Entrepreneurship, Costing, Waste Management and Environmental Sustainability
What this domain tests
Building a cost sheet, distinguishing markup from margin, break-even thinking, support schemes for small units, and the waste hierarchy applied to a cutting room.
Costing rules
- Cost sheet: fabric (consumption × rate) + trims + labour (SAM × cost per minute) + overheads + packing + rejection allowance.
- Markup is calculated on cost; margin is calculated on selling price. They give different answers to the same percentage.
- Break-even quantity = fixed costs ÷ (selling price − variable cost per unit).
- Support ecosystem: Udyam (MSME) registration, PMEGP, Mudra loans, cluster development schemes.
Waste and sustainability
- Hierarchy: prevent/reduce → reuse → recycle → recover → dispose.
- Cutting room: improve marker efficiency and CAD nesting, sort by size ratio, reuse cuttings for patchwork or wipers, bale and sell waste to recyclers.
- Wet processing: effluent treatment, restricted substances lists (RSL), ZDHC, GOTS for organic cotton, OEKO-TEX for tested articles.
Worked example
Fabric 1.2 m at ₹180/m = ₹216; trims ₹14; labour SAM 12 min at ₹4/min = ₹48; overhead at 15% of material plus labour = 0.15 × (230 + 48) = ₹41.70. Total cost = ₹319.70. A 20% margin gives price = cost ÷ (1 − 0.20) = ₹399.60. A 20% markup gives price = cost × 1.20 = ₹383.60. Same percentage, different price - that difference is the exam point.
Traps that cost marks
- Using markup and margin interchangeably.
- Leaving cutting waste and rejection out of the cost sheet.
- Quoting GOTS or OEKO-TEX as certifications of the factory rather than of the product or fibre.
- Forgetting that labour cost comes from SAM × cost per minute, not from an hourly wage guess.