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Process Costing

Views: 1641

#55345

Process Costing | 2 July, 2008

In My Process Cost Calculation in building products for the purpose of Manufacturing Quotation, Is Final QA inpection considered a process step as part of Direct Labor or is calculated as part of an Overhead Cost?

thanks and regards,

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#55350

Process Costing | 3 July, 2008

Our bean-counters would put inspection in overhead, because inspection adds no value to the product. As a contactor, your bean-counter may consider inspection to be a value added process, because it increases your confidence that you are shipping good product.

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#55351

Process Costing | 3 July, 2008

We include it as a part of overhead in our costing. However, I'm working to change that....we're a fairly small job-shop, and we run some jobs where we find that final inspection takes as long as the job took to build in the first place. In these instances, I think we lose some costs. I've set our processes up for inspection to be integral to the delivery of the product, and, so, I believe it should be included as a part of the cost; especially since we cost everything out as time, and my assemblers are also my inspectors, so, the step in the process takes time, and takes the person conducting the inspection away from assembly for that period of time.

cheers ..rob

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#55365

Process Costing | 3 July, 2008

Wrap your Final QA inspection into your Final Test and call it a day.

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#57870

Process Costing | 23 January, 2009

Hi Guys,

What about Tear Down process? example is upon job accomplishment in my P&P machines my operators have to unload all those feeders...are they still part of Direct Labor Costing or Indirect Labor Costing.

Our process is that Tear Down is an indirect labor...I am wondering why???

regards,

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#57892

Process Costing | 28 January, 2009

We're not sure why tear-down is an indirect cost at your plant. Our inclination is to think that loading and unloading feeders are dirctly related to the product and should be fairly easy to determine. What do your cost accountants say?

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#58014

Process Costing | 5 February, 2009

they said (management) that it is not part of the cost and whenever operators are unloading feeders from the machine and returning parts to store...they are considered and logged as idle time in our process sheets...and I feel very bad.

#$%^&**(

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#58018

Process Costing | 5 February, 2009

Considering a lean management on your shopfloor, any amount of inspection being done to a board, either by QA or Production personnel, does not add value to your product but instead, adds to your operational cost. You can explore to possibility of carrying out process audits during production to monitor the process yield in a 6-sigma environment. This will allow you to exclude regular inspection from your process while still maintaining a good stable production process. Trust me ... it works !

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