CM means cut and Make, is a cost which is derived from factory overhead other than materials, application, and logistics. In apparel production we can calculate cm based on average machine cost or minute cost, but minute cost is scientific.
What is minute cost?
Cost per minute (CPM) also called earning per minute (EPM) is a value per minute cost of production that machine needs to earn through manufacturing of garment. The minute production value includes production overhead, indirect and direct labor cost; in addition to some profits.
1. CM Calculation using average M/C cost
A
|
Total Direct & Indirect Cost Per Month
|
=
|
$ 109,824.00
|
B
|
Total Number of Machine Installed
|
=
|
220.00
|
D
|
Number of Working Days Per Month
|
=
|
26.00
|
C
|
Average Cost Per Machine Per Day A/(B X D)
|
=
|
$ 19.20
|
N
|
Required Machine for Style
|
=
|
80.00
|
E
|
Earning Per Style Per Day (C X N )
|
=
|
$ 1,536.00
|
T
|
Actual Out-Put per Style
(128 pcs./hour x 8)
|
=
|
1024.00
|
CM
|
Cut & Make Value Per Dozen (E/T) X 12
|
=
|
$ 18.00
|
2. CM Calculation using minute value
A
|
Total Direct & Indirect Cost Per Month
|
=
|
$ 109,824.00
|
B
|
Total Number of Machine Installed
|
=
|
220.00
|
D
|
Number of Working Days Per Month
|
=
|
26.00
|
H
|
Hour per day
|
=
|
8
|
M
|
Minutes per hour
|
=
|
60
|
C
|
Earning / Cost Per Minute (EPM/CPM)
|
=
|
$ 0.04
|
S
|
SMV
|
=
|
30
|
E
|
Efficiency
|
=
|
80%
|
CM
|
Cut & Make Value Per Dozen (C X S X 12) / E
|
=
|
$ 18.00
|
EPM = Total cost / total machine minutes
= ($1,09,824.00) / (220 X 26 X 8 X 60)
= $0.04
= ($1,09,824.00) / (220 X 26 X 8 X 60)
= $0.04