Question

Production cost management real world based examples?​

Answer 1

Answer:

Disruptive technological innovations increase the complexity of cost structures and make cost drivers less transparent. Additionally, the high volume of data makes analyzes more complex, impacting the accuracy and processing time for quotation costing. At the same time, more and more transparency and documentation of the CO2 footprint for products are required.

Watch our webinar and learn how our quotation costing solution helps you configure prices for products with several components or complex product bundles.

Discover the power of Predictive Costing

Predict prices for purchased parts/components/assemblies in the early phases of product development by easily integrate nonlinear performance pricing target price formulas into Teamcenter Product Cost Management.

Assess “should cost” and carbon footprint

Determine “should cost” and carbon footprint for parts, components and processes with the bottom-up approach. Manufacturers can make decisions on design and production choices without compromising emissions goals.

Establish cost breakdowns in open-book conversations with customers

Present a clear cost structure and plausible breakdown of the product costs to have a stronger negotiating position in cost negotiations

Answer 2

Example of Product Costs

Company A is a manufacturer of tables. Its product costs may include:

Direct material:

•  The cost of wood used to create the tables.

Direct labor: 

• The cost of wages and benefits for the carpenters to create the tables.

Manufacturing overhead (indirect material): 

• The cost of nails used to hold the tables together.

Manufacturing overhead (indirect labor):

•  The cost of wages and benefits for the security guards to overlook the manufacturing facility

Manufacturing overhead (other): 

• The cost of factory utilities.

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