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单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,*,单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,*,单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,*,单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,*,单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,*,单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,*,单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,*,ABC,Activity Based Costing/GRIMM,TRAINING PRESENTATION,1,Activity Based Costing/GRIMM,ABC Definition / Disclosure / Background Pg. 4 & 5,Elements of a Cost Estimate & Diagram Pg. 6 & 7,Direct Labor .Pg. 9 - 11,Indirect Labor .Pg. 12,Fringe Benefits . Pg. 13,MRO Labor . Pg. 14 & 15,Labor Summary . Pg. 16,LABOR Frequently asked Questions & Answers .Pg. 17 - 18,TABLE OF CONTENTS:,PRESENTATION PREPARED BY: Diane M. Blair (dblair12) ext. 33-78525),Burden Analysis, Cost Optimization Dept.,Labor Presentation,2,Activity Based Costing/GRIMM,Depreciation Pg. 21 & 22,Interest . Pg. 23 & 24,Insurance .Pg. 25,Utilities .Pg. 26,Indirect Materials .Pg. 27,MRO (Burden).Pg. 28 - 33,Burden Summary .Pg. 34 & 35,Frequently asked Burden Questions & Answers .Pg. 36,TABLE OF CONTENTS:,Burden Presentation,3,ABC,Activity Based Costing,What is GRIMM and ABC?,GRIMM - Cost Optimizations Database,Global Rates and Information of Machines and Materials. Used to accumulate & calculate manufacturing labor & overhead (burden) rates.,Activity Based Cost System,Identifies the uniqueness of each products processing method to determine overhead allocation, and applies the cost based on the major elements (Cost Drivers).,Consistent and fair method to compensate suppliers for product cost. Machines operating cost will remain consistent regardless of manufacturer.,Confidentiality,Good judgment should be maintained when discussing equipment cost between competitive manufactures. Many machine builders request a non-disclosure agreement.,Sensitive material should only be shared with the supplier for comparison information. Not a “one-sided” sharing process,.,4,ABC,Activity Based Costing,GRIMM Equipment Representation;,Currently the database represents over 400 equipment manufacturers, and approximately 1600 machines, 2300 raw materials, & 2900 SBOCs. (Standard Bought Out Components),New technologies are being studied and continually added to the database.,This system is shared globally, compiling data from 9 countries/regions,United States, Great Britain, Germany, France, Italy, Mexico; Domestic and Maquiladora, Spain, and Portugual.,Machines and Materials are updated annually. Raw material suppliers are contacted every year, and the new cost is entered into the system. Machine manufactures are contacted on a three year cycle. During the preceding two years, the PPI (Purchased Price Index, supplied by the Bureau of Labor Statistics) is utilized to update cost on an annual basis. The PPI method of updating has proved to be very accurate, within 1/2% of the new quotes from the manufacturers.,5,ABC,Activity Based Costing,Cost Elements;,Materials (includes raw matl. and purchased components),Labor,Direct Labor,Indirect Labor (Non-Skilled),Fringe Benefits,MRO Labor (Skilled),Equipment Overhead (Burden),Depreciation,Interest (Opportunity cost),Floorspace Cost (Building and Expenses),MRO - Equipment Maintenance (Non-Labor),MRO - Tooling Maintenance (Non-Labor),Utilities,Indirect Materials,Insurance,Markups (includes SGA, Profit, End-Item scrap, RD&E, etc),6,Cost Estimate Diagram,MATERIAL,LABOR,BURDEN,MARKUPS,Direct,Indirect,Fringe,Manufacturing,Overhead,MRO Labor,End Item Scrap,SG & A,Profit,Raw Material,Purchased Parts,ED & T,TOTAL,LABOR,TOTAL,MFG.,COST,0-0.7%,Varies,Varies,Varies,TOTAL,ESTIMATED,PC. PRICE,7,ABC,Activity Based Costing,LABOR PRESENTATION,8,Activity Based Costing,LABOR,DIRECT LABOR,Wages of person performing manufacturing process. (Value added operations),Generally expressed in rate per hour,Currently there are 11 primary categories available in CAPE;,General ManufacturingWiring,ForgingElectrical / Electronics,Rubber & Plastics Textiles Fabrication,Automotive StampingAir Bag,Body in WhiteTool & Die,Non-Ferrous Foundry,Each Primary category has 3 to 4 sub categories,Sub categories are skill level based,9,Activity Based Costing,LABOR,DIRECT LABOR CATEGORIES,Labor Group Codes,AGeneral Manufacturing,CForging,DElectrical / Electronics,ERubber / Plastics,GTextile Fabrication,HWiring,JAir Bag (Special Studied),KBody in White,MAutomotive Stamping,PNon-Ferrous Foundry,TTool and Die,Code,Description,Code,Description,Skill Factor Codes,A Low Skill Level C High Skill Level,B Medium Skill LevelS Special Studied,AA General Manufacturing / Low Skill,EB Rubber Fabrication / Medium Skill,KC Body in White Fab. / High Skill,Examples:,10,Labor specifically identified with a value-added step in the manufacturing process. Each year, during an economic adjustment, information is gathered from the following resources. Rates are developed based on the average wage in the commodity. This includes union and non-union shops, and all regions in the targeted country. They are not intended to reflect any one particular supplier, but are intended to cover the range of labor cost paid by efficient suppliers.,Resources,U.S. Department of Labor, Bureau of Labor Statistics;,Employment & Earnings Report,U.S. Bureau of Census Survey of Manufactures,Historical documentation; Supplier / Estimator Feedback,Activity Based Costing,LABOR,DIRECT LABOR,11,Activity Based Costing,LABOR,INDIRECT LABOR,Personnel not directly associated with manufacturing process,Such as; Material Handlers, Shipping/Receiving, Quality Control, First Line Supervision & Manufacturing Engineering, etc.,Expressed as a percentage of Direct Labor.,Studies have shown proportional,cost,relationships between Direct and Indirect labor within commodities. Indirect labor support is applied to individual commodity categories.,Examples:,Direct Labor Cost Indirect Labor Cost,General Manufacturing; $1.00 $0.55,Rubber & Plastics$1.00 $0.70,Automotive Stamping$1.00 $0.75,Body in White$1.00 $1.05,Resources,Industrial Technologies Institute,American Foundrymens Association,Historical documentation; Supplier / Estimator Feedback,12,Activity Based Costing,LABOR,FRINGE BENEFITS,Personnel Benefits,Such as; Shift premiums, vacation/holiday pay, insurance, pensions, tuition reimbursements, clothing allowances, etc.,Expressed as a percentage of Direct & Indirect Labor,Fringe benefits are applied to both the Direct & Indirect personnel,Unlike Indirect Labor, the percentage of fringe is consistent across commodities. Currently (2003) recognized at 50%.,Resources,U.S. Department of Labor, Bureau of Labor Statistics,Compensation & Working Conditions Report,Ford Internal Data,Historical documentation; Supplier / Estimator Feedback,13,Activity Based Costing,LABOR,MAINTENANCE, REPAIR & OTHER (MRO),LABOR,Personnel supporting Equipment, Tooling & Building,Skill Trades Labor, including machine repair, electricians, millwrights, pipefitters, tool & die repair, etc.,Cost is based on building maintenance per square meter,.,The system applies a fully accounted skilled trades rate to the amount of floorspace required, including outside maintenance, office space, warehousing, restroom, etc.,Cost is based on the investment value,.,The system applies a percentage factor to the investment , so that as the capital requirement increases, so does the amount of maintenance funding.,Equipment and Tooling,Building,14,Activity Based Costing,LABOR,MAINTENANCE, REPAIR & OTHER (MRO),LABOR,Resources;,R.S. Means Construction and Maintenance Models,Marshall and Shift; Construction Appraisal,Ford Land Development,European Database, Manufacturing Engineering Study,Ford Internal Maintenance studies,Equipment Manufacturers,Equipment and Tooling,Building,15,Activity Based Costing,LABOR,Labor Summary:,Labor Group,Direct Labor12.56 13.95 15.35,Indirect Labor 6.91 7.67 8.44,Fringe Benefit 9.93 11.03 12.13,MRO Labor .96 .96 .96,General Manufacturing,AA,AB,AC,Total Labor Rate/hour,30.36,33.61,36.88,(50%,of dir. + Ind. Labor),(55%,of direct Labor),(,MRO Labor remains constant because,it is based on Machine & Floorspace, not,Direct Labor wage),16,Activity Based Costing,LABOR,Labor - Question & Answers,When Im negotiating with a supplier, should I change my direct labor rate/hour to match the supplier?,No. The direct labor rate is based on the national average, which we believe is the competitive wage all suppliers should be measured against.,Do these rates reflect union shops?,Union shops are included in the study, as well as non-union shops. Regardless if the supplier is union or not, it is their responsibility to remain competitive. We treat all suppliers equally, not allowing anyone an advantage over another.,How often are rates updated?,We update all the rates annually. Each year the rates are based on January 1st economics.,Are rates/hour based on the region of the country?,No, we do not segment the rates by region, only by commodity and skill level.,17,Activity Based Costing,LABOR,Labor - Question & Answers,If Indirect labor is 55% of Direct Labor, does that mean there are .55 heads indirect for every direct head?,No. It means for every dollar spent on direct wages, there are $.55 dollars spent for indirect support.,Isnt MRO Labor still indirect labor?,YES, we have separated it from the unskilled and first line supervisor, because it is not proportional to direct labor. When you compare Fords indirect percentage to a suppliers, you should combine both the “indirect category” along with the the MRO Labor category.,Where is Scrap compensated?,There are two types of scrap;(1) process scrap is determined by the estimator and applied in the estimate as an allowance, (2) end-item scrap, is a minimal amount applied to finished good, to compensate for destructive testing, damage in transit, etc.,18,ABC,Activity Based Costing,BURDEN PRESENTATION,( MANUFACTURING OVERHEAD ),19,ABC,Activity Based Costing,Terminology;,“,PPI” - Purchased Price Index, Bureau of Labor Statistics,Lifetime Years - Expected life of equipment,Opportunity Cost - Also referred to as Interest cost,MRO (Maintenance, Repair & Other),SG&A (Sales, General & Administration),RD&E (Research, Development & Engineering),Work Pattern - 20 hrs/day, 237 days/year,Technical Availability - Expected Uptime of equipment,Manning Type - three levels,1. Direct labor head associated with equipment,2. No direct labor head, but requires indirect support (robots, automation),3. No direct labor or indirect labor required (conveyors),20,Activity Based Costing,BURDEN,DEPRECIATION,The means of compensating supplier for capital equipment used in the production of Ford parts.,Ford does not assume total capacity, we pay for what we use. It is the suppliers responsibility to sell,their,available equipment time. (These costs are paid in SGA allowance).,Ford utilizes the straight line method of depreciation over the entire useful life of the machine. This way the equipment is devalued by a constant amount. Many companies use accelerated depreciation for tax purposes. Tax accounting depreciation rules are not necessarily an equitable way to determine a fair price for a given product.,Ford should never pay the entire cost of any capital equipment over the life of a program, unless the expected useful life of that capital is equal to or less than the life of the program.,21,Activity Based Costing,BURDEN,STRAIGHT LINE DEPRECIATION METHOD,Formula;,(Initial Capital Value) + (Freight & Installation) - (Residual Value),(Lifetime hours),20 hrs/day x 237 days/yr x 86% utilization x 10 yrs,Assumptions;,Initial Capital Cost $500,000 - Cost of Machine,Freight & Installation $ 50,000 - 10% default if not available,Residual Value $ 25,000 - 5% default salvage value if not available,Lifetime hours40,760 hrs,$500,000 + $50,000 - $25,000,=,$525,000,= $12.88/hr. =,$.2147/min,40,760 40,760,22,Activity Based Costing,BURDEN,INTEREST,Interest is intended to compensate suppliers for the opportunity cost incurred in owning assets used to produce parts for Ford and should approximate the return on invested capital for a low risk investment.,The interest rate is applied to the cost of capital and,included,in the burden rate. Current 2003 interest calculation is 6.1%. It is Cost Optimizations policy to NEVER allow a higher interest rate than that provided by the Special Studies section, burden analysis,23,Activity Based Costing,BURDEN,INTEREST CALCULATION FORMULA;,(,Initial Investment x 50%) x (Interest amount),Annual Hours,Assumption;,Initial investment $100,000,Interest amount 6.1%,Equipment Utilization 90%,( $100,000 x .5) x .061,=,$50,000 x .061,=,$3,050,= $.715/hr = $.011 /min,20 x 237 x 90% 4266 4266,24,Activity Based Costing,BURDEN,INSURANCE,This category represents the insurance for equipment capital only. The insurance for the building is included in the floorspace allocation.,Insurance recovery cost is applied as a percent of capital. As the equipment value increases, so does the amount of insurance expense.,FORMULA;,(Insurance Percentage) x (Replacement Value of Equipment),Annual Hours,Assumption;,Capital $500,000, Freight & Installation $50,000, Residual Value $25,000,Replacement value = $500,000 + $50,000 - $25,000 = $525,000,Insurance factor .5%,.5% x $525,000,=,$2,625,=,$.644/hr. = $.011/min.,4076 hr/yr 4076,25,Activity Based Costing,BURDEN,UTILITIES,This category compensates the supplier for the utility consumption of the equipment during the manufacture of products. As with insurance, the building utilities are included in the building cost models.,Utility costs are applied to the burden rate in the appropriate units of measure, example; electricity is in Kilowatts per hour, compressed air is in cubic meters, etc.,Utility cost per unit is not based on any particular region or manufacturer, it is published as a national average. This measures suppliers on a level playing field, without penalizing a suppliers competitive advantage.,RESOURCES;,Consumers Energy News,Ford Internal Manufacturing facilities,26,Activity Based Costing,BURDEN,INDIRECT MATERIALS,This category compensates the supplier for the Indirect materials, consumed by the equipment during the manufacture of products. These include; hydraulic oil, cutting oils, acetylene gas, etc. This does not include the amount stored in a tank or reservoir, but the amount exhausted during the production hour.,Indirect material costs are applied to the burden rate, as consumed, in the appropriate units of measure, eg. kilograms, liters, cubic meters, etc,RESOURCES;,Manufacturers of materials,Ford Internal Manufacturing facilities,27,Activity Based Costing,BURDEN,MAINTENANCE, REPAIR & OTHER (MRO),BURDEN,MRO Burden for Equipment & Tooling,Cost applied to these segments are separated between the capital cost of the equipment/tooling and operating supplies.,Equipment and Tooling,Capital,cost of Equipment and Tooling,These costs apply to the Plant Engineering and Tool shop equipment necessary to maintain machines and tools. It is the responsibility of the supplier to keep their equipment/tooling in good operating condition to assure Ford quality standards and efficient productivity levels.,Capital recovery cost is applied as a percent of investment.,Operating Supplies,cost of Equipment and Tooling,Operating Supplies include spare parts, perishable tooling, safety equipment, gloves, etc.,Operating Supplies recovery cost is applied as a percent of investment.,28,Activity Based Costing,BURDEN,MAINTENANCE, REPAIR & OTHER (MRO),BURDEN,Maintenance Schedules,The maintenance of the machine or tool is predicated on the assumption that the equipment and tool is new. Its logical, that at the beginning of production, the required maintenance will be a minor amount, and increase during its expected life. Our rates, however, generate an average amount, constant over the entire life, thus over compensating during the 1st-half and possibly under compensating on the 2nd-half.,RESOURCES;,Equipment Manufacturers,Internal Ford Manufacturing Facilities,Historical Maintenance Schedules,European Industrial Handbook,Equipment and Tooling,29,Activity Based Costing,BURDEN,MAINTENANCE, REPAIR & OTHER (MRO),BURDEN,MRO,Burden for Building Cost & Maintenance,Similar to tooling and equipment MRO, building expenses are divided into Capital and Operating Supplies segments.,GRIMM distinguishes three different building environments; light manufacturing, foundry, and heavy stamping. These models vary based on the required infrastructure; foundation, overhead cranes, underground conveyor systems, etc., as appropriate. Each machine in the database is assigned to its typical floorspace environment, resulting in the appropriate allocation of funds.,30,Activity Based Costing,BURDEN,MAINTENANCE, REPAIR & OTHER (MRO),BURDEN,Capital,cost of the Building,This segment includes the initial building cost, interest, and insurance.,Building cost is applied as a rate per square meter. The manufacturing environment dictates the appropriate floorspace model, and applies the cost per square meter/ per hour.,The depreciation period used for building capital is 30 years, in general accordance with IRS guidelines. Similar to equipment depreciation, a straight line depreciation method is employed. Most buildings, however, are not rendered useless after the 30 year period, so a residual value is applied up front, and subtracted from the initial capital value.,Building,31,Activity Based Costing,BURDEN,MAINTENANCE, REPAIR & OTHER (MRO),BURDEN,Operating supplies,cost of the Building,These costs include heating energy, electricity for lighting, cleaning and maintenance materials, water service, real estate taxes, and misc. expenses.,Operating supplies recovery cost is presented in the burden rate as a cost per square meter / per hour.,Building,32,Activity Based Costing,BURDEN,MAINTENANCE, REPAIR & OTHER (MRO),BURDEN,Floorspace Allocation Formula;,Add two meters to each dimension of the equipment footprint, allowing for safety zones, isles, access between machines, plus an additional 50% increment to account for stock storage, cribs, shipping and receiving, supervisory space, plant front office areas, and other ancillary space.,Building,33,Activity Based Costing,BURDEN,Depreciation - Straight line method,Lifetime of Equipment,30 years building,Interest - (Opportunity Cost),Based on Long-term investment, low risk bonds,applied to capital, supporting a portion of the Suppliers (ROI) Return-on-Investment,Insurance,percentage applied to replacement value of equipment,Utilities,Operating cost; electricity, compressed air, water, etc,.,Indirect Materials,Operating cost for consumption of; Oils (cutting, hydr, etc.), Gas (nitrogen, hydrogen, etc),MRO Burden,Capital & Operating supplies, includes building cost, building maintenance, replacement parts, perishable tools, plant heating, lighting, water, waste
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