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ENGINEERING COST ANALYSIS

COURSE OBJECTIVE:

Teach the utilization of financial and cost techniques to do cost analysis for decision-making, pricing and control of operations.

PURPOSE FOR DOING:

  1. Cost Reduction/Productivity Improvement
  2. Cost Determination of Present Products and Operations
  3. Cost Determination of Present Products and Operations
  4. Cost Estimating/Forecasting
  5. Capital Investment Evaluation

COMMON TECHNIQUES:

  • Ratio and Trend Analysis
  • Standard Costing
  • Cost/Volume Relationships
  • Break Even
  • Variance Analysis
  • Activity Based Costing
  • Contribution Profit
  • Basic Accounting and Financial Statement Analysis

TOOLS:

  • Computer
  • Software
  • Statistics
  • Operations Research
  • Simulation

 

ENTERPRISE ORGANIZATION
Marketing Operations Finance
  Controller Treasurer

 

 General Organizational and Management Goal
  1. Stay in Business
  2. Expand Over Time

 

Management is evaluated on a financial basis

Profit

  • Rate of Return on Capital Invested
  • Profit Increase Over Time Compared to Competition

Non-Profit

Accomplishes Mission with Available    +  Govt. Funds

 

DIFFICULTY

Do this with constant changing conditions:

  • Legal
  • Economy
  • Competition
  • Technology
  • Global Economics
  • Demographics

 

Primary Management Report Card

ANNUAL REPORT

  • Profit and Loss
  • Balance Sheet

 

TYPES OF PEOPLE CONCERNED WITH COSTS:
  • Accountants/Controllers
  • Cost Engineers
  • Business Process Analysts
  • Industrial Engineers
  • Operating Personnel
  • Managers

 

METHODOLOGY RELEVANT FOR ALL TYPES OF ORGANIZATIONS:
  • Profit
  • Non-Profit
  • Governmental Enterprises

 

TYPICAL OUTPUTS PROVIDED BY ACCOUNTANTS TO MANAGEMENT:
  • Product Cost and Profitability for Period
  • Direct Material, Direct Labor
  • Overhead + Administrative Costs for Period
  • Balance Sheet - Firm
  • Profit and Loss - Firm
  • Quality Cost
  • Standard Cost
  • Cost and Profitability Profiles of Proposed Ventures (based on assumptions)
  • Budget Performance
  • Special Studies

 

COURSE REQUIREMENTS:
  • Assigned homework problems on topics covered
  • Examinations
  • Term Paper as specified in course outline

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