1. Manufacturing vs Non-Manufacturing Costs
Overview
Manufacturing Cost Analysis 2

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
Manufacturing Cost Analysis 2

3. Overview Non-Manufacturing Costs Manufacturing Costs
Manufacturing Cost Analysis 2

4. Non-Manufacturing Costs
Definition: Costs for company operations that are not directly related to manufacturing.
Manufacturing Cost Analysis 2

5. Non-Manufacturing Costs
Definition: Costs for company operations that are not directly related to manufacturing.
Examples:
Sales and marketing supplies and salaries
Manufacturing Cost Analysis 2

6. 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
Manufacturing Cost Analysis 2

7. 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
Manufacturing Cost Analysis 2

8. 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
Manufacturing Cost Analysis 2

9. 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
Manufacturing Cost Analysis 2

10. 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 Cost Analysis 2

11. 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 Cost Analysis 2

12. Manufacturing Costs Examples:
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
Manufacturing Cost Analysis 2

13. Manufacturing Costs Examples:
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
Manufacturing Cost Analysis 2

14. Manufacturing Costs Examples:
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 Cost Analysis 2

15. 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
Manufacturing Cost Analysis 2

16. 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
Utility costs of production facility (i.e. not for research, corporate, or other facilities)
Manufacturing Cost Analysis 2

17. 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
Utility costs of production facility (i.e. not for research, corporate, or other facilities)
Production waste disposal costs
Manufacturing Cost Analysis 2

18. 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
Manufacturing Cost Analysis 2

19. Sources: Non-Manufacturing Costs: Manufacturing Costs: Images:
Manufacturing Costs:
Images:
Manufacturing Cost Analysis 2