Horizon Information Portal

MSOE Library Home

MSOE Library Home

Home

How costs are controlled in the manufacturing of a standard overhead crane / by Lukie Lonsdel Christie.

by Christie, Lukie Lonsdel.

Costs, Industrial

Cost effectiveness

iv, 53 leaves : ill. ; 29 cm.

Introduction -- Crane estimating and cost control cycle -- Development of the total cost of the crane -- Establishing the net selling price of the crane -- Manufacturing cost variance analysis -- Standard cost system -- Performance of a standard crane -- Analysis of variances -- Brief description of a standard crane -- Appendixes: A- Estimated cost for bridge -- B- Estimated cost for trolley -- C- Estimated cost for electrical -- D- Cost return for bridge -- E-Cost return for trolley -- F- Cost return for electrical -- G- Work sheet -- H- Performance summary -- I- Dollar $ Variance analysis.

The main purpose of this report is to demonstrate the control of manufacturing cost through measurement of direct labor cost as applied to a standard overhead crane. The actual reported time in hours will be compared to the standard hours. The net effect of this comparison is the generation of two very important elements of an effective cost control program. These elements are: 1) Variances 2) Efficiency measurement or performance. Variance is the difference between the actual and the standard hours. If nothing ever changed, there would be no need for variances. But, because there are always deviations between the actual and the standard hours, there is a need to analyze the variances. The analysis of cost variances is usually the most important job to be done in the operation of a standard cost system. Although, without proper analysis and intelligent factual interpretation, the cost variances are just a collection of figures. Accurate analysis of these variances will make it possible to effectively monitor and control the manufacturing operations of the crane. By investigating major manufacturing areas and identifying locations that need immediate attention, management will be given a priority of variances enabling operations to be investigated and problems corrected. Because of the finite breakdown of the labor standard, management will be able to carefully study all phases of the operation, and then launch a major cost reduction program. A good labor reporting system is aimed at measuring the effectiveness of the employee, as well as the effectiveness of the system supporting the employee. To be able to accomplish this, one has to rely on efficiency measurement or performance. Efficiency measurement or performance measures how efficiently one is able to perform a productive work reported in the allotted time and in accordance with the prescribed method. It also measures the level of interference being encountered in the operation. This level of interference will determine if and when corrective action is needed. By establishing an average performance of 80%, the net selling price, reported cost, and list price of the crane can be developed. Assuming, of course, a particular sales factor for that period. A detailed development of this pricing system will be established in Chapter 1. Actual data developed for the standard crane identifies eight major operational areas. These areas will be used to monitor operating performance to ensure that the goals and objectives of the business are being achieved. The importance of implementing an effective cost control program is essential for several reasons. These reasons can be summarized as follows: Improved profitability is a basic operating objective. However, the intensity of competition has made it almost impossible for a company to recover all cost increases through increased selling prices. Therefore, an effective cost control system is the key to success.

Horizon Information Portal 3.25_9382

Powered by SirsiDynix

© 2001-2013 SirsiDynix All rights reserved.

Horizon Information Portal