Cost Of Production

Whether taken as a phase of industrial engineering or accounting, the determination of the cost of a manufactured product is of great importance. The time was when prices were set by guesswork or what seemed to be the price yielding a fair profit, but that time is now past. While the selling cost is dependent upon the demand and supply, the manufacturer, not being able to regulate or forecast what the probable demand will be, must know what the cost of his product is to him, that he may not be drawn into running his plant at a loss.

Outline Of The Subject

In the simplest form of manufacture labor and material are the two prime factors of cost. When manufacture becomes more complicated, as in the case of a machine-shop putting out engines, boilers, etc., in order to obtain the factors making up the selling price, divisions and subdivisions must be made until the prime factors are reached. For such a plant as mentioned, the following would be an outline: