| Material Name | Unit price ($) | Usage | |
|---|---|---|---|
Direct labour and manufacturing costs (change/fixed)
Cost-sharing and profit during the period
Cost-accounting depth analysis: the profit-making building block of manufacturing
Cost Accounting is not just a combination of spare parts. In modern enterprise management, full-cost models are the basic tools for assessing product life-cycle values, formulating quotation strategies and conducting internal efficiency audits.
1. Three core costs of manufacturing: materials, work, costs
- Direct Materials: Cost of raw materials that constitute the product entity. It is proposed that precision management be carried out through BOM (material inventory), including loss and loss rates.
- Direct Labor: Remuneration of employees directly involved in the manufacture of products. The calculation is usually based on “standard working hours x average wage”.
- Manufacturing costs (Manufacturing Overhead)(c) Rental of plant, depreciation of machinery, utilities (water, electricity, gas). These are usually fixed or semi-variant costs.
2. Why cost-sharing?
In addition to the costs on the production line, the administrative office (management costs) and advertising (sales costs) of the enterprise are also to be covered by the product. The tool uses the “proportional sharing” method to rate the costs of these periods to unit costs. Neglect of this share is often the main reason for the “book-entry, cash loss” of the start-up enterprise.
3. Three dimensions of cost control
Good managers optimize profits in three directions:
- Procurement optimization: Reduce BOM costs by scaling up or replacing materials.
- Efficiency gains: Reduction of working hours required for single-form product production through automation or lean production.
- Share Dilution• By expanding production, to place lower fixed manufacturing costs on individual products.
4. Logic of recommended sales prices
Recommended sale price = full cost ÷ (1 - expected Māori rate). By dynamically adjusting the expected interest rates, you can see clearly the impact of price movements on the profit pool, thus overplaying the business negotiations.