Showing posts with label COGS. Show all posts
Showing posts with label COGS. Show all posts

Monday, October 31

Cost of Goods Sold or Manufactured

What is involved in the cost of goods sold or manufactured?

  • Direct Labor
  • Indirect Labor
  • Cost of Materials
  • Cost of Storing Materials
  • Overhead Costs like
    • Electricity
    • Gas
    • Water
    • Telephones
    • Office Supplies
    • Building Maintenance
    • Maintenance Supplies
    • Equipment Purchases
    • Quality Control
    • Training

Two areas of which you may not be aware are Quality Control and Training...
Training
  1. Employees must be training on company policies and procedures including safety standards and sexual harassment.
  2. Employees must also be trained in how to operate any machines they are using and how to maintain and repair those machines.
  3. Employees must be trained in simple math in order to make the calculation that are part of machine operations.(Because these employees did not learn algebra I and II in high school, the industry must do what the school systems did not do)
  4. Statistical Process Control classes need to be taught to employees so that quality products can be made with reliability.
Quality Control
According to government regulations, all companies are required to make sure that they produce a quality product that is ultimately sold to the general public.  Ralph Nader was originally responsible back in the 1960s for this happening.
Without quality control, the public has no guarantees that what they are buying is actually reliable and works the way it is supposed to work.
If a company is 99.9% accurate, it is still producing 1500 out of spec parts per million.
How many of those out of spec parts would you like to have in the automobile you are riding in or the washing machine you are using?
Those 1500 parts have to be found and pulled out of production so that they are not inadvertantly sold.

SO...  if the high schools do not do their jobs with teaching students, then that burden and cost falls on industries and companies...  which causes them to increase their prices...

AND...  if our federal government imposes rules and regulations on our industries and companies for whatever reason, then that costs money which is then passed on to the consumer.

DON'T FORGET...  when employees demand more money, those increased costs are passed along to the consumer as well...

If a company pays an employee $50,000 a year, it ultimately costs that company $150,000 in benefits which include insurance, retirement, holidays, vacation and sick leave.

AWARENESS IS KNOWLEDGE
KNOWLEDGE IS POWER