Calculation of charges for commission weaving
by Dr. H.R.Sheikh,
professor, Emeritus, Textile Institute of Pakistan.
Commission Weaving is occasionally undertaken by independent
weaving mills equipped with modern shuttle less looms for
clients who supply their own yarn and specify fabric
constructions. The charges are usually calculated per pick and
quoted accordingly. The method of calculation is based on the
installed capacity, operating speeds, fabric constructions,
conversion cost etc. and is explained as follows:
1. Technical data and production capacity
of a weaving mill comprising of
60 shuttle less looms
|
Table-1 |
|
Particulars |
Air Jet |
Looms |
Remarks |
|
Number of Looms |
30 |
30 |
Specified by the
client Actual Production is equal to
RPM×60×8×0.9
PPI × 39.37 |
|
Reed Space of Looms |
75 inch |
110 inch |
|
Loom Speed in RPM |
700 |
550 |
|
Fabric Construction. |
16×10(Denim)
70×40 |
30×30
(Shirting)
80×60 |
|
Width of cloth (inches) |
63 |
98 |
|
Efficiency (%) |
90 |
90 |
Actual production per
loom shift in meters. |
192.02 |
100.58 |
2. Conversion Cost
The components of the conversion cost for the plant
comprising of 60 shuttle less looms are listed in table 2 along
with assumed monthly expenses. (Rs. in millions).
|
Table-2 |
|
|
Mark-up on Loans.
|
7.319 |
|
Salaries, wages and overhead
at the factory and head office |
1.335 |
|
Utilities, electricity, gas,
diesel, water etc. |
2.10 |
Insurance of plant &
machinery, vehicles, stock-in-process
cash-in-transit. |
0.20 |
|
Contractors for loading,
unloading, packing, bailing etc. |
0.10 |
Spare parts, stores,
chemicals, sizing ingredients, lubricants,
greases, etc. |
0.50 |
|
Total |
11.554 |
The conversion cost for own weaving is Rs.11.554 million per
month. However, for commission weaving the amount of mark-up on
loans is not included. Consequently, the conversion cost for
commission weaving works out at Rs. 4.235 million. This is due
to the fact that the finance of the management of the weaving
mill is not involved for the yarn, stock in process and finished
goods inventory. The conversion cost per meter of the fabric in
both cases and charges per pick in the case of commission
weaving are calculated as following Table 3.
|
Table-3 |
|
Particulars |
Denim |
Shirting |
Remarks |
Own
weaving |
Commission weaving |
Own weaving |
Commission weaving |
Conversion Cost per
month ( Rs. in Million) |
11.554 |
4.235 |
11.554 |
4.235 |
This calculation is based on 60
looms weaving shed. |
Conversion cost per
shift. (Rs. in Million) |
0.1284 |
0.0471 |
0.1284 |
0.471 |
Conversion cost per
loom shift. |
Rs.2140 |
Rs. 784.20 |
Rs. 2140 |
Rs.784.20 |
Production per loom
shift. (MTRS) |
192.02 |
192.02 |
Rs. 100.58 |
Rs.100.58 |
Conversion cost per
meter of fabric. |
Rs.11.15 |
Rs. 4.084 |
Rs. 21.28 |
Rs. 7.80 |
|
Charges per pick |
-- |
Rs.0.1021 Ps.10.21 |
-- |
Rs.0.13 Ps. 13 |
Adding 20 % profit
margin |
-- |
Ps.12.252 |
-- |
Ps.15.60 |
Per Pick Charges to be
quoted. |
-- |
Ps. 13 |
-- |
Ps. 16 |
Theses calculations show per pick charges to be quoted for
denim and shirting fabrics @ ps.13 and ps.16 respectively. The
client will make his own arrangements for taking delivery of the
grey fabric. However, if the grey fabric is to be delivered to
the client in the form of bales, extra charges have to be paid
by the client ranging from about Rs.0.75 to Rs.1.00 per meter of
the fabric. The management of the concerned weaving mills
allocates adequate number of looms in proportion to the size of
the order and the delivery period specified by the client.
|
