Direct manufacturing costs

Direct Manufacturing Costs Direct manufacturing costs include raw materials, operating labor, utihties, and some miscellaneous items. A summary of the characteristics of each follows. 

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. 

The total annual cost of manufacture, COM, as shown in Table 17.1, is the sum of (1) direct manufacturing costs feedstocks, utilities, labor-related operations, and maintenance (2) operating overhead and (3) fixed costs property taxes, insurance, and depreciation. 

Table 8.2 gives data to estimate the individual cost items identified in Table 8.1 (both tables carry the same identification of individual cost terms). With the exception of the cost of raw materials, waste treatment, utilities, and operating labor (all parts of the direct manufacturing costs). Table 8.2 presents equations that can be used to estimate each individual item With each equation, a typical range for the constants (multiplication factors) to estimate an individual cost item is presented. If no other information is available, the midpoint value for each of these ranges is used to estimate the costs involved. It should be noted that the best information that is available should always be used to establish these constants. The method presented here should be used only when no other information on these costs is available. 

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