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CHAPTER 6 : COST EVALUATION & ANALYSIS, NAIF SHAHMI BIN…
CHAPTER 6 : COST EVALUATION & ANALYSIS
COST CLASSIFICATION
Recurring cost
Direct function involving manufacturing operation cost
Fixed cost
Unchanged cost
Overhead cost
Investment cost
Nonrecurring cost
Capital cost
Manufacturing cost
Variable cost
Dependent cost with the change of production of goods rate
Direct labor
Maintenance cost
Materials
THE IMPORTANCE OF COSTING
Costing evaluation
Process of determining how resources are been utilized based on cost allocation and benefits
The importance
Basis for identification for product selling price and profit projection
Cost
Monetary valuation in dealing with the aspect of material, risk issues, resources and etc.
COSTING EVALUATION METHOD
Difference categories
Make
Cheaper
Experience gained
Buy
Higher value
No experience of manufacturing and etc
Parameters
Liaise with vendor
Without vendor involvement
Make item
Purchased from vendor
Buy item
Methods
Industrial engineering approach
Analogy
Statistical approach
COST REDUCTION
Definition
A process involving finding and removing unwarranted expenses without discriminates the product quality and increase in product's profit.
The importance
To fully utilize all the production capabilities
Improve methods and reduce unwanted work in progress and inventory of product
PRODUCT PRICING
Method
Implementation of break-even chart
Selling price
Manufacturing cost of product
Variable cost
Fixed cost
Definition
Product selling price that positively affects the customer interest and greatest profit generation
BREAK-EVEN CHART
Details
Total cost
Total cost = Fixed cost + Variable cost
Sale price
Fixed cost
Draw the sales as function of number
Variable cost per product
Material
Break even point = The intersection of the sales line with total price
NAIF SHAHMI BIN SUKHAIMI(2018679698)