ABC Uses in Textiles
Two kinds of machine cost
A machine has a running cost (workers on it, electricity, gas, depreciation) and a set-up cost — the cost of each changeover: wages of workers who set up or stand idle, the minimum chemicals needed to start, and so on. Suppose a processing department has a set-up cost of Rs 5,500 and a running cost of Rs 1 per metre, and marketing charges Rs 3 per metre. Two orders arrive: A for 1,000 m and B for 10,000 m.
| A | B | C | |||
|---|---|---|---|---|---|
| 1 | Running cost per metre | ||||
| 2 | Set-up cost per order | ||||
| 3 | Charge to customer per metre | ||||
| 4 | Order A | Order B | |||
| 5 | Length (m) | ||||
| 6 | Conventional: total cost ÷ total metres | ||||
| 7 | Average cost per metre | 2.00 | |||
| 8 | Cost of order | 2,000 | 20,000 | ||
| 9 | Revenue | 3,000 | 30,000 | ||
| 10 | Profit | 1,000 | 10,000 | ||
| 11 | Activity based: set-up traced to each order | ||||
| 12 | Cost of order | 6,500 | 15,500 | ||
| 13 | Profit / (loss) | (3,500) | 14,500 | ||
Dyeing and printing study of a textile factory
Observations from a rotary printing department:
- A changeover means removing and washing screens, blades and the drum, changing the back cloth, and changing blades if the width changes.
- 100–200 m of testing wastage per design at rotary #4 arises from setting problems. Designs with fewer colours can be checked at slow speed (less wastage); more colours need high speed so colours become sharp enough to check, and have more setting problems.
- At least 10–12 kg of colour is wasted at every changeover; on average 4–5 screens out of 12 give an unsatisfactory shade and are washed and readjusted, wasting 5–6 kg per screen; residual colour is left in the drum because the quantity is hard to estimate.
- Colour costs about Rs 30/kg (light), 45 (medium), 100 (dark); making one colour takes 10–15 minutes, so 3 hours for 12 colours.
- Vat dyes are costly and need two processes; dyeing has its own essential wastage of colour and cloth.
Screen cost
| Width (mm) | Filling | Engraving | Screen cost |
|---|---|---|---|
| 1280 | Rs 1,400 | Rs 1,300 | Rs 1,500 – 10,750 |
| 1850 | Rs 1,400 | Rs 1,400 | Rs 7,200 – 15,500 |
| 2400 | Rs 1,400 | Rs 1,600 | Rs 5,664 – 22,450 |
| 2800 | Rs 1,400 | Rs 1,900 | Rs 12,200 – 25,000 |
So one screen carries about Rs 3,000 of labour on average. If the screen cost for a design is 12,000, a 12-colour design needs Rs 180,000 of screens alone — Rs 180/m on a 1,000 m run — before electricity, wages, depreciation, rent, steam and the wastage of fabric and colour are counted.
| A | B | |
|---|---|---|
| 1 | Average colour cost (Rs/kg) | |
| 2 | Number of colours | |
| 3 | Essential wastage at changeover (kg per colour) | |
| 4 | Screens readjusted | |
| 5 | Shade-out wastage per readjusted screen (kg) | |
| 6 | Residual in drum (kg per colour) | |
| 7 | Colour wasted (Rs) | 9,650 |
Screen cost per metre by run length and number of colours
The costing department gave an average screen cost of 6,249 for June. Dividing by the run length shows why 400 m jobs cannot be priced like 20,000 m jobs.
| A | B | C | D | E | F | |
|---|---|---|---|---|---|---|
| 1 | Screen cost | |||||
| 2 | Colours \ Metres | 400 | 1,000 | 2,000 | 10,000 | 20,000 |
| 3 | 4 | 62.49 | 25.00 | 12.50 | 2.50 | 1.25 |
| 4 | 8 | 124.98 | 49.99 | 25.00 | 5.00 | 2.50 |
| 5 | 12 | 187.47 | 74.99 | 37.49 | 7.50 | 3.75 |