Required input = accepted output ÷ agreed yield. Apply the stated rounding rule, then compare quantity-based process cost with any applicable minimum charge. Add packing and delivery, record validity and version, and treat the amount left after listed costs as contribution before overhead, not net profit.
Define what the buyer is accepting
Before the calculation, write the required quantity, specification, unit, packing and delivery point. A quote for 1,000 accepted metres is different from a quote for processing 1,000 metres of input. Clarify which one you are pricing.
ERPNext's bill-of-materials documentation describes materials, quantities and operations as inputs to manufacturing cost. The worksheet here adds an explicit output assumption and order-specific charges. It is an original example, not a textile industry cost benchmark.
Calculate against accepted output
All figures are illustrative and exclude taxes. Assume 1,000 accepted metres are required, and the unit's checked planning assumption is 95% usable output from input. That assumption must come from the relevant product and process; it is not a recommended yield.
Required input is 1,000 ÷ 0.95 = 1,052.63 metres. Suppose the supplier sells whole metres, so the plan buys 1,053 metres. The example charges the full purchase to this order; if leftover usable material is retained, account for it consistently instead.
| Cost line | Basis | Amount |
|---|---|---|
| Fabric input | 1,053 m × ₹80 | ₹84,240 |
| Outside processing | 1,053 input m × ₹18 | ₹18,954 |
| Packing | 1,000 accepted m × ₹3 | ₹3,000 |
| Order-specific delivery | Confirmed estimate | ₹2,500 |
| Total listed cost | ₹1,08,694 |
At ₹125 per accepted metre, order revenue is ₹1,25,000. The amount left after these listed costs is ₹16,306, or 13.04% of revenue. This is not net profit. Salaries, rent, finance costs and any other unlisted overhead still need coverage.
Test the assumption that could change the quote
If usable output is 92%, whole-metre input becomes 1,087 metres. At the same material and processing rates, cost becomes 1,087 × ₹98 + ₹3,000 + ₹2,500 = ₹1,12,026. The amount left falls to ₹12,974.
This is a scenario, not a prediction. Its purpose is to expose how much the quote depends on yield. Ask the responsible production person to confirm the appropriate planning basis before committing the price.
Check the commercial details separately
- Is processing charged on input quantity, output quantity or a minimum batch?
- Does the material rate apply to the required specification and lot size?
- Who pays for return transport, rework and rejected material?
- Are samples, special packing or testing charged separately?
- Does the promised receipt date leave enough time for the agreed delivery?
For a repeat order, compare the last estimate with the actual quantities and charges. Copying the previous selling price is quicker, but it may also copy an assumption that no longer holds.
Keep the approval short
Show the owner the price, listed cost, amount remaining and the two most sensitive assumptions. Keep a dated version of the approved worksheet with the quote. When the order closes, reconcile actual output and charges to that version so the next quote benefits from what happened.
ACCA distinguishes contribution from profit after fixed costs. The worked amounts here cover only the costs explicitly listed; do not treat an omitted cost as zero.
Compare minimum charges before approval
Suppose outside processing is ₹18 per input metre with a minimum charge for 1,200 metres. On 1,053 planned input metres, the quantity calculation is ₹18,954, but the minimum charge is ₹21,600. Use the larger applicable amount: ₹21,600. That raises total listed cost by ₹2,646 and reduces the amount left from ₹16,306 to ₹13,660.
Confirm whether the minimum applies per order, lot, colour or delivery. A minimum copied from another job can distort the quote. Keep any leftover usable material treatment explicit rather than silently giving it zero or full value.
Copy the inputs and version the quote
| Field | Recorded basis |
|---|---|
| Accepted output | Quantity, unit, tolerance and specification |
| Required input | Accepted output ÷ agreed yield, then stated rounding rule |
| Material | Rate, lot size, minimum and leftover treatment |
| Processes | Rate basis, minimum charge, tax treatment and supplier validity |
| Other order costs | Packing, testing, samples, transport and delivery point |
| Commercial version | Quote ID, issue date, valid-until date, approver and superseded version |
Required input = accepted output ÷ agreed yield. Apply rounding and process minimums after the basis is clear. A changed material rate, validity date or yield creates a new version; preserve the old one. This educational sheet does not create quotations or approve prices in Dhandha GPT.
Questions you might ask
Is the amount left after textile processing cost my profit?
It is only the amount left after the costs included in your worksheet. Unlisted overhead, finance costs and other charges still reduce profit.
Should I calculate yield on input or output?
Define it explicitly. In this example, usable output divided by input is the yield, so required input equals accepted output divided by that yield.