IENG 217 Cost Estimating for Engineers Product Estimating

Product Methods Learning Operations Planning Bill of Material Method of profit and loss

Learning Theory Person-hours or cost necessary to complete a unit will decrease by a constant percentage each time the manufacturing quantity is doubled.

Learning Theory Now consider the cost per unit is $100 for 1 unit produced and $80 for 2 units produced.

Learning Theory

Class Problem A company audits to production units for an engine machining process. The 20 th unit requires 120 hours of total machining time while the 40 th unit requires 90 hours of total machining time. Estimate the time it will take to machine the 80 th unit.

Class Problem

Engineering Costs

Information Needed Engineering bill of materials Due date for completion Quantity, rate of production, etc. Special test, inspection Packaging & shipping information Marketing information

Bill of Material

Product Estimate Productive hour cost model Activity Based Costing Learning Model

Productive hour cost model

Example

From below

Example HSUNxH hrs l c    (/).(./)

Example PHClothoursxprodhrtrate    cos.(.) $1,