ME2027 - Process Planning and Cost Estimation

INTERNAL II ANSWER KEY

Date : 25.09.14
Part - A
1.
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 different
manufacturing processes. The total costs for two alternative processes are plotted on a graph
against quantity to be produced.
5.
Write the difference between costing and cost estimation
Costing
Cost Estimation
a. It gives an expected cost of the product
a. It gives actual cost of the product
b. It is generally carried out before actual b. It usually starts with the issue of order for
production of a product.
production of a product and ends after the
product 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 price
Catalogue 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 be
economical or not.
It enables the manufacturer to choose from various methods of production the one which is
likely 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 decisions
b. 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 as
cost of special layouts, designs, etc. hire of special tools and equipments; depreciation charges of
plants and factory building; building rent; cost of transportation, salaries and commissions to salesman
etc. All these expenditures are known as overheads or expenses.

Part B
11. (a) Manufacturing Logic

Decision trees.
Decision tables.
Artificial intelligence based approach.
Axiomatic approach.
11. (b)Operating sequences

While 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 elements

1. Material. 2. Labour.
3. Expenses. 4. Overhead.
13. (a) (i)

(ii) Total Manufacturing cost = Rs. 1202.50

S.P = Rs.1000
13. (b)

Material cost = Opening stock value + Material purchases Closing balance

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