Direct Expenses

These are the expenses that are directly associated with the manufacture of a product, e.g., utilities, labor, and maintenance. 

With the current energy demands increasing, the unit costs of all utilities are increasing. Any prices quoted need to be reviewed periodically to determine their effect on plant operations. A company utility supervisor is a good source of future price trends. Unfortunately, there are no shortcuts for estimating and projecting utility prices. Utilities are the third largest expense item in the manufacture of a product, behind raw materials and labor. 

Operating Labor The most reliable method for estimating labor requirements is to prepare a table of shift, weekend, and vacation coverage. For round-the-clock operation of a continuous process, one operator per shift requires 4.2 operators, if it is assumed that 21 shifts cover the operation and each operator works five, 8-h shifts per week. For batch or semicontinuous operation, it is advisable to prepare a labor table, listing the number of tasks and the number of operators required per task, paying particular attention to primary processing steps such as filtration and distillation that may have several items of equipment per step. 

Labor rates may be obtained from the union contract or from a company labor relation supervisor. This person will know the current 

Ulrich (1984) developed a table for estimating labor requirements from flow sheets and drawings of the process. Consideration is given to the type and arrangement of equipment, multiplicity of units, and amount of process control equipment. This method is easier to use than the Wessel method and has been updated in a new edition of the original text. 

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In general, heterogeneous catalysts are preferred to homogeneous catalysts because the separation and recycling of homogeneous catalysts often can be very difficult. Loss of homogeneous catalyst not only creates a direct expense through loss of material but also creates an environmental problem. 

Liu et al. (2002) also calculated the economic cost of an HIV infection for the employer. Based on a simulation model to predict the comprehensive lifetime economic costs of HIV-infected workers to an employer, they predicted total lifetime costs of US 90,000 for the employer, whereas 2/3 are direct expenses on health insurance premium, life insurance premium, benefits, etc., and 1/3 loss of productivity. 

Thermoeconomics of the LHS system involves fixed capital investment, operational and maintenance cost, and exergy costs (Domanski and Fellah, 1998). Total fixed capital investment consists of (i) direct expenses that are equipment cost, materials, and labor, (ii) indirect project expenses that are freight, insurance, taxes, construction, overhead, (iii) contingency and contractor fee, and (iv) auxiliary facilities, such as site development, auxiliary buildings. 

Miscellaneous Direct Expenses These items include operating supplies, clothing and laundry, laboratory expenses, royalties, environmental control expenses, etc. 

Environmental Control Expense Wastes from manufacturing operations must be disposed of in an environmentally acceptable manner. This direct expense is borne by each manufacturing department. Some companies have their own disposal facilities, or they may contract with a firm that handles the disposal operation. However the wastes are handled, there is an expense. Published data are found in the open literature, some of which have been published by Couper (2003k... 

To operate the chemical plant, some direct expenses must be sustained. Manufacturing costs are the expenses connected with the manufacturing operation of the process plant. These costs can be divided into direct production costs, fixed charges, plant overhead costs and general expenses. Direct manufacturing costs are expenses strongly associated with the manufacturing operations. 

Another way to classify costs is direct versus indirect. Direct costs are costs that are completely attributable to the prescription department (e.g., the costs of prescription vials and the prescription department computer). Pharmacist labor is considered a direct expense unless the pharmacist has managerial responsibilities in nonprescription departments. Indirect costs are costs that are shared between the prescription department and the rest of the store. Rent, clerical labor costs, utilities, and advertising for the pharmacy are examples of indirect expenses. Methods for allocating indirect expenses to the prescription department are discussed in the example in Table 16-2. 

Some expenses are directly related to prescription drug dispensing and should be allocated 100 percent to the prescription department. For Good Service Pharmacy, the direct expenses that are listed on the Income Statement are prescription vials and the computer. The total of these direct expenses is 17,250. Note Other direct expenses that may appear in a pharmacy Income Statement include delivery expenses, professional liability insurance, continuing education expenses, transaction fees, and professional license fees. 

The cost of manufacturing a product includes the manufacturing cost, overhead, and general expenses. Manufacturing cost includes direct expenses and consists of the cost of raw material, containers, operator and labor costs, and utilities (like electricity, steam, water, fuel, etc.). This cost will depend on the production quantity. In contrast, overhead cost will be constant irrespective of the quantity of material that is being manufactured. Overhead cost may include expenses such as employee salaries, medical services, administration, insurance, depreciation, taxes, etc. General expenses consist of freight and delivery, sales, and R D expenses. 

An acceptable plant design must present a process that is capable of operating under conditions which will yield a profit. Since net profit equals total income minus all expenses, it is essential that the chemical engineer be aware of the many different types of costs involved in manufacturing processes. Capital must be allocated for direct plant expenses, such as those for raw materials, labor, and equipment. Besides direct expenses, many other indirect expenses are incurred, and these must be included if a complete analysis of the total cost is to be obtained. Some examples of these indirect expenses are administrative salaries, product-distribution costs, and costs for interplant communications. 

Faculty (principal investigator) grants 43% Direct Expenses ... 

The preceding sections discussed how variations in securitization structures can affect direct transaction costs and flexibility. Each structure is also associated with certain indirect costs and benefits. For example, transaction costs are not limited to direct expenses, such as fees for lawyers, investment bankers, and liquidity or credit enhancement facilities. They also arise from the true sale requirement. ... 

This manufacturing expense sheet has four distinct parts the heading, raw material section, direct conversion expenses, and indirect conversion expenses. The heading identifies the product to be made, the amount produced, the fixed capital investment, and sometimes the location, yields, operating time, and other items. The raw material includes the raw materials used to produce the product as well as any by-products for which credit may be received. The direct expenses include utilities, labor, and maintenance. The sum of these two sections is the direct conversion expense. The indirect expenses include the depreciation and plant indirect expenses, such as plant security, fire protection, roads, docks, and so forth. These expenses occur continually regardless of whether a product is produced. The sum of these expenses is the total indirect conversion expense. 

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