PRODUCT COSTING PRODUCT PERFORMANCE NICOLE ANDREWS

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Malcolm Harris
6 years ago
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1 PRODUCT COSTING PRODUCT PERFORMANCE NICOLE ANDREWS 1

2 Product Costing Product Performance Bill of Material Manufacturing Costs Assembly Costs URS Transport Testing Environment Testing Final Costs (FOAR) Reducing Costs Revised Cost 2

3 PRODUCT COSTING 3

4 Bill Of Materials Component Material Cost ( ) Quantity Quantity Per Unit Formula Cost Per Unit ( ) Material Waste ( ) Total Part Cost (Cost Per Unit + Material Waste) ( ) Plastic case 1 per kg 1 Kg 0.02kg (1x0.02=50) Chain cm 25 cm (2.99/500= x25=0.1495) Clasp (17.99/1200=0.0149x1=0.015) Photo resistor sensor (1/1=1)(2.73/1=2.73) ATmega328 P-20AU (1/1=1)(3.68/1=3.68) Connectors wires cm 10 cm (3.15/2000= x10=0.158) Batteries (1.09/10=0.19x2=0.38) Red LED's (4.99/100=0.0499x10=0.499) Green LED (4.99/100=0.0499x1=0.049) Solder cm 10 cm (1.59/1000= x10=0.015) Total 8.56 Manufacturing Costs Part Process Machine Rate ( /h) Time To Produce One Unit Units per Hour (h) Formula (Machine Rate/Units Per Hour) Machine Cost Per Unit ( ) Plastic case Injection moulding seconds 360 (125/360= ) 0.35 Electronics Soldering minutes 30 (0.1/60= ) 0.01 Packaging Die Cutting/Lithography 75 1 minute 60 (75/60=1.25) 1.25 Total 1.61 Part Process Labour Wage ( /h) Time To Produce One Unit Units per hour (h) Formula (Labour Wage/Units Per Hour) Labour Cost ( ) Plastic case Injection moulding seconds 360 (40/360= ) 0.12 Electronics Soldering 20 2 minutes 30 (20/30= ) 0.7 Packaging Die Cutting/Lithography 20 1 minute 60 (20/30= ) 0.7 Total

5 Assembly Costs Component Process Skill Level Labour Wage ( /h) Time per Unit Units Per Hour Formula Cost (Labour Wage/Units Per Hour) ( ) Plastic Case Attaching Medium Seconds 120 (10/120= ) 0.84 Chain Cutting, attaching Medium 10 2 minutes 30 (10/30= ) 0.04 Electronics Putting inside Low minute 30 (6.5/30= ) 0.22 Packaging Folding, attaching Low minutes 30 (6.5/30= ) 0.22 Total 1.32 Final Costs (FOAR) Direct Costs Price ( ) Indirect Costs Price ( ) Percentage Price Total Materials Cost 8.56 FOAR (100%) Total Manufacturing Costs 3.13 Manufacturers Profit (10%) Total Assembly Cost 1.32 Wholesaler Mark Up (33%) Product Total Cost Retail Mark Up (100%) VAT (20%) Product Selling Price 76 5

Reducing Costs Economy of sale Buying components/materials in bulk to get a large discount- All components in the charts have been used at there retail price or a small stock or for one unit, making

6 Reducing Costs Economy of sale Buying components/materials in bulk to get a large discount- All components in the charts have been used at there retail price or a small stock or for one unit, making the price higher then it would be if brought in industry I bulk. Internet sales Removing the wholesale mark up and the retail mark up, so being about to sell the product for (FOAR price + wholesale mark up + VAT)= A much cheaper selling price. However with internet sales this may reduce the overall cost of how many units are sold because or the reduced selling environments (cutting out shopping centres). Meaning individuals wont see the product and have an impulse buy rather have to search for the product online. This would also increase the need for marketing, hence the rice of marketing. Re-Design Reducing the manufacturing cost can be done by changing the design of the necklace. For example removing the end triangles that are there for only cosmetic appearance. Therefore reducing the amount of polypropylene used. This would reduce the weight of the material used. Another thing would be to injection mould four at a time using runners. This would make the injection moulding price divide by four per unit. This would make the initial mould more expensive but that initial cost isn't factored into the individual product price. Out Sourcing Manufacturing By outsourcing manufacturing to a country that has a much lower living cost and minimum wage would reduce the cost of producing the product. For example Halfling the labour wage costs. However, it also must be considered exchange rates and shipping costs. 6

7 Revised Cost Component Material Cost ( ) Quantity Per Unit Formula Cost Per Unit ( ) Material Waste ( ) Total Part Cost (Cost Per Unit + Material Waste) ( ) Plastic case 1 per kg 0.015kg (1x0.015= ) Total 8.06 Part Process Machine Rate ( /h) Time To Produce Four Unit Units per Hour (h) Formula (Machine Rate/Units Per Hour) Machine Cost Per Unit ( ) Plastic case Injection moulding seconds 1440 (125/1440= ) 0.01 Total 1.27 Part Process Labour Wage ( /h) Time To Produce Four Unit Units per hour (h) Formula (Labour Wage/Units Per Hour) Labour Cost ( ) Plastic case Injection moulding seconds 1440 (40/1440= ) 0.02 Total 1.42 Direct Costs Price ( ) Indirect Costs Price ( ) Percentage Price Total Materials Cost 8.06 FOAR (100%) Total Manufacturing Costs 2.69 Manufacturers Profit (10%) Total Assembly Cost 1.32 Wholesaler Mark Up (33%) Product Total Cost Retail Mark Up (100%) VAT (20%) Product Selling Price Original New Saving 7.61 Internet Sales Indirect Costs Price ( ) Percentage Price FOAR (100%) Manufacturers Profit (10%) VAT (20%) Original New Saving

8 PRODUCT PERFORMANCE 8

9 URS URS (A1) Must Reduce the risk of drinks being spiked. Does the product know if a drink has been spiked? Yes or no Test a drink that hasn't been spiked, test a drink that has been, a positive result for the spiked one passes. Repeat the test for accuracy. N/A N/A Nicole Andrews URS (A2) It must identify when a drink has been spiked via visual change The product must change either, brightness, colour, or shape. If so product has passed. Place the product in a Pass Product went from no N/A Nicole Andrews spiked state (e.g. blue coloured paper in front of the photo resistor) and note and visible change. light to multiple flashing red LED s. URS (A3) Must be small enough to fit Inside a female bag. Must be smaller then 20x30cm in width and length, if so product has passed. Measure the length and di- Pass N/A Nicole Andrews 9

10 URS (A3) Must be small enough to fit Inside a female bag. Must be smaller then 20x30cm in width and length, if so product has passed. Measure the length and diameter for the product. Pass N/A Nicole Andrews URS (A4) Must be able to test different drinks quickly. Must be able to get the result from one drink, and then test another within 30 seconds, if the product succeeds the product has passed. Go through the testing process Fail it took more then thirty Re-think the testing method, Nicole Andrews of a drink, once com- plete go through the testing process of another drink. consider better colour seconds to test both drinks. detection modules or faster colour changing paper. Time how long it takes to complete both tests. URS (A5) Must be useable for an intoxicated individual, so be removed within a maximum of three movements and attached with a maximum of three movements Does it take three movements to use the product, for example, takeout place on alcohol put in if it takes less then three the product passes. go through the steps of the N/A N/A Nicole Andrews product to test a drink. Count the stages. 10

11 URS (A6) Must be used by the target market of years old A group of year olds must agree that they would use the product. 50% of them agreeing is a pass. Have a focus group of N/A N/A Nicole Andrews year old females, ask them if they would use the product or not, write down the responses. URS (A7) It must suit nightclub drinking vessels such as: bottles, disposable drinking cups and/or strong plastic cups If the product works with all drinking vessels. If it does the product passes. Use the product to test the Pass the necklace can be N/A Nicole Andrews drinks from different vessels used for any vessel that you listed in the URS. have access to in a night- URS (A8) It must be within the price range of students with low income. Product must be in the range of See if the product selling N/A N/A Nicole Andrews 11

12 Transport Testing PRS The product shouldn t break during transportation. The product should withstand impact while in the packaging and not break. Simulating the worst case during transport. Drop the product in the packaging from a certain height. See if the product N/A N/A Nicole Andrews Environment Testing PRS Should withstand a range of temperatures The product should withstand 5 degrees above the average club temperature at a minimum, and with stand below zero due t outside environments. A wider spectrum, this classes as a pass. Place the product into a N/A N/A Nicole Andrews chamber, rapidly increase and decrease the temperature record the results. PRS Should withstand chemical corrosion. The product should withstand corrosion from drugs that may be used to spike drinks, as well as anti-corrosion to water or alcohol due to the club environment, if no corrosion is seen it s a pass. Cover the product in multiple chemicals, wait a period of time. Record the results. N/A N/A Nicole Andrews 12

13 Appendix Product Costing CES EDUPACK Chain Necklace Clasp Red and green LED s pt=lh_defaultdomain_3&var= &hash=item43d2a6a8fb Solder Batteries pt=lh_defaultdomain_3&hash=item27ddcfa1701.5v Wire Colour Detection Chip Colour detection sensor s=diy&ie=utf8&qid= &sr=1-5&keywords=colour+detector+sensor Product Performance Total Design, Stuart Pugh, Chapter

Direct Costs. Costs that vary in direct proportion to the number of products produced

Direct Costs. Costs that vary in direct proportion to the number of products produced Costing Lee Colburn Direct Costs Costs that vary in direct proportion to the number of products produced Material Costing Data Manufacture Costing Data Assembly Costing Data Total Direct Costs In-Direct