1. 10-1 Chapter 10 Overview b Costs come from a variety of sources b There is a method for identifying those costs

2. 10-2 Chapter 10 Objectives b Identify the highest cost factors in the die casting industry b Identify the three levels of a manufacturing cost system b Explain the difference between direct and tare material in a die casting

3. 10-3 New Term b Operations Traditionally used to identify steps that add value or transform the product Traditionally used to identify steps that add value or transform the product

4. 10-4 Cost Factors b Many factors b There’s a multi-level system for determining cost b The levels investigated are the: Factory level Factory level Work Cell level Work Cell level Product level Product level

5. 10-5 Factory Level: Material/Alloy Cost 9 Direct costs 9 Added costs 9 Storage costs 9 Handling costs  Total Material Cost

6. 10-6 Factory Level: Tare Material b Additional material used that is a byproduct of creating the casting b Much is reclaimed, some is scrapped outright b Costs must be recovered b Costs related to: Collection and delivery Collection and delivery Oxidation loss Oxidation loss

7. 10-7 Work Cells b A grouping of machines that performs operations sequentially to a piece part b Comprised of 5 elements

8. 10-8 Work Cell Cost Structure b Any workpiece passing through a work cell has value added by the work cell b An appropriate share of operating costs must be applied to the workpiece b Costs can be classified as: Cost per idle hour Cost per idle hour Cost per operating hour Cost per operating hour Extra cost per piece Extra cost per piece

9. 10-9 Work Cell Level Costs b Floor space b ROI b Fixed maintenance b Utilities b Services b Maintenance

10. 10-10 Work Cell Level: General Burden b Some activities cannot be applied to specific functions Accounting or legal activities and salaries of the plant manager or controller Accounting or legal activities and salaries of the plant manager or controller Other costs included are “overapplied” or “underapplied” Other costs included are “overapplied” or “underapplied” b Distributing it over all direct labor hours is a common accounting practice

11. 10-11 Product Level Costs b Type of work cell called a “service” cell b Performs activities that do not actually change the product or add value but do add cost to the product Could be the toolroom, maintenance or a conveyor Could be the toolroom, maintenance or a conveyor b Computed costs of all products must include the costs of all the cells

12. 10-12 Product Tree b Consists of many materials and/or items brought together to make one product b That product is used in many other products The original materials are like the root system The original materials are like the root system The basic product is like the trunk The basic product is like the trunk The many final products are the branches The many final products are the branches b The manufacturing steps for each item must be identified and listed after tree is complete

13. 10-13 Summary b Costs come from a variety of sources b All the costs, plus a profit, have to be included in the selling price of the castings b A multi-level system can be used to determine cost b The levels investigated are the Factory level, the Work Cell level, and the Product level b The highest cost is not always the alloy

14. 10-14 Summary cont. b Factory level costs: Material/alloy = direct, added, storage, and handling costs Material/alloy = direct, added, storage, and handling costs Tare material Tare material b Product level costs: Product tree Product tree b Work cell level costs: Machine/facility Introducing the workpieces to the processing machine Extracting the workpieces from the processing machine An operator/controller Space (floor space)