how do i estimate the production cost of a drill that i manufacture in my own factory?
entire process is completed in my small scale unit.i want to compare costs vis-a-vis vendors..note foll details:-
material-M2(HSS)
operations overview–cutoff,rough centreless grinding,flute grinding,clearance grinding,taper grinding,point grinding,heat treatment finish grinding
Firstly define the “boundary conditions” for the production of the drill/production line.
You’ve got power (manual, and/or electric, maybe some heat) going in, some heat going out (which, if it’s not being used, is wasted).
You also have materials going in(stock, and consumables like cut-off saws), and materials going out (product, waste, and breakages)
The raw sum of values in should equal the raw value of things out. (profit is added to the drill OUTSIDE of the production line)
Many kinds of waste do have a value. If you have to pay for it to get it taken away, then it removes value from your product, (causing an increase in cost).
If you are lucky and get paid for the waste, it adds value to your product (causing a decrease in cost)
If you don’t get paid/billed for dealing with an input/output stream, then you can assign it null monetary value
The total cost of production (and value of product) is the sum of the cost of each operation.
Quite frequently the cost
