A practical playbook for true per-piece costing in garment manufacturing
Ask three people in the same garment factory what a T-shirt costs and you will often get three answers. The merchandiser quotes the costing sheet prepared before the order. The accountant divides last month's expenses by last month's output. The owner has a number in his head from ten years of experience. All three are estimates, and none of them tells you what the order you just shipped actually cost.
True per-piece costing is not complicated mathematics. It is disciplined recording. This playbook walks through the formula, the data each part needs, and the common places where the number quietly goes wrong.
Why the costing sheet is not your cost
A pre-order costing sheet is a forecast. It assumes a consumption per piece, a waste allowance, a line efficiency and a labour rate. Real production rarely matches all four. Fabric arrives with a different width, the marker is less efficient than planned, a batch is recut, a few hundred pieces are rejected at final inspection. Each deviation is small, but they stack.
The month-end average has the opposite problem. It is based on real money but blends every order together, so a loss-making order hides behind a profitable one. If you want to know which styles and which customers make you money, you need cost per order, then cost per good piece.
The formula that does not lie
The honest per-piece cost is built from what was really consumed, divided by what was really delivered:
True cost per piece = (material issued − material returned + direct labour + allocated overhead) ÷ good pieces delivered
Three details make this formula different from the usual one:
- Material is net of returns. Fabric returned to the store after cutting should come off the order's cost, otherwise you charge the order for rolls it never used.
- Loss stays inside the cost. Material recorded as lost, damaged or wasted is not removed; it is part of what the order consumed.
- The divisor is good pieces only. Rejects, seconds and missing pieces are excluded, so their cost is spread over the pieces you can actually sell.
A worked example
Take an order of 10,000 knitted T-shirts with a planned consumption of 0.22 kg per piece at 150 EGP per kilo.
| Item | Planned | Actual |
|---|---|---|
| Fabric issued | 2,200 kg | 2,420 kg |
| Fabric returned to store | 0 kg | 60 kg |
| Net fabric cost | 330,000 EGP | 354,000 EGP |
| Labour and overhead | 120,000 EGP | 131,000 EGP |
| Good pieces delivered | 10,000 | 9,700 |
| Cost per piece | 45.00 EGP | 49.99 EGP |
A difference of five pounds per piece looks small until you remember that the selling price was 52 EGP. The order that looked like a 13% margin on paper delivered about 4%. Without per-order costing, nobody would have noticed until the year-end accounts.
Notice where the five pounds came from. Roughly 220 kg of extra fabric explains most of it, and 300 missing good pieces explain the rest. Neither would show up on a monthly profit and loss statement as a separate line. They only become visible when material and output are recorded against the order itself, which is why the rest of this playbook focuses on recording rather than on accounting.
Where the number usually goes wrong
When we review costing in Egyptian factories, the same leaks appear again and again:
- Fabric issued without a reference. Rolls leave the store "for cutting" with no order number, so their cost lands on whichever order is open.
- Returns that are never recorded. Leftover fabric goes back to a corner of the store and is reused later, effectively free, for a different order.
- Mixed lots. When older and newer material is consumed out of order, cost layers blur. Our article on why FIFO matters on the shop floor explains how this distorts unit cost.
- Cutting waste treated as normal. A marker efficiency of 78% instead of 84% is a direct cost increase. See reducing fabric waste in the cutting room for practical improvements.
- Rework that is invisible. Pieces sent back from finishing to sewing consume labour twice but appear once in the output count.
How to instrument your factory for true costing
You do not need an accounting system to get this right. You need four types of movement recorded against each order, every time:
- Intake — material received from the supplier, with quantity and price.
- Issue — material sent from the store to production for a specific order.
- Return — unused material sent back to the store.
- Loss — material damaged, wasted or missing, with a reason.
With these four movements and a count of good pieces at the end of each stage, the formula above fills itself in. The final step is reconciliation when the order closes, described in detail in closing a production order. Once you trust your actual costs, you can price new business with confidence, which is the subject of our guide to cost-plus pricing for export orders.
Where Nasij fits
Nasij records material intake, issue, return and loss as separate movements against each purchase order, and tracks good pieces stage by stage with live balances. When an order is completed, Nasij reconciles material received against pieces produced, so the inputs for a true per-piece cost are already in place. Labour and overhead still come from your own records; Nasij gives you the material and output side that most factories are missing.
