Cost fixed/variable costs

Capital Finance Cost + Variable Production Cost + Fixed Operating Cost... 

Variable Operating Cost Fixed Operating Cost Capital Charges Total Fueling Station Cost... 

The model considers fixed costs and variable costs (Lesson 12). 

Companies that engage in toll manufacturing can be further classified into three fundamental types. First are companies that have more capacity than they need to produce an established product line. Rather than let that excess capacity stand idle, the companies use it for toll manufacturing to reduce the burden of salaries and overhead attached to the excess capacity while concurrently producing additional income. Pricing for services from these manufacturers are usually quite favorable, since their product line is absorbing their fixed costs. Only variable costs associated with the excess capacity are incurred. 

The total annual cost of producing a product is traditionally considered to have two components, fixed cost and variable cost. A list of such costs is provided by Peters and Timmerhaus (3). Fixed cost (FC) does not depend on the rate of production in the time period. The major components of any fixed cost are as follows ... 

PCf) = production costs at nominal capacity FC = fixed costs VC = variable costs Qj = effective plant capacity in t a ... 

Cost/trip = fixed cost/trip + (variable cost/distance) (distance/trip)... 

The most important parameter for large-volume chemicals is production costs (variable and fixed costs). The variable costs are related to the feed costs, the use of energy, process selectivity and environmental costs. 

B-Enterprise sales P-Unit product price Q-Product sales C-Total production cost of product Cf-Fixed cost Cv-Variable cost of unit product. 

Let the free market enter your enterprise. Pass everything on to other enterprises whose core competence is to do precisely what your core competence is not. In doing so, you convert a large percentage of your high fixed costs into variable costs, your break-even point is lowered, and, just as importantly ... 

You effectively convert your fixed costs to variable costs, lower the dangerous break-even point, and thereby ensure the continued existence of your enterprise. All of your company s resources, including your management, are focused on your decisive core areas of competence. 

In the same way, direct costs, or variable costs, comprising mostly the costs of power for pressure drop plus costs of minor items such as repairs and maintenance, can be related to pipe size. For a given flow, the power cost decreases as the pipe size increases. Thus, direct costs decrease with pipe size. And total costs, which include fixed charges, reach aminimum at some optimum pipe size. The ultimate solution leading to the optimum economic diameter is found from the graph shown in Figure 5.5. 

Directness of costs is concerned with the extent to which costs can be allocated directly to given products. This is a completely different concept from that of fixed/variable costs. While there is a tendency to associate fixed costs with indirect and variable with direct, there is no necessary relationship at all. Thus direct labour costs tend to be fixed, at least in the short term. 

Manufacturing cost a variable cost for each product was found by collecting raw material, labour, power, packaging and waste costs. Manufacturing overheads (fixed costs) were allocated on the basis of direct labour. Because of the small difference in manufacturing methods, the manufacturing costs for the two products were similar. They were 2,107 for A and 2,032 for B. 

The objective function minimizes the total cost (fixed + variable) of setting up and operating the network. The constraint in Equation 5.1 requires that the demand at each regional market be satisfied. The constraint in Equation 5.2 states that no plant can supply more than its capacity. (Clearly, the capacity is 0 if the plant is closed and K( if it is open. The product of terms, A, y captures this effect.) The constraint in Equation 5.3 enforces that each plant is either open (y, = 1)... 

Fixed Cost (euro) Variable Cost (euro)... 

To evaluate design options and carry out preliminary process optimization, simple economic criteria are required. What happens to the revenue from product sales after the process has been commissioned The sales revenue first pays for fixed costs which are independent of the rate of production. Variable costs, which do depend on the rate of production, also must be met. After this, taxes are deducted to leave the net profit. 

There can be an element of maintenance costs that is fixed and an element which is variable. Fixed maintenance costs cover routine maintenance such as regular maintenance on safety valves which must be carried out irrespective of the rate of production. There also can be an element of maintenance costs which is variable. This arises from the fact that certain items of equipment can need more maintenance as the production rate increases. Also, royalties which cover the cost of purchasing another company s process technology may have different bases. Royalties may be a variable cost, since they can sometimes be paid in proportion to the rate of production. Alternatively, the royalty might be a single-sum payment at the beginning of the project. In this case, the single-sum payment will become part of the project s capital investment. As such, it will be included in the annual capital repayment, and this becomes part of the fixed cost. 

EP = value of products - fixed costs - variable costs - taxes... 

When synthesizing a flowsheet, these criteria are applied at various stages when there is an incomplete picture. Hence it is usually not possible to account for all the fixed and variable costs listed above. Also, there is little point in calculating taxes until a complete picture of operating costs and cash flows has been established. 

Among the key variables in strategic alkylphenol planning are feedstock quaHty and availabiHty, equipment capabiHty, environmental needs, and product quahty. In the past decade, environmental needs have grown enormously in their effect on economic decisions. The manufacturing cost of alkylphenols includes raw-material cost, nonraw-material variable cost, fixed cost, and depreciation. 

In terms of the derived general relationships (3-1) and (3-2), x, y, and h are independent variables—cost and volume, dependent variables. That is, the cost and volume become fixed with the specification of dimensions. However, corresponding to the given restriedion of the problem, relative to volume, the function g(x, y, z) =xyh becomes a constraint funedion. In place of three independent and two dependent variables the problem reduces to two independent (volume has been constrained) and two dependent as in functions (3-3) and (3-4). Further, the requirement of minimum cost reduces the problem to three dependent variables x, y, h) and no degrees of freedom, that is, freedom of independent selection. 

However, it is sometimes quite difficult to separate costs and particularly manufacturing overhead costs into fixed and variable components. In the long term virtually all costs are variable. The difference between the two methods assumes great importance in inventory evaluation. In cost accounting, costs are identified with cost centers. These are accounting devices which may or may not have a physical existence. In the simplest case of a plant manufacturing a single product, the entire plant may be the cost center. 

In addition to fixed and variable costs there are mixed or semivari-... 

Raw-materials cost, /unit Direct labor cost, /unit Production rate, units/period Production time h/period Fixed and semivariahle overhead cost, /period Variable overhead cost, /h Overhead cost, /period... 

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