Manual vs. Automatic Part Cost Calculations

Manual and automatic systems part ways when it comes to part costs. One is riddled with dangers while the other is much smoother sailing.

Manual:

A part’s total cost not only includes the cost of the materials it’s made up of, but also the company’s operational and labor costs involved in producing it. The workers’ salaries, space taken up in the warehouse, electricity used during the manufacturing process, and other factors can all contribute to the total cost.

Problems:

Neglecting these additional costs might not seem like a big deal, but they can add up to big discrepancies over time. Knowing the true cost of a finished product is extremely important in setting a price for it and calculating the breakeven point for it. It’s a daunting task to try to do all of this by hand for every single product your company manufactures.

Automatic:

If you use an online time clock solution, such as Fishbowl Time & Labor, to track labor costs and integrate them with your manufacturing and warehouse management solution, you can automatically add labor costs to a bill of materials as a line item. You can also integrate it with other solutions to ensure no other costs are forgotten.

Solutions:

By adding labor and other side costs to each bill of materials, you get a clear picture of both the physical side and the more difficult-to-pin-down side of your products’ costs. As noted before, this helps immensely in setting prices and calculating products’ profitability. A business automation platform does all of this for you, ensuring the right costs are always included in the total cost.