3. Indented BOM Cookie Company Bill of Material As of 2/4/09 MODEL NUMBER A DESCRIPTION Final Assembly A REV LEVEL A PART NUMBER DESCRIPTION REV PART TYPE QTY PER UNIT OF MEASURE EFFECTIVITY DATE OBSOLETE DATE A Final Assembly A A M 1.00 EA 2/4/09 12/31/09 B Sub Assembly B A M 1.00 EA 2/4/09 12/31/09 D Sub Assembly D A M 1.00 EA 2/4/09 12/31/09 H Component Part H A B 9.84 OZ 2/4/09 12/31/09 I Component Part I A B 0.13 OZ 2/4/09 12/31/09 J Component Part J A B 0.13 OZ 2/4/09 12/31/09 E Sub Assembly E A M 1.00 EA 2/4/09 12/31/09 K Sub Assembly K A M 1.00 EA 2/4/09 12/31/09 M Component Part M A B 8.00 OZ 2/4/09 12/31/09 N Component Part N A B 4.97 OZ 2/4/09 12/31/09 O Component Part O A B 5.25 OZ 2/4/09 12/31/09 L Component Part L A M 2.00 EA 2/4/09 12/31/09 C Sub Assembly C A M 1.00 EA 2/4/09 12/31/09 F Component Part F A B 1.00 EA 2/4/09 12/31/09 G Component Part G A B 10.00 OZ 2/4/09 12/31/09
4. Process Routing Cookie Company Process Routing As of 2/4/09 MODEL NUMBER : A DESCRIPTION Final Assembly A REV LEVEL A OPERATION NUMBER OPERATION DESCRIPTION WORK CENTER STD LOT SIZE SET UP HOURS RUN HOURS TOTAL HOURS/ UNIT 10 PreHeat 9999 60 0.25 - 0.0042 20 Assemble 10000 60 0.25 - 0.0042 30 Bake 20000 60 - 0.1500 0.1500 40 Cool 30000 60 - - - 0.1583
5. Cost Roll Up - BOM Cookie Company Bill of Material As of 2/4/09 MODEL NUMBER A DESCRIPTION Final Assembly A REV LEVEL A PART NUMBER DESCRIPTION PART TYPE MATERIAL COST ASSEMBLY LABOR OUTSIDE PROCESSING TOTAL COST A Final Assembly A M 13.13 0.53 0.00 13.66 B Sub Assembly B M 3.68 0.13 0.00 3.81 D Sub Assembly D M 0.31 0.40 0.00 0.71 H Component Part H B 0.29 0.00 0.00 0.29 I Component Part I B 0.01 0.00 0.00 0.01 J Component Part J B 0.01 0.00 0.00 0.01 E Sub Assembly E M 3.37 0.40 0.00 3.77 K Sub Assembly K M 2.82 0.40 0.00 3.22 M Component Part M B 2.16 0.00 0.00 2.16 N Component Part N B 0.19 0.00 0.00 0.19 O Component Part O B 0.47 0.00 0.00 0.47 L Component Part L M 0.55 0.00 0.00 0.55 C Sub Assembly C M 9.45 0.13 0.00 9.58 F Component Part F B 6.39 0.00 0.00 6.39 G Component Part G B 3.06 0.00 0.00 3.06
6. Cost Roll Up – Process Routing $2.24 Per Batch! Cookie Company Process Routing As of 2/4/09 MODEL NUMBER : A DESCRIPTION Final Assembly A REV LEVEL A OPERATION NUMBER OPERATION DESCRIPTION WORK CENTER STD LOT SIZE SET UP HOURS RUN HOURS TOTAL HOURS/ UNIT TOTAL COST 10 PreHeat 9999 1 0.25 - 0.2500 0.15 20 Assemble 10000 1 0.25 - 0.2500 2.00 30 Bake 20000 1 - 0.1500 0.1500 0.09 40 Cool 30000 1 - - - - 0.6500 2.24
7. Overhead costs What? How? Why? Rent Direct Labor Facilities Cost Utilities: Electric Direct Labor Facilities Cost Utilities: Water Direct Labor Facilities Cost Utilities: Gas Direct Labor Facilities Cost Taxes Direct Labor Facilities Cost Cleaning Direct Labor Facilities Cost Garbage Direct Labor Facilities Cost Insurance Direct Labor Facilities Cost Shipping Outside Processing Freight & Handling Web Presence Direct Material Product Engineer
8. Cost Reduction Opportunities Opportunity Savings Risk, if any Outsource Production Overhead Costs: power/labor/rent, etc. Loss of quality control. Less expensive materials (Chocolate) Most expensive part of the product: 62% of the total cost incl. labor/batch Reduced Quality/Customer Attrition Sell dough only Save ~ 1% of current labor costs, larger savings on rent/overhead Questions Around Sales Success.
