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Valuing production using engineered costs

Article Abstract:

Automation, the introduction of such techniques as manufacturing resource planning and just-in-time manufacturing, and other factors changing the nature of manufacturing are increasingly eroding the effectiveness of traditional costing methods. A more viable and less expensive alternative is using the engineered cost approach to value production. This accounting system requires a formal or 'engineered' analysis of all resources needed to manufacture a product, followed by the application of cost to each resource's quantity. In addition to increasing product costing accuracy, this method eliminates the need for such costly tasks as data collection, data entry and compilation of individual production transactions. Adopting engineered costs is also attractive because this approach is compatible with activity-based costing and other modern cost management techniques.

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The 'vital few' saves costs

Article Abstract:

A-dec, a manufacturer of dental instruments and related apparatus, has a management exception report program which will provide management with the data necessary for it to direct its attentions to the products and parts which represent 80 percent of its production volume in dollars and 20 percent of its system parts. The group technology concept was introduced to the production process in order to produce more efficient resource allocations. The production control department is responsible for coding all of the system parts according to their status. The method for management planning and reporting may be applied to all areas, including: analysis of 'Cost Update for the Vital Few Products', formulating a quality defect parts 'Vital Few' list, and product termination on the lower ten percent.

Dental equipment and supplies, Planning, Accounting and auditing, Management, Inventory control, Dental equipment and supplies industry, Dental equipment industry, A-dec

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