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Chapter 10 Overview. Costs come from a variety of sources There is a method for identifying those costs. Chapter 10 Objectives. Identify the highest cost factors in the die casting industry Identify the three levels of a manufacturing cost system

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chapter 10 overview
Chapter 10 Overview
  • Costs come from a variety of sources
  • There is a method for identifying those costs
chapter 10 objectives
Chapter 10 Objectives
  • Identify the highest cost factors in the die casting industry
  • Identify the three levels of a manufacturing cost system
  • Explain the difference between direct and tare material in a die casting
new term
New Term
  • Operations
    • Traditionally used to identify steps that add value or transform the product
cost factors
Cost Factors
  • Many factors
  • There’s a multi-level system for determining cost
  • The levels investigated are the:
    • Factory level
    • Work Cell level
    • Product level
factory level material alloy cost
Factory Level: Material/Alloy Cost
  • Direct costs
  • Added costs
  • Storage costs
  • Handling costs
  • Total Material Cost
factory level tare material
Factory Level: Tare Material
  • Additional material used that is a byproduct of creating the casting
  • Much is reclaimed, some is scrapped outright
  • Costs must be recovered
  • Costs related to:
    • Collection and delivery
    • Oxidation loss
work cells
Work Cells
  • A grouping of machines that performs operations sequentially to a piece part
  • Comprised of 5 elements
work cell cost structure
Work Cell Cost Structure
  • Any workpiece passing through a work cell has value added by the work cell
  • An appropriate share of operating costs must be applied to the workpiece
  • Costs can be classified as:
    • Cost per idle hour
    • Cost per operating hour
    • Extra cost per piece
work cell level costs
Work Cell Level Costs
  • Floor space
  • ROI
  • Fixed maintenance
  • Utilities
  • Services
  • Maintenance
work cell level general burden
Work Cell Level:General Burden
  • Some activities cannot be applied to specific functions
    • Accounting or legal activities and salaries of the plant manager or controller
    • Other costs included are “overapplied” or “underapplied”
  • Distributing it over all direct labor hours is a common accounting practice
product level costs
Product Level Costs
  • Type of work cell called a “service” cell
  • Performs activities that do not actually change the product or add value but do add cost to the product
    • Could be the toolroom, maintenance or a conveyor
  • Computed costs of all products must include the costs of all the cells
product tree
Product Tree
  • Consists of many materials and/or items brought together to make one product
  • That product is used in many other products
    • The original materials are like the root system
    • The basic product is like the trunk
    • The many final products are the branches
  • The manufacturing steps for each item must be identified and listed after tree is complete
  • Costs come from a variety of sources
  • All the costs, plus a profit, have to be included in the selling price of the castings
  • A multi-level system can be used to determine cost
  • The levels investigated are the Factory level, the Work Cell level, and the Product level
  • The highest cost is not always the alloy
summary cont
Factory level costs:

Material/alloy = direct, added, storage, and handling costs

Tare material

Product level costs:

Product tree

Work cell level costs:


Introducing the workpieces to the processing machine

Extracting the workpieces from the processing machine

An operator/controller

Space (floor space)

Summary cont.