What is CPM? How to Calculate Cost Per Minute In A Production Line?

 What is CPM: 

CPM is Cost per minute. That means CPM of a line is the cost incurred per standerd minute for that production line.

How to Calculate Cost Per Minute

There are two types we can calculate cost per minute of a sewing line. Those are,

1. Estimated cost per minute 
2. Actual cost per minute

By those method, we can measure cost per minute of a-

• Production line
• Specific section
• A production floor
• Full factory

 1. Calculate Estimated cost per minute of a line.

To calculate estimated CPM of a production line, we need below information correctly,

1. Total one day salary of that line
2. Total Minutes available to work on that day
3. Line Efficiency of that line

Here,

To calculate total salary of a line consider all direct operators who are directly invovle with the production only like all operators, helpers, quality checkers. You can also include line supervisor and line QA if they are not considered under factory overhead cost.

Total Minutes available to work on that day = (Number of total workers Х working hour Х 60)

And Line Efficiency of that line for example 75% ( It may vary factory to factory )

Now equation to calculate estimated CPM is given below,

Estimated CPM = Total Salary of a Day of a line/( Total Available Minutes Х Line Efficiency )

For example, Total one day salary of a production line is 14700 TK where total 32 manpower ( 28 direct operators ) involve for the production for 10 hours and line efficiency is 75%.

So, Cost Per Minute = 14700/( 32 Х 10 Х 60 Х 75%)

                                = 1.02 Taka

2. Calculate Actual cost per minute of a line.

To calculate actual CPM of a production line, we need below information,

1. Total one day salary of that line
2. Total garments produced of that day
3. Garments SMV

The equation to calculate actual CPM of a line is - 

Actual CPM = Total Actual Salary of a Day of a line/( Total garments produced of that day Х Garments SMV )

 For example, Total one day salary of that production line is 14700 TK where total garments produced of that day is 600 pcs and garments SMV is 20.98 min.

So, Cost Per Minute = 14700/( 600 Х 20.98 )

                                = 1.17 Taka

Related Topics: How to Reduce Cost Per Minute ( CPM ) in a Factory.

Read also: Calculating Factory Efficiency of a Manufacturing Unit. Template of Efficiency Report.