Cost analysis

Cost analysis

is a method that examines, analyzes, and develops the costings of a manufactured product from the beginning of the early design process to the completion of research into the manufacturing process. The price of a product is determined as cost + profit where costs are further broken down into indirect and direct costs:

1A. Indirect costs:
when related to the production process can be classified into specific costs:

- Indirect production cost:
that concerns factors that contribute to the production of the final product such as the depreciation of the machines used, their maintenance, the personnel who operate them, the quality control, the leases for the production of the project, the operational costs such as electricity and water.

- Indirect manufacturing cost:
when it comes to costs that do not affect production and are not necessary for it, but belong to functional areas that have to do with the correct business health of the company such as e.g. administrative or business expenses.

2A. Direct cost:
refers to costs that are directly related to the production of the product, are measurable and are classified according to the production process.
The most common ones concern:

- Raw material:
are the materials used to produce the final product and the costs mainly concern their price, the quantity we will use, the way they are processed and the final treatment of their surface.

Direct labor cost:
refers to the man-hours that will be spent on the production of the overall project, overtime, any delays or failures as well as the additional labor specialized personnel that may be needed for additional requirements or variations of the project.

Additional costs:
they usually concern costs that have a direct relationship with the produced product such as packaging, manufacturing and processing thereof (when the producer of the product has undertaken the packaging project), distribution, promotion, invoicing, etc.

Product cost management:

It is the methodology used by a company that designs, develops and produces products to ensure precisely that the produced project meets the cost target. This methodology concerns the tools it uses, the procedures it has chosen, the methods it analyzes and measures numerically, even the culture and philosophy it has developed as a company. Different parameters determine cost management always in relation to the type of product produced and according to certain measurable specifications that each company chooses to develop and take into account:

- Production cost + storage, distribution, transportation cost.
- Production cost + Logistics + operating cost + product availability.
- Production cost + design cost + market research and development cost.
- Cost of production + cost of product life cycle + cost of redesign and correction of individual problems of use and operation.

Product cost management technique:
It is about how correctly and more systematically we approach the cost control of the development, design and production of a product. Having as a basic parameter that the cost is defined and planned in the product from the beginning, usually since the first decisions for the whole project are defined, it is not easy not to be included later in the next stages of the project and not to be taken into account. By making the right design decisions right from the start we can avoid unnecessary costs in later stages.

Taking into account the initial estimates, specifications and requirements we can- with specific measures- obtain a controlled cost plan during the development of the entire life cycle and development of the project. Costing is not an easy task and it is not always possible to accurately determine the costing of the product when it reaches the final stage of production.

It is very likely that many times there are differences and discrepancies.
Another parameter that for many is measurable and calculable - it sometimes concerns a reasonable calculable estimate for "Marios Design" when it undertakes the design of a new project - the "Design to value" for the produced product, in the value that can be received by the end consumer instead of the production cost for the product itself.

Product value management and its definition:



It is about how we define the value of a product, how we analyze and modify it and what final performance it provides after its production process.
The main parameters concern:

- Product functionality and ergonomics.
- Cost lists of basic raw materials – analysis.
- Machining and parts cost list.
- Product performance and tolerability.
- Lifetime performance and recycling.
- Project design and performance.
- Product reliability, quality and safety.