of variation between the planned work and the actual work
As Saginaw plant handles 10 product families and 110 product models, introduction of Flexible manufacturing system will be beneficial there. This will address the high variability and reduce the overhead costs.
The presentation of the material is in dollars only. Overhead is applied to products as a percent of direct labor dollar cost. Factory profit for each year is found by subtracting direct material, direct labor, and direct overhead costs from total sales. The overhead percentage is calculated at the same time budgeting and is applied as a single overhead pool throughout each model year. The consulting company used 435% of direct labor costs in 1987 for their study; the budgeted was actually 437% (OH/DL=107,954/24,682). A similar percentage applies in the following year (109890/25294=434.5%). However in the next two years, after the outsourcing of oil pans and mufflers was enacted, the allocation of overhead in...
The company is using a batch shop process flow structure. CBF, Inc. bases its board fabrication process on the average job size or on its typical order. This means that the company proceeds with the manufacturing process in batches so as to meet the specific requirements per order. The typical contract that the company currently gets is 60 boards per order. However, due to persisting factory defects, they manufacture a total of 75 boards per batch in order to compensate for 20% of the boards that they typically reject during the process.
e. Count out and separate the quantity required from the material that is to be placed back into storage. If all or part of the material is NOT found, contact the IM to resolve any differences.
In the long run the entire scale of the operation can be altered. Quite literally the company can open a new factory to meet the increase in demand for its products. When looking at the actual product we need to remember that the costs we must now calculate are the DIRECT and INDIRECT costs. Some people prefer to call indirect costs overheads. Direct costs involve all the costs that can be directly related to the product or service.
Lululemon’s has to produce and sell 150,000 jackets in order to cover their total expenses, fixed and variable. At this level of sales, Lululemon’s will breakeven (profit = loss).
Signode Industries Inc. - Providing Packaging Solutions Executive Summary SIGNODE INDUSTRY: DILEMMA AT HAND: Mr. Gary Reed, President of Signode Industries packaging division, is in a dilemma as what he should be his course of action to meet the 6.8% increase in price of cold rolled steel- the raw material used in manufacture of Signode’s primary product, steel strapping. There are few options given in the case: Increase Signode’s strapping prices to offset the increased price of cold – rolled steel. Maintain Signode’s current book prices as increasing prices would affect sales force morale. Introduce price-flex model as proposed by Jack Davis i.e. a kind of selective discounting or premium charging for customized services. Recommendations Reason: (All data in accordance to 1983) In accordance to Exhibit 1: Sales of Packaging Division of the company = $285,950 In accordance to Table A: Sales of Apex = 33.3% of $285,950 Sales of BBM = 26.8% of $285,950 Sales of HDM = 33.4% of $285,950 Sales of Customized Products = 6.5% of $285,950 In accordance to Exhibit 4: Similarly, For Apex: As it has a capacity utilization of 71% now, Suppose a sale is $100. Then contribution is $39.15 Therefore variable cost is $60.85. Now if we increase the capacity utilization to 100%, Sales becomes $ 141 since production increases by [(100-71)/71] * 100 = 41% Variable Cost = 141% of 60.85 = $85.8 Fixed Cost = 69.38% * 12.3 = $8.53 Total Cost = 85.8+8.53 = $94.33 EBIT = Sales – Variable cost – Fixed Cost = $46.67 % of EBIT = [(46.67/141) * 100] = 33.09% Suppose the company sales 100x units, the total cost was 69.38. Thus per unit cost was .6938. Now the company sells 141x units, the total cost...
Every company has some kind of Revenue and they all have costs that are associated with running the company. It is also true that if a company wants to increase their Revenue, their costs will increase too. It is every company’s goal to maximize revenue and either through Production or Services, and minimize cost. These things are easy to figure out, but actually identifying the production and figuring out how it will increase or decrease with change is very difficult.
Primary production of homogenous goods and several processes are undertaken for the finished product to be realized is what is called process costing. All stages of processing and costs accrued during manufacturing of a product will be added to the final batch of products. Keenness is
Costs are usually fixed and direct with respect to the capability. Example is the salaries of front office personnel such as the receptionist and office manager.
Sampling process in apparel industry is an important activity for the order acceptance. The main purpose of the sampling process is
U.S. Congress, Office of Technology Assessment, The U.S. Textile and Apparel Industry: A Revolution in Progress–Special Report, OTA-TET-332 (Washington, DC: U.S. Government Printing Office, April 1987). <http://www.wws.princeton.edu/cgi-bin/byteserv.prl/~ota/disk2/1987/8733/873306.PDF>
During the last few years, Harry Davis Industries has been too constrained by the high cost of capital to make many capital investments. Recently, though, capital costs have been declining, and the company has decided to look seriously at a major expansion program that had been proposed by the marketing department. Assume that you are an assistant to Leigh Jones, the financial vice president. Your first task is to estimate Harry Davis’s cost of capital. Jones has provided you with the following data, which she believes may be relevant to your task.
First of all, the fibres can classified as natural or man-made fibres. Natural fibres are those obtained from the natural resources on the environment, whereas the man-made fibres could be synthetic or regenerated fibres. Synthetic fibres are completely made from chemicals while regenerated fibres are those originally from natural resources unsuitable to be used as fibres directly, processed chemically to be changed into textile fibres. In this assignment, we will study on the general textile manufacturing processes as listed below. Then, it is hoped that the knowledge on general process could help us understand more on the industry as well to relate it with the environment.
A job order cost system is one in which costs are accumulated by individual products. Furthermore, a job-order costing system is utilized for assigning manufacturing costs to an individual product or batches of products. Generally, the job order costing system is used only when the products manufactured are adequately different from each other. In contrast, when products are identical or nearly identical, the process-costing system will likely be used (Averkamp, 2016). In addition, a job-order costing system is generally used by companies that manufacture a number of contrasting products.