time and motion study
 

Maintenance Management Resources
Six sigma and lean manufacturing, it's all about money:
Business Industrial Network is your best resource when you need fast solutions. After you view this six sigma area dedicated to learning the true cost of equipment downtime with time and motion study, please visit our company.

 

 
True Cost of downtime
Spacer Spacer

TDC - Overhead Category

     Add to favorites

six sigma, six sigma tools, lean manufacturing, time and motion study

 

 

This category is a one time entry of a constant, updated annually, exported from your existing computer systems. Your existing method of calculation need only meet the TDC recommendations below. As with all labor categories, cost should be net cost (insurance, SSC, benefits, etc.), not just base salary.

The indirect expenses allocated in your budgeting process and assigned to your resources or departments. You typically include administration, facility, depreciation activity, and other costs you cannot directly charge to your manufactured items. With predetermined overhead rate, overhead costs are allocated to events as they occur. This helps control overhead costs and measure profit.

As long as you use the other TDC metrics to calculate overhead, you can accurately determine your true fixed and variable overhead rates. Only considering production demands and labor in your day to day management decisions, is just as bad as using labor and fixed overhead rates. This method divides the total expenses by the direct labor total.

Even using such generalities as overhead cost proves to be many times the labor cost. For a large part TDC is a way to isolate potential reductions in overhead cost. Therefore to remain competitive and make smart daily decisions, one must be knowledgeable as to how your company  overhead rates were derived, and if that rate covers the TDC metrics in their proper perspective.

When calculating downtime cost, we strongly encourage managers to use individual cost factors such as TDC labor categories, as opposed to a blind overhead rate.

References, to learn more...

Manufacturing Cost AssessmentManufacturing Cost Assessment

  • The manufacturing cost assessment methodology used is a detailed, component-focused, activity based technique for rigorously calculating the manufacturing cost of a product (direct materials, direct labor and some overhead costs).

Manufacturing Cost FlowQC Labor Category

  • The flow of manufacturing costs through the accounting system.

Handbook for Hands-On ManagersHandbook for Hands-On Managers

  • Provides insight into basic topics like break-even analysis, working capital, interviewing key personnel, marketing tips, planning, and financing your company.

Standard CostingStandard Costing

  • This power point presentation is from accounting 2120 on performance evaluation through standard costs. Right click yellow link above and select "Save As" to download.

Business BasicsBusiness BasicsThis power point presentation describes the wholesale and retail business processes. Right click yellow link above and select "Save As" to download.

 

When equipment breaks down, we all realize the area supervisor will be there insuring necessary actions are taken. Requesting maintenance, redirecting operators, reporting to upper level management, altering production schedules/flow, administrative tasks, etc. Fifty percent of the time a machine is down can be extra tasks a supervisor is required to perform.

What isn't tracked in today's facility is the time upper level management is tasked, related to a machine breakdown. The production manager, plant manager, general manager's time, can cost the the company several times the supervisors cost. Not just the time they may visit out on the floor to see how it's going, but other behind the scene tasks such as arranging meetings, making phone calls and other administrative tasks, to name a few.

As with all the other labor categories, procedures must be put in place to track these cost and assign to the appropriate cost center. TDC reports will point out what task may be better performed by less expensive employees.

See also Business Management

allPM.com is the Project Manager’s Home Page™.  allPM.com offers Project Managers the most extensive collection of free resources available, including informative links, downloads of tips, tools and templates; informative PM community forums; PM news; white papers; and special offers. Visit us at www.allpm.com.

NewStandardInstitute.com - Maintenance Computer Based Training CDs and Downloads  (Click Here)

 New Document
Please use the Content Navigation Menu below to share in discussions about "Overhead Category" or look up other related content.
content
discussion surveys articles white downloads more  
 
 
Spacer 

Corporate Sponsors

Supporting the True Cost of Downtime with their product and services

oee-production-process

maintenance-engineering-books

reliability-award

oee-production-process

 
 
Spacer Spacer

MAIN:   Home | TDC | Standards | OEE | Glossary | Download | Search | Feedback
TDC:    Equipment | Labor | Downtime | Link to us | Site Content Page | Awards
Other:  Survey | Discussion | Contact Us | About DT
           Entire Site Map