Introduction:
Knitting is a method of fabric formation and in this method, yarns are interlooped to make fabrics. Knitted fabrics are built by loops formed by needles progressively row after row by intermeshing the loops. Knitted loops are arranged in rows and columns roughly equivalent to weft and warp of woven structures. Knitting is one of the oldest and most popular techniques of fabric formation, which can be done either by hand or by machine. Knitting requires a relatively fine, smooth, and strong yarn with good elastic recovery properties. In the early days knitting was an art, because all knitted fabrics were fashioned by hand and the esthetic and performance of the end products were dependent entirely on the skill, dexterity, and artistic ability of the knitter.
Knitting Cost Calculation:
Costing is the deciding factor of the prices and the important thing to be followed in all important stages like purchase, production, marketing, sales, etc. Knitting cost calculation is a critical aspect of textile manufacturing, as it determines the overall expense involved in producing knitted fabrics. Accurate cost estimation helps manufacturers maintain competitive pricing, manage resources effectively, and ensure profitability.
In knitting process, the production capacity of the knitting machines is one of the major influencing factors as it decides the number of kilogram fabric produced per shift. The machine gauge is another important factor which directly decides the production capacity. The factory efficiency, labor cost and overhead expenses are the cost factors which influences the knitting cost.
In general, the knitted fabric is produced in grey form or in the colored form using the dyed yarns. The general methods of knitting cost calculation and the influencing factors are detailed as follows:
Factors Influencing the Knitting Cost Calculation:
- Machine production capacity
- Gauge length
- Factory efficiency
- Type of structure required
- Yarn type used
- Average wastage percentage
- Labor cost, staff salary and overhead cost
- General expenses
With respect to the fabric manufacturing, the manufacturing industry directly receives tech pack from customer. Ideally the first two pages of the tech pack will detail the garment sketch and the fabric details like yarn count, fiber type, fabric structure, grams per square meter details and all other fabric related details.
From the information obtained from the buyer, based on the production capacity, the manufacturer decides the number of shifts required to complete the order. Then they include the possible cost associated with the order and estimate the cost. The details need to be used for the cost calculation of fabric from the manufacturer side are:
- Production capacity
- Labor cost
- Supervisor or manager salary
- Raw material cost (Yarn)
- Machine maintenance cost
- Electricity cost
- Other overhead like general maintenance and other costs
The following example details the knitting cost calculation methods of grey and colored knitted fabric cost.
Example 1:
A knit fabric manufacturing industry received an order to knit 2,500 kg of single jersey fabric. For this process, the factory was about to source the yarn and produce the fabric. The factory works with 4 weft knitting machines with a production capacity of 120 kg/shift. There are 4 knitting machine operators and 2 helpers with a wage of Tk.340/shift and Tk.280/shift. The average wastage percentage of the knitting process is 3.5%. The overhead costs of the factory are factory rent Tk.25,000/month, electricity bill of Tk. 12,000/ month and machine maintenance cost of Tk.5,000/month. The other general expenses are Tk.10,000/month including other staff salary. Cost of the yarn is Tk.240/kg. Calculate the cost of knitting per kg and cost of the fabric after knitting if the factory works 1 shift per day and 30 days per month.
Solution:
Step 1: Number of shifts required to complete the order.
Total production per day = Average machine production × Number of machines
= 120 × 4
= 480 kg / shift
The wastage percentage expected = 3.5 %
Hence, 2,500 kg + (3.5% of 2,500 kg) = The original quantity produced
= 2,500 + {2,500 × (3.5/100)}
= 2,587.5 Kg
………………………………………………………Total yarn quantity
Total number of shifts required = ——————————————————–
………………………………………………..Production capacity per shift
…2,587.5
= ——————-
…..480
= 5.4 shifts
Step 2: Calculate total labor cost
The labor cost = no. of labors × No. of shifts worked to complete order × wages/shift
= Cost of operators + Cost of helpers
= (4 × 5.4 × 340) + (2 × 5.4 × 280)
= Tk. 7344 + Tk.3024
= Tk. 10,368 = 136.42 USD
Step 3: Calculation of direct material cost
Yarn Purchased = 2,587.5 kg with the price of Tk.240 / kg
= 2,587.5 × 240
= Tk. 6,21,000
= 8,171.05 USD
Step 4: Calculation of overheads
Company spends all these overheads per month (30 days). Since, the company works one shift per day, The 1 day or 1 shift expense as overhead is as follows: Factory rent Tk. 25,000/month, Electricity bill of Tk. 12,000/month Machine maintenance cost of Tk. 5,000/month The other general expenses are Tk.10,000/month
………………….Tk.25,000 + Tk.12,000 + Tk.5,000+Tk.10,000
Overheads = ————————————————————————
…………………………………………….30
= Tk. 1,733.33
Since, the company works 5.4 shifts for this order,
= Tk.1,733.33 × 5.4 shifts
= Tk. 9,360
= 123.16 USD
Step 5:The overall cost of the knitting process
…………………………………………………Material cost + Labor cost + Overheads
The total knitted fabric cost / kg = —————————————————————
……………………………………………………………….Total production
…………………………..Tk.6,21,000 + Tk.10,368 + Tk.9,360
Fabric cost / kg = ———————————————————
…………………………………………….2,500
………..6,40,728
= Tk.——————–
…………..2500
= Tk.256.29
= 3.37 USD
…………………………..Tk.10,368 + Tk.9,360
Knitting cost/ kg = ————————————-
…………………………………..2,500
…..19,728
= ——————–
…..2,500
= Tk.7.89/kg
= 0.103 USD/kg
Example 2:
A textile industry industry received an order to produce 8,000 kg of knitted fabric with interlock structure with grams per square meter of 210. The factory works with 4 knitting machines with a capacity of 102 kg/shift. The manufacturer works with 2 machine operators, 2 helpers with a wage of Tk.380/shift and Tk.310 per shift. The machines monitored by a supervisor with a salary of Tk.20,000/month. As the yarn is provided by the customer, the industry quoted only the cost of manufacturing to the customer. The factory overhead is noted Tk.1,45,000/month as a whole estimate of the cost of production with 2% knitting shrinkage and 10% profit. The company works with 3 shifts per day and 30 days in a month.
Solution:
Step 1: Number of shifts required to complete the order.
Total production per day = Average machine production × Number of machines
= 102 × 4 = 408 kg / shift
The wastage percentage expected = 2 %
Hence, 8000 kg + (2% of 8,000 kg) = The original quantity produced
= 8,000 + (8,000 × 0.02) = 8,160 kg
……………………………………………………..Total yarn quantity
Total number of shifts required = ————————————————–
……………………………………………….Production capacity per shift
….8,160
= ————- = 20 shifts.
….408
Step 2: Calculate total labor cost
The labor cost = no. of labors × No. of shifts worked to complete order × wages/shift
= Cost of operators + Cost of helpers
= (2 × 20 × 380) + (2 × 20 × 310)
= Tk. 15,200 + Tk.12,400
= Tk.27,600
Step 4: Calculation of overheads
Company spends all these overheads per month (30 days). Since, the company works 3 shifts per day, company works 6.66 days.
……………………………..Tk.1,45,000
Total overhead cost = ——————
…………………………………..30
= Tk. 4,833.33
Since, the company works 6.67 days for this order,
The total overhead cost for this order is = Tk.4,833.33 × 6.67 shifts
= Tk. 32,238.31
Step 5: The overall cost of the knitting process
…………………………………………………….Labor cost + Overheads
The total knitted fabric cost / kg = ———————————————
………………………………………………………….Total production
…………………………..Tk.27,600 + Tk.32,238.31
Knitting cost/kg = —————————————-
…………………………………….8,000
……….59,838.31
= Tk. ——————-
…………8000
= Tk.7.48
Profit 10%, hence final cost = 7.48 + {7.47 × 0.10} = Tk. 8.23/kg
Conclusion:
Accurate knitting cost calculation is essential for textile manufacturers to optimize production efficiency and maintain profitability. In this article I have tried to explain knitting cost calculation with several examples.
References:
- Handbook of Textile and Apparel Costing by Dr. R. Rathinamoorthy, Dr. R. Surjit and Dr. K. J.Vishnu Vardhini
- Fabric Manufacturing Technology: Weaving and Knitting by K. Thangamani and S. Sundaresan
- Textile and Clothing Design Technology Edited by Tom Cassidy and Parikshit Goswami
- Apparel Merchandising by R. Rathinamoorthy and R. Surjit