Variable overhead costs include wages for first-line supervisors and costs associated with set-up labor, scrap, and rework. Fixed overhead costs include depreciation, utilities, and salaries for support staff. Overhead costs vary across plants due to differences in the number of product families manufactured, complexity of products, production processes, age and performance of equipment, and fringe benefits provided to employees. Plants with more product families and older equipment generally experience higher overhead costs than plants with fewer product families and newer equipment.
Variable overhead costs include wages for first-line supervisors and costs associated with set-up labor, scrap, and rework. Fixed overhead costs include depreciation, utilities, and salaries for support staff. Overhead costs vary across plants due to differences in the number of product families manufactured, complexity of products, production processes, age and performance of equipment, and fringe benefits provided to employees. Plants with more product families and older equipment generally experience higher overhead costs than plants with fewer product families and newer equipment.
Variable overhead costs include wages for first-line supervisors and costs associated with set-up labor, scrap, and rework. Fixed overhead costs include depreciation, utilities, and salaries for support staff. Overhead costs vary across plants due to differences in the number of product families manufactured, complexity of products, production processes, age and performance of equipment, and fringe benefits provided to employees. Plants with more product families and older equipment generally experience higher overhead costs than plants with fewer product families and newer equipment.
• Variable overhead costs include first line supervisors wages, costs of set up labour, scrap and rework
costs, fringe benefits cost for all labourers
• Fixed overhead costs include depreciation, utilities, salaries and fringe benefit costs of employees performing support activities
Varying Set up times
• Each plant varies widely in the number of product families and product models • Varied complexity across products manufactured • Different product families required different routings through manufacturing and assembly areas • A product family might contain 15-20 product models each requiring different tooling and set ups Utilities • Varies depending on complexity of production, size of plants etc. • Outdated and underperforming machines lead to higher consumption of electricity. • Plants like Pontiac had constantly sprinkling leaks at water systems Return on Assets • Return on assets was significantly higher for newer plants • This might indirectly lead to varying cost of rework and scrap • With outdated machine tools and processes, return on assets will be lower leading to higher cost of rework and scrap Varied Fringe benefits across plants • General trends show that overhead costs increases with increasing number of product families. • Pontiac with highest number of product families experiences highest total overhead burden rate • Lebanon and Maysville with minimum product families experience least overhead costs