Cost sheet overhead

The direct-printing process does not require any sophisticated instrumentation. Basically, two pieces of equipment are required as fundamental tools a computer equipped with graphic software (e.g., Corel Draw, AutoCad, Macromedia FreeHand, or Microsoft Power Point) and a laser printer (although different brands provide different results as will be discussed later). Accessories such as an office laminator, a heating press (T-shirt transfer machine), and a paper driller represent the low-cost tools we have used. Finally, polyester films (transparency films or overhead projector films), wax paper sheets, a commercially available toner cartridge, microscope slides (glass) and CDs are the consumables, since they are used to produce microchips, microelectrodes, and integrated systems at very low cost. 

However, if the report shows that using three sheet sizes instead of two produces only a 300 annual scrap savings, the company can probably estimate that the scrap savings will be much less than the extra overhead and inventorycarrying costs that will be incurred. In this case, two sheet sizes probably represents the overall manufacturing cost to the company. 

The Wassermann Supply Chain emphasizes the process character of the activities. The engineering department may add order-related engineering activities as well as customer services, for example. Using intelligent software, we can automatically add many cost and time-intensive overhead activities to the supply chain generated from the bills of materials and work sheets (Fig. 10). 

The experts who invented work sheets many years ago were not focussing on the technologically uninteresting overhead activities. For this reason, they were never included in work sheets, which is why they were not controlled, which is why they are considered overhead costs today. Wrong ... 

With several good ideas and suitable software, artificial overhead costs can be converted into direct costs. We can then concentrate on these direct costs the same way we have looked at the operating sequences and routings from work sheets for over 40 years. 

How is this possible if only a maximum value of 20% of all processes necessary to complete a customer order are included in the work sheet and over 80% of the processes are overhead activities that have not even been reviewed for their feasibility Since the overhead cost centers never really become a bottleneck, they must carry a clear over-capacity. 

You incorporate the overhead activities in the performance process, scale the former overhead cost units to meet demands, and then control the overhead employees which to date was only possible for the value-added employees identified in the work sheets. 

Inventory is classified differently for retail companies, merchants, and manufacturers. Retailers classify their inventory as merchandise inventory, the merchant owns it and it is ready for sale. Contrastingly, manufacturers and assembly plants categorize their inventory as raw materials, work-in-process, and finished goods. Manufacturers and assemblers classify inventory this way to indicate the condition of the inventory and if it is ready for sale. For example, prior to assembly of an aircraft, an aircraft manufacturer would classify components of the airplane such as tires, wiring, and hydraulic pumps as raw materials. These materials are directly used in production. As soon as assembly starts, the manufacturer would then classify the components as work-in-process. Work-in-process is inventory costs related to direct materials, direct labor, and manufacturing overhead. A completed aircraft ready for sale would be classified as finished goods. As a reminder, all inventories are combined and reported on the balance sheet. 

Inventory is typically valued at cost and reported on the balance sheet in this way. If the market value of the inventory is less than the actual cost of the inventory, then companies may reduce the inventory amount to the lower of cost or market value. Inventory costs include the amount to acquire the product plus the costs related to placing it in the location and condition ready for sale. This includes costs related to purchasing, transporting, and storing inventory. Purchasing costs decline by the amount of purchase returns, allowances, and discounts received. Further, manufacturers and assemblers add direct costs of production, such as labor and overhead, to the COGS. 

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