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Every decision in the product development process affects cost: design is typically considered to account for 70–80% of the final cost of a project such as an engineering project [1] or the construction of a building. [2] In the public sector, cost reduction programs can be used where income is reduced or to reduce debt levels. [3]
Kaizen costing is a cost reduction system used a product's design has been completed and it is in production. [1] Business professor Yasuhiro Monden [2] defines kaizen costing as . The maintenance of present cost levels for products currently being manufactured via systematic efforts to achieve the desired cost level. [citation needed]
The economy grew 2.4% in the second quarter, and while the Consumer Price Index rose slightly in September to 3.7%, core inflation (which excludes volatile food and energy prices) only increased ...
Some economies of scale, such as capital cost of manufacturing facilities and friction loss of transportation and industrial equipment, have a physical or engineering basis. The economic concept dates back to Adam Smith and the idea of obtaining larger production returns through the use of division of labor. [2] Diseconomies of scale are the ...
The Inflation Reduction Act has sparked a manufacturing boom across the U.S., mobilizing tens of billions of dollars of investment, particularly in rural communities in need of economic development.
Manufacturing may want to consider moving away from traditional accounting and adopting lean accounting. In using lean accounting, one expected gain is activity-based cost visibility, i.e., measuring the direct and indirect costs at each step of an activity rather than traditional cost accounting that limits itself to labor and supplies.
Target costing is defined as "a disciplined process for determining and achieving a full-stream cost at which a proposed product with specified functionality, performance, and quality must be produced in order to generate the desired profitability at the product’s anticipated selling price over a specified period of time in the future."
While (ABC) Activity-based costing may be able to pinpoint the cost of each activity and resources into the ultimate product, the process could be tedious, costly and subject to errors. As it is a tool for a more accurate way of allocating fixed costs into a product, these fixed costs do not vary according to each month's production volume.