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ME2027 - Process Planning and Cost EstimationINTERNAL II ANSWER KEY

Date : 25.09.14Part - A1. What is manufacturing logic?

Manufacturing logic is a system to support a process planning system, the acquisition and

documentation of manufacturing knowledge.2. What are the material selection parameters? Functional requirements Reliability Service life durability Aesthetics and appearance Environmental Factors

3. List any four information required for process planning Quantity of work to be done along with product specifications. Availability of equipments, tools and personnels. Sequence in which operations will be performed on the raw material. Names of equipment on which the operations will be performed.

4. Define Break even analysis

Break-even charts are also used for comparing the cost of producing a product by differentmanufacturing processes. The total costs for two alternative processes are plotted on a graphagainst quantity to be produced.

5. Write the difference between costing and cost estimationCosting Cost Estimation

a. It gives an expected cost of the productb. It is generally carried out before actualproduction of a product.

a. It gives actual cost of the productb. It usually starts with the issue of order forproduction of a product and ends after theproduct is dispatched for sale.

6. What do you mean by catalogue price?It is the net price obtained after considering the discount in the selling priceCatalogue price = Selling price + Discount

7. What are the objectives of cost estimation?

It gives an indication to the manufacturer whether the project to be undertaken will beeconomical or not.

It enables the manufacturer to choose from various methods of production the one which islikely to be most economical

It helps in taking decisions to make or to buy.8. Why is costing essential to industrial control?

Costing is essential because It determines the price to be quoted to customers It determines, classifies and analyses the cost & income to a business firm It forms the basis for managerial decisions that have to do with :

a. Make or buy decisionsb. To introduce a new product or to drop an existing one;c. To expand or contract the existing one.

9. What do you mean by multiple cost method?Multiple cost method is used in firms which manufacture variety of standardized products having no

relation to one another in cost, quality and type of process etc..10. What is meant by overheads? Write its types.

Apart from material and labour cost in each factory there are several other expenditures such ascost of special layouts, designs, etc. hire of special tools and equipments; depreciation charges ofplants and factory building; building rent; cost of transportation, salaries and commissions to salesmanetc. All these expenditures are known as overheads or expenses.

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Part –B11. (a) Manufacturing Logic

• Decision trees. • Decision tables. • Artificial intelligence based approach.

• Axiomatic approach. 11. (b)Operating sequencesWhile selecting the machine for a particular product (or) process, the following methods are used:

Selection among the two suitable machines. Break-even point analysis. Production cost comparison. Process-cost comparison.

12. (a)a) Process costing.(b) Job costing.(c) Batch costing.(d) Hybrid costing systems.

12. (b) The total cost is made up of three main elements1. Material. 2. Labour.3. Expenses. 4. Overhead.

13. (a) (i)

(ii) Total Manufacturing cost = Rs. 1202.50S.P = Rs.1000

13. (b)

Material cost = Opening stock value + Material purchases – Closing balance= 26,000 + 2,74,000 – 36,000= Rs. 2,64,000Prime cost = Direct material cost + Direct labour cost + Direct expenses= 2,64,000 + 1,20,000 + 5,000= Rs. 3,89,000Factory cost = Prime cost + Factory expenses= 3,89,000 + 66,600= Rs. 4,55,600Profit = Sales – Total cost= 6,36,000 – 5,36,000= Rs. 1,00,000