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.

Time study data is known as work measurement data. From time study we calculate the standard time (SAM) for various activities. In garment production jobs are called operations.

Using work measurement data you can estimate only direct labour 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 labour cost.

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

Procedure to calculate labour cost

Step#1. Measure garment SAM:
First, calculate garment sewing wok content in standard minutes. You can use the Time Study method or synthetic data for calculating standard minute of the garment sample.

If you are new to calculate garment SAM, read this post “How to calculate SAM of a Garment Operation”

So, you know how to get garment sewing SAM.

To calculate labor cost, you need additional information such as

1. Daily labor wages (You can take actual data)
2. Line efficiency

Step#2. Calculate Daily labour wages:
Calculate the minimum labour 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 labour cost.
Let's say daily labor wages is USD 4.0 and
Calculated per minute labor cost is 4.0/480 = USD 0.00833.
(Considering shift time is 8 hours, which is equal to 480 minutes)

Step#3. Calculate Line Efficiency:

Calculate the line efficiency of your sewing lines.
If you know the efficiency of your sewing lines, use those data.
Let's say one line is running at 50% efficiency. We will use this data for labour cost calculation.

Use the following formula to calculate direct labour cost per garment

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

Example: Let's say your product SAM is 20 minutes. Line efficiency and Labor wages of skilled labours areas the above.

Therefore direct labour cost of the garment
= US$ (20 X 0.00833)/50%
= US$ 0.3333 (or equal to Indian Rupees 18.00)

Also See: Garment CM (cut and make) cost estimation using SAM or SMV