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Item Information   Holdings       More by this author     Sincere, David P.     Subjects     Manufacturing industries -- Capital investments     Activity-based costing     Manufacturing industries -- Equipment and supplies     MSEM Thesis.     Browse Catalog     by author:      Sincere, David P.       by title:      New justification te...         MARC Display

New justification technique for the replacement of capital equipment / by David P. Sincere. by Sincere, David P. Subjects Manufacturing industries -- Capital investments   Activity-based costing   Manufacturing industries -- Equipment and supplies   MSEM Thesis. Description:  136 leaves : ill. ; 29 cm. Contents:  Advisor: Cecil Head. Committee members: Dr. Bruce Thompson, Joseph Papp. Types of manufacturing costs -- Accounting systems -- Cost justification techniques -- Financial examples -- Use of older financial techniques -- A better capital cost justification method. Wise investment in capital equipment is critical to a company's future. The basic object of replacing capital equipment is to improve a company's future and competitiveness. The process to replace old or obsolete captial equipment is very critical. More than 34% of all U.S. machine tools are twenty years old or greater. This equipment will eventually need to be replaced. An accurate equipment justification procedure must be in place to make financially sound decisions. This procedure can only be effective if an accurate costing system is in place, all benefits are stated, and no fixed numerical hurdle rate is in place that acts as the go/no-go decision on capital equipment replacement decision making. Technology has changed the way companies do business. Production lines have become fully automated. Overhead costs have grown while direct labor costs have shrunk. Overhead costs have grown because of the need for more expensive equipment and tooling, larger marketing departments, increased advertising, technology, and R & D research. While so much has changed, some things are still the same. Accounting systems have not changed to reflect the change that is happening in manufacturing facilities. New Activity Based Costing (ABC) accounting systems are needed to allocate costs where they are consumed. Unfortunately, converting standard accounting systems into Activity Based Costing accounting systems can be difficult. New technology is being used because customers demand higher quality, greater variability, shorter lead times, and lower cost products. This causes overhead costs to increase. New manufacturing technology increasing involves more maintenance, expensive capital equipment, additional engineers, maintenance equipment, support labor, and expensive tooling, etc. The major cost of a product has shifted from direct labor to overhead and material cost. Direct labor is a small percentage of total corporate cost. The increased use of automation has had a direct impact on the reduction of direct labor. The changes in manufacturing philosophy have been significant: A) Greater use of automation equals higher quality, and lower cost. B) Flexible Manufacturing Systems (FMS) reduce throughput time. C) JIT philosophy leads to less lead time and smoother work flow. D) Cellular Manufacturing reduces delivery time, increases flexibility and quality.   Copy/Holding information Location Collection Call No. Status   Walter Schroeder Library Master's Theses AC805 .S563 1996 Available Add Copy to MyList Format: HTMLPlain textDelimited Subject:   Email to:

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