dimensioning & tolerances 2 manufacturing vs non-manufacturing costs overview manufacturing cost...

Dimensioning & Tolerances 2

Manufacturing vs Non-Manufacturing Costs

OVERVIEW

Manufacturing Cost Analysis 2

Importance Your company wants to make money!

Profit and price (and ultimately your salary) depend on how you manage manufacturing costs.

You will have to address costs and economics in presentations about your work


Overview

Non-Manufacturing Costs

Manufacturing Costs



Non-Manufacturing Costs Definition: Costs for company operations that are not directly related to manufacturing.



Non-Manufacturing Costs Definition: Costs for company operations that are not directly related to manufacturing. Examples:

◦ Sales and marketing supplies and salaries




◦ Sales and marketing supplies and salaries◦ Management salaries and office supplies




◦ Sales and marketing supplies and salaries◦ Management salaries and office supplies◦ Shipping the completed product to the customer




◦ Sales and marketing supplies and salaries◦ Management salaries and office supplies◦ Shipping the completed product to the customer◦ Janitorial, maintenance, taxes, and depreciation of non-

manufacturing facilities




◦ Sales and marketing supplies and salaries◦ Management salaries and office supplies◦ Shipping the completed product to the customer◦ Janitorial, maintenance, taxes, and depreciation of non-

manufacturing facilities◦ Research and development



Non-Manufacturing Costs Definition: Costs for company operations that are not directly related to manufacturing.

Examples:◦ Sales and marketing supplies and salaries◦ Management salaries and office supplies◦ Shipping the completed product to the customer◦ Janitorial, maintenance, taxes, and depreciation of non-manufacturing

facilities◦ Research and development◦ Interest on Loans



Manufacturing Costs Definition: Costs from labor and materials that are directly or indirectly related to producing an item. These costs should be clearly linked to the factory where the product is manufactured.



Manufacturing Costs Definition: Costs from labor and materials that is directly or indirectly related to producing an item. These costs should be clearly linked to the factory where the product is manufactured. Examples:

◦ Property taxes and rent paid for the manufacturing facilities




◦ Property taxes and rent paid for the manufacturing facilities◦ Maintenance of machines◦ Depreciation of property and equipment values




◦ Property taxes and rent paid for the manufacturing facilities◦ Maintenance of machines◦ Depreciation of property and equipment values◦ Raw material costs



Manufacturing Costs Definition: Costs from labor and materials that is directly or indirectly related to producing an item. These costs should be clearly linked to the factory where the product is manufactured.

Examples:◦ Property taxes and rent paid for the manufacturing facilities◦ Maintenance of machines◦ Depreciation of property and equipment values◦ Raw material costs◦ Manufacturing labor costs




Examples:◦ Property taxes and rent paid for the manufacturing facilities◦ Maintenance of machines◦ Depreciation of property and equipment values◦ Raw material costs◦ Manufacturing labor costs◦ Utility costs of production facility (i.e. not for research, corporate, or other facilities)




Examples:◦ Property taxes and rent paid for the manufacturing facilities◦ Maintenance of machines◦ Depreciation of property and equipment values◦ Raw material costs◦ Manufacturing labor costs◦ Utility costs of production facility (i.e. not for research, corporate, or other facilities)◦ Production waste disposal costs



Homework Problem (MC 2) For the following items, classify each as either a Manufacturing Cost or a Non-manufacturing Cost. Then state why you chose to classify the item as you did.◦ A) The electric bill for Ford’s corporate office◦ B) The salary of a call-center employee handling returns◦ C) The cost of wood used to build IKEA furniture◦ D) The cost of new computers for a pharmaceutical company’s

research team◦ E) The salary of the janitorial / maintenance staff at a

manufacturing plant



Sources: Non-Manufacturing Costs:

◦ http://www.microbuspub.com/pdfs/chapter4.pdf◦ http://www.accountingcoach.com/nonmanufacturing-overhead/explanation◦ http://simplestudies.com/manufacturing-nonmanufacturing-costs.html/page/3

Manufacturing Costs:◦ http://www.microbuspub.com/pdfs/chapter4.pdf◦ http://www.accountingcoach.com/manufacturing-overhead/explanation◦ http://simplestudies.com/manufacturing-nonmanufacturing-costs.html

Images:◦ http://www.freeimages.com


dimensioning & tolerances 2 manufacturing vs non-manufacturing costs overview manufacturing cost...

Documents

dimensioning tolerances

company operations

marketing supplies

salariesmanagement salaries

completed product

office suppliesshipping

importanceyour company

property taxes