Posts Tagged ‘software’

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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Fixed and Variable Costs

There are two main types of costs – fixed and variable.  If something is being manufactured, it consists of both fixed and variable costs.  Fixed costs are those that do not change based on a quantity.  This means the cost is fixed if you produce 1 or 1000 pieces.  Some of these costs would be…

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Job Costing Software

Job Costing has been around for many years to determine the cost of manufacturing a given product.  The process by which the expenses are record is costing.  Job costing software should make the process of recording the transaction simpler and not more difficult and time consuming.  Job costing software is not like cost accounting because it does…

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Techniques for Cost Estimating

The basic cost estimating techniques involve analyzing all factors that make up a cost estimate. The first technique I would follow is to go through the following steps, systematically, and costing each one out in detail. Once you have gone through the basic steps, you will have all the cost information required for the estimate. 1.…

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Purpose of Cost Estimating

There are numerous purposes behind cost estimating, including the following: 1. A manufacturer can determine if the project or product is cost-effective to the manufacturer prior to the manufacturing process. 2. There are various alternatives to manufacturing and cost estimating can determine the economic feasibility of manufacturing the project or product by different methods 3.…

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Cost Estimate Types

There are different types of cost estimates including “Rough Approximation” of cost which can be a conceptual design, preliminary design and then a detailed estimate or quote. Rough Approximation The rough approximation is really prepared for informational purposes only.   This type of estimate may not have geometry or even materials but just a rough idea…

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Profit Improvement and Cost Reduction Part 1

Talking about profit improvement and cost reduction we cannot leave out the importance of estimating accurately.  There are a few ways to reach the goal of both profit improvement and cost reduction. Increase your prices which improves profit, but only if that does not drive away customers. Increase sales if your fixed costs stay the…

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Cost Estimating Versus Cost Accounting

What is the difference between cost estimating and cost accounting? Cost estimating is a precursor to cost accounting because it done at the beginning of the process.   Lets define cost estimating as the estimation of the cost of a goods or services  prior to the actual production of the goods or services.  Cost estimating…

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Estimating is more than Setup and Run Time Part 2

In the not to distant past many manufacturing processes were very labor intensive.  In countries such as China and India there is still a great deal of manual labor intensive manufacturing.  I remember as a child I worked in my Father’s sheet metal shop and the machine of choice was a Strippit 30/30.  I have…

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How To : Manufacturing Hourly Rate Calculation

Sheet metal, CNC shops, machine shops and many other job shops provide a valuable service to their customers.  For a job shop to be a profitable business, the service rate should cover the cost of doing business plus have a certain amount of margin or profit built into the price customers pay. If this is too low,…

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