1. IENG 217 Cost Estimating for Engineers
Product Estimating

2. Product Methods Estimating Design Costs Productive Hour Cost Model
Estimate Engineering Costs
Estimate Unit Costs (Bill of Material)
Productive Hour Cost Model

3. Unit

4. Unit
Metal machining cost may be related to length of the bar stock that is turned on a lathe. Actual tickets yield

5. Unit
Metal machining cost may be related to length of the bar stock that is turned on a lathe. Actual tickets yield
Ca = 110/9 = $12.22 / in.

6. Unit Cost Fails to apply principle of economy of scale
Accounts for slope only
Regression: Ca = (length)

7. Product Methods Estimating Design Costs Productive Hour Cost Model
Estimate Engineering Costs
Estimate Unit Costs (Bill of Material)
Productive Hour Cost Model

8. Engineering Costs

9. Engineering Costs

10. Product Methods Estimating Design Costs Productive Hour Cost Model
Estimate Engineering Costs
Estimate Unit Costs (Bill of Material)
Productive Hour Cost Model

11. Estimate Unit Costs Engineering bill of materials
Due date for completion
Quantity, rate of production, etc.
Special test, inspection
Packaging & shipping information
Marketing information

12. Bill of Material

13. Bill of Material

14. Product Methods Estimating Design Costs Productive Hour Cost Model
Estimate Engineering Costs
Estimate Unit Costs (Bill of Material)
Productive Hour Cost Model

15. Productive hour cost model

16. Productive hour cost model

17. Example

18. Example
From below

19. H SU N x
hrs l c = + ( / ) . 60 75 87 31
561 46 51
Example

20. Example PHC lot hours x prod hr t rate = cos . ( ) $1 , 46 51 32 19
497 27
Example

21. Note that this is only for final assembly; other labor material cost comes from BOM.
Example

22. Example
Add material cost from BOM (includes prior labor costs).

23. Example
Total costs for 87 units of the XJ-27 part.

24. Example
Cost per part for the XJ-27 =65, / 87 =