Business Management Techniques For Engineers

Business management techniques for engineers.

In this task I will chose an appropriate costing system for each of examples.

Out of 4 products we can get rid of one of them, but instead we can start new product which requires less costs, or double the production of product which does not require so much expenses. This requires forecasting and counting. Like that we can raise the total profit of the company.

One of the Production Managers at Engineering Solutions was faced with a decision where he could either manufacture a nut or buy it in from Atlas Bolts Ltd (i.e. purchase it). The selling price of the item when assembled into a chain was the same to the customer whichever policy was to be adopted. Fixed costs for manufacture were estimated to be £12000 and variable costs £1.50 per nut. To buy the nut cost £2.00 per item (special safety nuts using high tensile, heattreated material). However, using the bought in nut meant that the manager would have had an annual fixed cost of £2400 for storage and handling etc. The manager expected to use 25000 nuts per year as they were used on several models.

Using the data given I’ve measured that for this scenario it would be better to buy a nut than manufacture it. To manufacture a nut itself its cheaper than buying it, but then we add all fixed costs and the price gets higher than just buying them, because then the only fixed cost is storage.

For all companies is very important to have accurate costing system, but for different situations there is different costing method:

Job costings is used with ‘one off’ or bespoke products, in other words low volume products that have an element of design included in the manufacturing process.

it’s actually not a costing methodology, but a method when we need to focus on balance between fixed and variable costs on a specific situation, when the company needs to make a decision for a special order or so, as an example from this assignment would be Task1 second part.