Material Cost

Material cost is a big subject and will be handled in multiple blog entries.  Material costs are costs that directly go into producing the desired product.  Material costs can be divided into both direct and indirect material costs.  Direct costs are what we will be looking into because those costs are directly in the product.

Material can also be broken between raw materials which are commodities and other items which would include pre-manufactured “things” including nuts, bolts, screws, hard drives, memory chips, etc.  Raw materials dealing with commodities where their price may fluctuate daily is what we will deal with in the next few blogs entries.

Direct commodity material costs are those expenditures which can be allocated directly to the cost of the specific product.  Here is a basic outline of estimating the material cost

1. Catalog all the raw materials required from all the drawings.

2. Calculate the amount of material required for each cataloged raw material.

3. Total common materials, gauges and sizes to come up with total requirements

4. Sum all the weights with the requirements

5. Obtain supplier pricing

6. Total costs

This is just a high level summary of calculating material costs.  We will investigate calculating volumes, lengths and other type of raw material calculations.

MIE Solutions provides software resources to help you manage your direct and indirect costs throughout the product lifecycle from quoting and estimating, job costing to invoicing.

http://mie-solutions.com/mie/index.php/MIE-QuoteIt-Quoting-and-Estimating-Software/mie-quoteit.html

Author: MIE Solutions

David Ferguson has over 20 years of experience in the manufacturing and fabrication industry. David Ferguson has been to over 100 manufacturing companies helping and guiding them to be more efficient and cost effective. As a child in Junior High School David Ferguson found a passion for the early computer systems, which would drive much of his future work. David Ferguson created and sold his first computer program, Arrow Data Systems, which was an early CAD/CAM system for the Apple 2e Computer. In the late 1980's after seeing his father (a sheet metal manufacturer) come home many nights estimating, David Ferguson saw an opportunity to optimize his effort through computer technology. Shortly thereafter the FabriTRAK Production Control package was developed. The Quote It! estimating package was developed out of the FabriTRAK system to become one of the leading sheet metal estimating packages in the world. David Ferguson has always had a passion for developing software to make the manufacturing process simpler, faster and more efficient. Prior to founding MIE Solutions David Ferguson worked with his father at Alco Sheet Metal, METALSOFT Inc. and was a consultant at Toyota Motors Sales. David Ferguson has his Masters in Computer Science and Mathematics from California State University, Long Beach.

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