This document provides information on costing and cost calculations for manufacturing processes. It discusses the need for zero-based costing to understand cost contributions and identify cost reduction opportunities. It then outlines various cost elements like direct material, labor, expenses, and overheads. The document also provides examples of calculating costs for specific manufacturing processes like machining, drilling, milling, and forging conversion. Machine hour rates are calculated considering machine depreciation, power, labor, and other expenses. Cutting forces for sheet metal cutting are also explained.

1. 1
NEED OF ZBC………
• To understand Component-Cost Matrix
• To understand Manufacturing Processes Cost Contribution
• To identify Opportunities for Cost Reduction
• To Improve Margins (Profitability of Organization)
• To negotiate with Vendor & Reduce Procurement costs

2. 2
Cost Elements
• Elements of Cost
– Direct material
– Direct labor
– Direct expenses
– Process Cost
– Overheads
– Factory overheads
– Selling and distribution overheads
– Office and administration overheads
– Indirect material
– Indirect labor
– Indirect expenses

3. 3
PRODUCT COST ATTRIBUTES
Any product cost consists of following constituents:
+ + + + + +
Input cost /
RMC
Manufacturing
Cost
Overhead Profit
Product Cost (NSV)

4. 4
PRODUCT COST ATTRIBUTES
» Raw Material Cost
» Processing cost
» Overhead
» Profit
» Inventory carrying cost
» Inspection / Rejection
» Packing & Forwarding
» Taxation
RMC
Landed Cost

5. 5
ESSENTIALS FOR COSTING……
– Understanding & Reading of Drawings
– Identifying Processes
– Sequencing of Processes
– Ability to use Handbooks / Tables
– Selection of Machines / Equipment
– Knowledge of Tools/ Jigs / Fixtures
– Quality Requirements

6. 6
NAME OF M/C HEADS RATE
No.
Off
Cost/M/
C
COST OF
M/C
KW INTT DEP POWER
CONS
/DAY
MAINT
LABOU
R
TOTAL PROD.
PER
PC.
(Rs/Mont
h)
15% 10.34% REVIEW 2.50% COST 24 HRS.
PER
DAY
COST
PIPE BENDING 3 7000 1 4500000 4500000 11 2250 1551 631 138 375 840 5785 2000 2.89
PARTING M/C 6 5000 4 150000 600000 1 300 207 172 107 50 1200 2036 2000 1.02
BENCH GRINDER 0 5000 4 10000 40000 0 20 14 57 40 3 0 134 2000 0.07
TIG WELDING 12 5250 2 250000 500000 15 250 172 1721 312 42 2520 5017 1500 3.34
MARKING M/C 0 5000 1 325000 325000 2 163 112 86 60 27 0 448 2000 0.22
FURNACE BRAZING 15 6750 1 4650000 4650000 11 2325 1603 631 10050 2054 4050 20713 2000 10.36
LEAK TESTING M/C 3 5000 1 900000 900000 1 450 310 29 10 75 600 1474 2000 0.74
MANUAL JIG 6 5000 2 50000 100000 0 50 34 0 36 8 1200 1329 2000 0.66
RECEIVING GAUGE 3 5000 1 50000 50000 0 25 17 0 18 4 600 664 2000 0.33
ULTRASONIC WASHING M/C 3 5000 1 1750000 1750000 48 875 603 2754 250 146 600 5228 2000 2.61
MILLIPORE TEST 0 1 250000 250000 0 125 86 0 54 21 0 286 2000 0.14
OILING (Zerust) 3 5000 1 250000 250000 1 125 86 57 200 21 600 1089 2000 0.54
54 13915000 89 6958 4796 6139 11275 2826 12210 44204 22.94
Furnace Brazing Details:
Consumables - LPG 7.5 Kg per hr @ Rs.42/- per kg, ammonia 2 Kg per hr @ RS. 50/-
Man power - heads increased from 6 to 15 i.e. 5 heads per shift
Maintenance - Maintenance cost increased by Rs. 5 Lacs per annum i.e. 4 Lacs for casting and 1 Lac for Graphite trays
COST CALCULATIONS PROCESS COST

7. 7
Item Name TUBE ASSY DATED:
Drwg. Number CUSTOMER :
A) Raw Material Cost : FLANGE A+FLANGE B+PIPE A+PIPE B
a) R.M. Spec's
h) Finish
Wt.
b) R.M. Size i) Scrap Wt.
c) R.M. Source j) Scrap Rate
d) R.M. Gross Wt. GMS k) Scrap Cost
e) R.M. Basic Rate Rs. g) R.M. Cost
f) R.M. Landed Rate Rs.
Net Raw Material Cost (g-h) : 9.59
B) Operation Cost :
S.No. OPERATION M/C CAVITY CT (sec)
SHIFT
CHARGES
(Rs)
PROD
./SHIFT
(Nos.)
OPER.
COST (Rs.)
1 FLANGE A 1.60
2 FLANGE B 1.52
3 PROCESS COST + ASSY COST 22.94
Total 26.06
C) Tool/ Die Cost Details (if any)
a) Tool Cost/Die Cost for Assy. 560000 300000
b) Tool Cost/Die Cost for Flange A&B 475000 200000
d) Tool/Die Cost/Pc. Rs. 4.24
D) BOP COST IF ANY Rs. 0.00
E) POST OPER. COST Rs. 0.00
F) OVERHEADS 20% OF (B) Rs. 5.21
G) PROFIT 5% OF (A+B) Rs. 1.81
H) REJ. ALLOW. 2% OF (A+B) Rs. 0.69
I) PACK/FWD/FRT 1.5% OF (A+B) Rs. 0.52
J) ICC 1% OF (A+B) 0.34
K) TOTAL COST Rs. 47.17
(A+B+C+D+E+F+G+H+I)
COST CALCULATIONS ASSY COST

8. 8
COST CALCULATIONS FOR MACHINING
• Cycle Time Calculation:-
– Key attributes which govern cycle time
» Wok Piece Machinability
» Cutting Speed
» Feed Rate
» Stock Removal
» Type of Cutting Tool
» Machine Capability
» Surface Finish Requirements
» Dimensional Tolerances
» Type of Fixturing
» Quantity Requirements

9. 9
COST CALCULATIONS FOR MACHINING
• Cycle Time Calculation:-
T P = T I + T c + T c * TCT
T L
T I = Idle Time per piece, min
T C = Actual Cutting Time per piece, min
T L = Tool Life
TCT = Average Tool Change Time per piece

10. 10
MACHINING TIME CALCULATION FOR LATHE
Tc = Lc X np
N X So
L c = Actual Length of cut
= Lw + A + O
A, O = Approach and Over run
N = spindle speed, rpm
So= feed (tool), mm/rev
np = number of passes required

11. 11
EXERCISE
• Determine the machining time for 100mm
dia,length:200mm, A=O=5mm, Vc= 120m/min &
So=0.2mm/rev

12. 12
MACHINING TIME CALCULATION FOR DRILLING & BORING
The Machining time, Tc is estimated:-
Tc = Lc / N / So
Lc = Lw + A + O + C
A, O = Approach and Over run
and C = D/2 cotρ
D = Diameter of the hole
ρ = Half of the drill point angle.
Similarly Tc is estimated in boring also.
Only the portion ‘C’ is not included.
For blind hole, over run, ‘O’ is
excluded.

13. 13
EXERCISE
• Calculate the machining time for doing 25mm
diameter, 60mm deep, Lip Angle of Drill:120
degree, feed: 0.25mm/rev, A=O=2mm, Vc:
44m/min

14. 14
COST CALCULATIONS FOR MILLING
Tc = Lc / Sm
(For Job Width<Cutter Length)
Lc = Total Length of travel of the job
= Lw + A + O + Dc/2
Lw = Length of the Work piece
A, O = approach and over run (5 to 10
mm)
Dc= Diameter of the cutter, mm
Sm= Table feed, mm/min
= SoXZcXN
where, So = Feed per tooth, mm/tooth
Zc= Number of teeth of the cutter
N = Cutter speed, rpm.

15. 15
EXERCISE
• Determine Tcfor Plain Milling a rectangular
surface of length 100 mm and width 50 mm
by a helical fluted plain HSS milling cutter of
diameter 60 mm, length 75 mm and 6 teeth.
Assume A = O = 5 mm, Vc= 40 m/min and So =
0.1 mm/tooth

16. 16
FORGING CONVERSION COST:-
• Forging Hammer (3 Ton) = Rs 70.00 Lacs
• Shearing Press = Rs 20.00 Lacs
• Skilled Labour = 04 Nos.
• Unskilled Labour = 06 Nos
• Oil Fired Furnace = 140 Lts/Ton
• Trimming Press = Rs 12.00 Lacs
• 3 Tons Hammer O/P = 04 Tons/Day
• Working Days/Month = 25 Days
• Monthly Production = 100 Tons

17. 17
• Cost / Hr (MHR) = Rs 1850.00
• Working Hour / Day = 21 Hrs
• Working Days / Month = 25 Days
• Monthly Expense = 1850 X 21 X 25
+140*42*100
• Monthly O/P = 100 Tons
• Cost / Kg (FCC) = 1559250/100000= Rs 15.59/Kg

18. 18
PROCESS COST…
• Process Cost = Machining Cycle time X MHR
• MHR: Machine Hour Rate
The terminology defines a machine hour rate as “a
rate calculated considering machine depreciation,
power, labour, interest, repairs and maintenance,
insurance, etc.

19. 19
MACHINE HOUR RATE CALCULATION…
DETAILS COST
MACHINE LANDED COST (Rs. IN Lacs) 30.00 MAKE : WMW - TURNING CENTER
POWER CONSUMPTION (KW) 11.00
Rs./Hr
INTEREST @15%PA /Hr 62.50
DEPRECIATION @10.34% PA (Triple shift) / Hr 43.08
POWER CONSUMPTION/Hr 31.02 60% OF RATED LOAD PER HR.
MANPOWER / Hr 85.00 1SKILLED + 1 UNSKILLED
MACHINE MAINTENANCE / Hr 4.17 @ 1% OF M/C COST P.A.
MACHINE CONSUMABLES 8.33 @ 2% OF M/C COST P.A.
SPACE RENT 8.33 20'X15' @Rs.20/sq. feet
MACHINE HOUR RATE 242
MHR AT 85% EFFICIENCY 291
MHR AT 90% EFFICIENCY 275

20. 20
CUTTING FORCE CALCULATION
• CUTTING FORCE
IT IS THE FORCE REQUIRED TO DRIVE A PUNCH THROUGH THE STOCK MATERIAL
• CUTTING FORCE CAN BE CALCULATED AS
– C=SPT WHERE
– S - SHEARING FORCE
– P - PERIMETER OF CUTTING EDGE
– T - THICKNESS OF THE MATERIAL
• ILLUSTRATION
RAW MATERIAL 2 mm CR SHEET ORDINARY
PERIMETER OF PART 50 MM
SHEARING STRENGTH 25 TON /SQ INCH (38.7 N/mm2)
CUTTING FORCE = .078 * 1.968 * 25
3.837 TON
FACTOR OF SAFETY= 20% ~ 60%
PRESS TONNAGE = 3.837 x 1.3 = 5 TON

21. 21
• SHEARING STERNGTH
IT IS THE FORCE NECESSARY TO SEVER BY SHEARING ACTION
ON SQURE INCH OF THE MATERIAL
FOR CR SHEET 25 TON /SQ INCH
FOR AL SHEET 10 TON/SQ INCH
FOR S.S 38 TON/ SQ INCH

22. 22
Item Name FLANGE A DATED: Item Name FLANGE B DATED:
Drwg. Number CUSTOMER Drwg. Number CUSTOMER
A) Raw Material Cost : A) Raw Material Cost :
a) R.M. Spec's AISI 1008-1010
h) FinIsh
Wt. 32.00 a) R.M. Spec's AISI 1008-1010 h) FinIsh Wt. 16.00
b) R.M. Size
7x73x1200 MM ( 55
Pcs.)
I) Scrap
Wt. 44.42 b) R.M. Size
3.5x59x1196 MM (
49 Pcs.) I) Scrap Wt. 18.85
c) R.M. Source
j) Scrap
Rate 18.00 c) R.M. Source j) Scrap Rate 18.00
d) R.M. Gross Wt. GMS 87.52
k) Scrap
Cost 0.80 d) R.M. Gross Wt. GMS 39.57k) Scrap Cost 0.34
e) R.M. Basic Rate Rs. 38.00
g) R.M.
Cost 3.37 e) R.M. Basic Rate Rs. 38.00g) R.M. Cost 1.52
f) R.M. Landed Rate Rs. 38.50 f) R.M. Landed Rate Rs. 38.50
Net Raw Material Cost (g-h) : 2.57 Net Raw Material Cost (g-h) : 1.18
B) Operation Cost : B) Operation Cost :
S.No. OPERATION M/C
OPER. COST
(Rs.)
S.No. OPERATION M/C
OPER.
COST(Rs.)
1
BLANKING &
PIERCING 60T 0.25 1
BLANKING &
PIERCING 50T 0.22
2 COINING 20T 0.12 2 ANGLE PIERCING 30T 0.13
3
INEER HOLE
SHAVING 20T 0.12 3 COINING 20T 0.12
4 OUTER SHAVING 30T 0.13 4 HOLE SHAVING 20T 0.12
5 GRINDING SPM 0.85 5 OUTER SHAVING 30T 0.13
6
OUTER HOLE
SHAVING 30T 0.13 6 GRINDING SPM 0.80
Total 1.60 Total 1.52
C) Tool/ Die Cost Details (if any) C) Tool/ Die Cost Details (if any)
a)Tool Cost/Die Cost 260000 a)Tool Cost/Die Cost 215000
DESCRIPTION LENGTH RATE (Rs/Mt)Value (Rs)
PIPE A 0.215 11 2.37
PIPE B 0.225 11 2.48
4.84
COST CALCULATIONS RAW MATERIAL COST

23. 23
Thank you