COSTING FOR A SPINNING MILL - Cost Accounting - Page 3
The following table gives the details of count pattern, selling price, rawmaterial price, packing cost and contribution per kg of different counts for a particular period ( year 2000). This is just an example , one should understand that the selling price, rawmaterial price and all other costs keep changing. THis is the reason why costing is important for a running mill. All the costs are changing. Some costs change every month, some once in a year. Therefore costing plays a major role to run the plant efficiently.
|count||no. of spls||no of mcs||prdn/mc||prdn kgs/day||raw material cost/kg||packing cost /kg||freight per kg||commn 2% on selling price||selling price / kg||contribn per kg|
In the above table, all the costs are in US$. The ringframes are with 1120 spindles per machine with automatic doffing and link to autoconer. Packing cost is based on indonesian packing material prices for carton packing.
The ultimate aim of the project is to maximise the contribution. Looking into the cotribution per kg of yarn, the project should produce only 36s TC. But in this project they have considered 5 different counts. Because
- yarn market is not stable. It needs a lot felxibility
- customers are not same, the price depends on the customers
- the end uses are not same, the price depends on the enduse
- this unit exports 80% of the yarn, it can not depend on one country, eg. 36sTc is only for Philippines market, it can not be sold in Malaysia, eventhough the quality is good
- the count pattern depends upon the market requirement and the major counts in the market, not only on the contribution
- A linear programming technique can be used to maximise the contribution, considering all market constraints, and production constraints.
- flexibility needs more investment and more day to day expenses, if a project has to be more flexible, it has to invest more money on infrastructure
- the major factor which will make the project feasible with less felexibility is YARN QUALITY in a spinning mill
- Since this is a critical step for a new project, management should be clear about their Yarn quality , Flexibility required for marketing and should make use of Linear Programming Techniques to find out the best product mix to maximise the contribution.
STEP NO. 2: To work out the Total Investment cost ( machineries, accessories, land and builidng, humdification and electrical instruments)
The following table gives the requirement of produciton machines. To calculate the number of back proess and winding drums required, a detailed spin plan should be worked out with speeds and efficiencies to be achieved in each machine.
While calculating the no of machines required, m/c utilisation, m/c efficiency , waste percentage, twist multipliers, delivery speeds etc should be considered properly. These factors should be decided based on yarn quality required, end breakge rates and the capacity of machine.
INVESTMENT ON MACHINERY
|MACHINERY||NO. OF MCS||RATE / MC||TOTAL COST|
|Trutzschler Blowrrom line for cotton||1 line||416,640||416,640|
|Trutschler Blowrrom line for Polyester||1 Line||321,365||321,365|
|Trutshcler DK-903 cards||22||92,500||2,035,000|
|Rieter RSB-D30 draw frames (with autoleveller)||6||1,648,000|
|Rieter double delivery drawframe||10|
|Rieter E62 combers||10|
|Howa speed frames with overhead blower||7||144530||1,011,710|
|Ring frames with autodoffer||23||148,960||3,426,080|
|winding machines ( 26 drums per mc)||23||93,200||2,143,600|
|Roving transport ( manual)||1||150,000||150,000|
|Argus fire system||1||50,000||50,000|
Some of the following points can be considered while deciding the machines.
From the above table it is clear that, 23 ringframes with 1120 spindles are working with auto doffing and with link to autoconer. The major advantage of this automation is to reduce labour and to reduce the problems related to material handling. One has to really work out the benefits achieved because of this and the pay back for the extra investment.
Drawframe contributes a lot to the yarn quality and the ringframe and winding machine working. It is always better to go in for the best drawframes like RSB-D30 drawframes with autoleveller. It is not wise to buy a cheaper drawframe and save money.
It is always better to keep excess carding and autoleveller drawframes, so that flexibility of the project is also maintained. If the coarser counts contributes more and the market is good, overall production can be increased. If the market is for finer count, both the machines (carding and drawframes)can be run at slower speeds, which will surely contribute to yarn quality.
Speeds of speedframe , combers and ringframes do not affect the yarn quality as it is affected by card and drawframe speeds.
Blow room capacity should be utilised to the maximum, as it consumes a lot of power ,space and money.
Ringframe specification should be perfect, because the working performance and power consumption of the ringframe depends on the specifications like, lift, ring dia, no of spindles etc. Ring frame specification should be decided to get the maximum production per spindle and to reduce the power consumed per kg of yarn produced by that spindle. Because the investment cost and the power consumption for the ringframe is the highest in a spinning mill.
INVESTMENT ON ACCESSORIES:
The following table gives the details of the accessories like cans for carding, rawframe, bobbins, trollies etc
|ACCESSORIES||NO. OF MCS||RATE / MC||TOTAL COST|
|Carding cans 36" x 48"||120||160||19,200|
|comber cans 24" x 48"||350||85||29750|
|Drawframe cans 20" x 48"||1100||53||58,300|
|Identification bands 20"||400||1.2||480|
|Identification bands 24"||50||1.8||90|
|Roving and spinning bobbins||36,000|
SERVICE AND MAINTENANCE EQUIPMENTS:
The following table gives the details about the investments required on service and maintenance equipments
|SERVICE AND MAINTENANCE EQUIPEMENTS||NO OF MCS||RATE/MC||TOTAL PRICE|
|Cots buffing machine and accessories||1||20000||20000|
|Card room accessories||1 set||60,000||60,000|
|Spindle oil lubricator||1||4000||4000|
|Clearer roller cleaning machine||1||3000||3000|
|Premier uster tester||1||45000||45000|
|Premier strength tester||1||45000||45000|
|premier fiber testing||1||45000||45000|
Card service machines like Flat tops clipping machine and flats grinding machine are very important for yarn quality. One should not look for cheaper machine. It is always better to go for reputed manufacturers like GRAF, HOLLINGSWORTH etc.
Rubber cots contributes a lot to yarn quality. Bad buffing in
ring frame can increase the imperfections by 15%. Poor
quality of buffing in drawframe and speedframes can affect both
production and quality. It is better to go for the best cots
mounting machine and cots buffing machine.
HUMIDIFICATION AND ELECTRICAL EQUIPMENTS:
The following table gives the details about the investments required on umdification and electrical istruments
|Electrical installation including transformer, incoming and outgoing panels, bus duct, capacitor, etc for 3800 KVA||350,000|
|Compressor, Dryer and pipe lines||180,000|
|Ducting and installation for humidification system||125,000|
|workshops, hydrant and other equipments||100,000|
In indonesia, most of the units use PLN power and some of the spinning mills use Gensets. A detailed costing has to be done to compare the cost per unit to decide, Whether to use the PLN power or to go in for Gensets. while working out the costing finance cost on investment , overhauling cost, running cost, efficiency of the machine should be considered for cost caluculation in the case of Genset. In case of PLN power, the losses due to power interruption( based on the area data), finance cost on initial investment, md charges, unit charges to be considered. It is better to use 50% PLN and 50 % own generation.
The following table gives the details about land and builiding investments
|Factory building Including Service ally
192 x 62 meters
11,712 Square meter @ 120 usd/sq meter
|Road and others||40,000|
STEP NO.3: To calculate the expenses ( labour, power, stores,working capital, insurance etc)
WorWorking capital = 3,000,000
LABOUR:The following table gives the details about labour requirement
|DEPARTMENT||No of people required|
|administration and personal dept||20|
Total no of people required per day
|wages at 50 usd/month including bonus and insurance||111,00|
|other facilities at 35 %||3,885|
|salaries for managerial staff||10000|
|Other facilities at 35 %||3500|
Total labour cost / month
POWER: The following table gives the details about the power
|Total units(KWH) produced (consumed)per day||69559|
|Unit cost (cost / KWH)||0.03|
|Total production in Kgs||17,390|
|KWH/ Kg of yarn||4.0|
|TOTAL POWER COST /DAY||2087|
SPARES:The following table shows the spares cost, repair , and insurance
|spares cost at usd 8/1000 spindle shift||222,566d|
|repairs and other overheads||200,000|
|Insurance at 0.175% on investment and working capital||31320|
|TOTAL cost per year||453886|
STEP NO.4: PAY BACK CALCULATION
|Land and building||1,444,440|
|Machinery, accessories & service equipments||11,832,115|
|Electrical and Humidification ducts||1,823,000|
|RECURRING EXPENDITURES PER DAY|
|Salaries and Wages||949.5|
|Stores , repairs and insurance||1260.8|
|INTEREST CALCULATION (per day)|
|On capital 8%||3355.5|
|on working capital 9%||750|
|TOTAL EXPENSES INCLUDING INTEREST||8402.8|
|TOTAL CONTRIBUTION PER DAY||13312|
|NET PROFIT( before depreciation & taxation)||4909.2|
|PAY BACK PERIOD||8.54 years|
Go to Top of Page