Posts Tagged ‘overhead’

Classification Of Costs – Fixed and Variable Costs

There are many facets of costing and breaking costing into these four categories helps in understanding Fixed and Variable Costs Direct and Indirect Costs Costs are generally classified as to whether or not they vary with the quantity of parts being manufactured.  Many times this can be described as a Setup Cost because it does…

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Material Estimating

Material estimating can be simple to complex depending on the particular job you are estimating.   Raw material is a commodity which could include metal sheets, wood, bars, plastic, plates, block of metal, etc.  These items are purchased from a supplier and are usually priced at a per unit weight price. A few examples 1.…

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Indirect Material Costs

Indirect material costs are those that are not directly added into the product. There are many times where materials are required to manufacture a part but are not put directly into the product.  Examples of this may include oils, lubricants for machines, sandpaper, molds, and castings. There are some situations where the molds and castings…

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Direct and Indirect Costs

Fixed and variable costs can now be broken down into two more cost types: direct and indirect costs. These classify the costs of parts being manufactured and are critical to calculating shop overhead rates.  Direct costs are those costs that are directly associated with the production of the product.  Indirect costs are those costs which…

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Manufacturing Efficiency in Estimating

How many of you have estimated a job and wonder how anyone could do it any cheaper and make money?  Well your not alone in your thinking.   There are manufacturers that are using reverse auctions in order to try to get more work and pick up new customers.   The problem is when you…

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Fabrication Workcenter Overhead Rates

When you quote a job and its operations you need to make sure you quote it accurately. Its very important to know that when you quote a job that your rates are high enough to actually turn a profit. [polldaddy poll=2007715] Welcome to the MIE Solutions Job Shop Estimating blog. Fabrication software as in sheet…

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Machine Shop Rates Part 2

Welcome to the MIE Solutions Job Shop Estimating  blog.   Fabrication software as in sheet metal software and manufacturing software deals with shop rates extensively for costing. There are basically 3 ways to calculate overhead absorption rates which is used to provide your shop sell rate during quoting and estimating. Company Overhead Absorption Rate Percentage…

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Calculating Shop Rates Using The Income Statement

We are going to spend the next few posts reviewing what an income sheet is and how the income sheet will help you determine you shop rates. From Wikipedia the definition of income statement is Income statement, also called profit and loss statement (P&L) and Statement of Operations, is a company’s financial statement that indicates how the revenue…

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Introduction To Shop Rates

Labor used to produce products and services purchased by customers. These man-hours are directly attributable to customer activity. Lab A few years ago before computers, excel spreadsheets and calculators most organization used a standard shop rate for any labor that was occuring during a process.   Now that computers can easily calculate figures organizations have…

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