INTRODUCTION TO
COST PER MINUTE
VALUE
1
What is the Cost Per Minute
(Minute Value) ?
Economical Value of a Standard
Minute in the Factory
2
Factors Effecting for Minute Value
Factory Over Heads
There are two types of over heads,
Direct.
Indirect.
3
Factors Effecting for Minute Value
Direct Over Heads
• Salaries
• Wages
• Over Time
• Store Consumptions
4
Factors Effecting for Minute Value
Salaries
• Stitching
• Inline & Final Inspector
• Clipping, Finishing & Packing
• All over staff in the factory
( Including Managers, GMS & Directors )
5
Factors Effecting for Minute Value
Wages
• Piece Rate for contractual workers.
• Commission for contractors
6
Factors Effecting for Minute Value
Over Time
• Stitching
• Inline & Final Inspector
• Clipping, Finishing & Packing
• All over staff in the factory
7
Factors Effecting for Minute Value
Store Consumption
Example
• Machines Parts (Sewing & Others)
• Needles
• Stationeries
8
Factors Effecting for Minute Value
Indirect Over Heads
• Traveling & Conveyance
• Entertainment
• Fuel & Power
• Water
• Carriage & Freight
• Communication (Postage & Telephonic)
• Security Service
• Building Rent
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Factors Effecting for Minute Value
No of Machine Operators
( Machine use capacity Per Day )
Assume that there are 03 production units with
each150 machines in a plant,
No. of Machine / section = 150
No. of section in Factory = 03
No. of Machine in Factory = 450
10
Factors Effecting for Minute Value
Working Minute Per Day
Working time = 8 am to 6 pm
No of hours = 08
working minute = 480 min/day
11
Factors Effecting for Minute Value
Planned Average Efficiency Level
85% average efficiency level per
month.
Planed by Production Planning &
Control Dept.
Decided by Industrial Engineering dept.
(according to capacity analyzing )
12
Factors Affecting on Minute Value
Absenteeism Percentage
If consider absenteeism = 05%
Present (Machine Operators)= 95%
No of Working Days per Month
Average 26 working days per month
( excluding 04 Sundays )
13
How Calculate the Cost Of Minute ?
Total Expenses per Month (F.O.H)
Monthly Capacity of the Plant
Direct over heads + Indirect over heads
Total Available Minute per month
14
How Calculate the Cost Of Minute ?
Rs.10,000,000 *+ Rs.5,000,000*
450 x 480 x 85% x 95% x 26
Rs. 15,000,000
4,534,920 Rs. 3.31
COST PER MINUTE
0.018 $
* - Assumptions
15
How Can We Reduce Minute Cost?
Increasing Plant Efficiency
Reducing Absenteeism percentage
Reducing Man to Machine ratio
Maximum Capacity Utilization
Controlling Over Time
Controlling Store Consumption
Controlling Indirect Over Heads
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How to Cost a product on ?
( According to Minute Value )
Manufacturing Cost
Total S.M.V of a style = 5.50 Min
Minute Value in a Plant = Rs. 3.31
Cost of manufacturing = 5.50 x 3.31
= Rs. 18.21 17
Material Cost
Fabric price per meter = Rs. 30.00
Fabric consumption/Product = 2.00 Meter
Fabric Cost per Product = (30 x 2.00)
= Rs. 60.00
Accessories Cost = Rs. 20.00
Total material cost = (60 + 20)
= Rs. 80.00
18
Calculate the Sales Price
Total Variable Cost = (80.00 + 18.21)
= Rs. 98.21
Sales Price = 98.21 x 1.25
= Rs.122.76
Contribution Margin = ( 122.76 – 98.21 )
= Rs.24.55
= (25%)
19
•Salary & Wages Expense Rs. 40,00,000
Monthly
•Interest on Bank Loan Rs. 100,000 Monthly
•Depreciation Expense is Rs. 50,000 Monthly
•Rental Expense of Building is Rs. 200,000
Monthly
•Transportation Cost is Rs. 150,000 Monthly
•Repair & Maintenance Expense is Rs. 50,000
Monthly
•Utility Expense is Rs 10,00,000 Monthly
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•Total Number of Machine = 180 Unit
•Number of Workers Required = 200
Person
•Total Working Hours a Day = 8 Hours
•Number of Working Days for a Given
Month = 26 Days
•Workers Efficiency = 65%
•SMV of Trouser = 35 Minute
21
•Available Minute = (200 Workers x 8
Hours x 26 Days x 60 Minute) X 65%
•Available Minute = 16,22,400
Minutes in a Month
22
•Salary = (40,00,000/16,22,400) = 2.47 Rs/Minute
•Interest = (100,000/16,22,400) = 0.06 Rs/Minute
•Depreciation = (50,000/16,22,400) = 0.03 Rs/Minute
•Rental Expense = (2,00,000/16,22,400) = 0.12
Rs/Minute
•Transportation = (150,000/16,22,400) = 0.09
Rs/Minute
•Repair & Maintenance = (50,000/16,22,400) = 0.03
Rs/Minute
•Utility Expense = (10,00,000/16,22,400) = 0.62
Rs/Minute
•Total Cost Per Minute = 3.42 Rs/Minute
So, the Cost of Making (CM) of Trouser = 35 Minute x
3.42 Cost Per Minute = 119.7 Rs
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Suppose Your Sewing Section has 30 machines and
for this machine 30 operators and 5 helpers are
working.
•Total Salary Expense = ( 30 Operators * Average
Monthly Salary) + (5 Helpers * Average Monthly
Salary)
•Salary and Wages Expense = (30*10000 Rs.) + (5 *
8000 Rs.) = 340000 Rs/Month.
•Available Minute Per Month = ((30 operators+5
helpers)* (8 hours *60 minutes)) * 26 days = 436800
Minutes in a Month
CM of Garments = (340000/436800) = .78 Rs./Minute
If a garments need 45 minutes to make then the total
cost of making the cost of that particular garments
will be = (.78 Rs * 45 minute) = 35.1 Rs./Per Piece
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