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Injection Molding - Applying Overhead

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JaneTervo
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Joined: Wed Oct 03, 2018 4:44 pm

Injection Molding - Applying Overhead

Post by JaneTervo » Wed Nov 07, 2018 6:56 pm

We have Injection Mold Presses ranging in sizes from 55T to 1200T. We go around and around when we start talking about the best way to determine each Press's OH rate. Of course, a large press is going to take more power and has a bigger footprint. But, for us, items that run on a small press typically require more Quality Assurance & are shorter runs, etc. So i'm wondering how other companies are determining the Fixed OH rate for each machine?
Thanks!

Team1MAPP
Posts: 7
Joined: Thu May 10, 2018 10:12 am

Re: Injection Molding - Applying Overhead

Post by Team1MAPP » Fri Nov 09, 2018 12:13 pm

We use an activity based costing model that does not assign overhead to the machine rate. We calculate the direct machine costs, i.e. machine deprecation, utilities, floor space, etc. We try and assign our overhead it by activity, i.e. launch, sales, admin, etc., and then use as a separate item in our quote.

I would be happy to discuss with you and feel free to reach out to me.

Sincerely,
Team 1 Plastics
Craig Carrel

JaneTervo
Posts: 2
Joined: Wed Oct 03, 2018 4:44 pm

Re: Injection Molding - Applying Overhead

Post by JaneTervo » Fri Nov 16, 2018 4:07 pm

Craig,
Thank you so much for your reply, and i apologize for my slow response. I have been researching Activity Based Costing. I have a couple more questions.
1. Do you use Standard Costing?
2. Is your ABC model just for quoting purposes?
3. Have you incorporated that into the Standard Cost?

Jane

Team1MAPP
Posts: 7
Joined: Thu May 10, 2018 10:12 am

Re: Injection Molding - Applying Overhead

Post by Team1MAPP » Fri Nov 30, 2018 1:12 pm

Jane,

I also apologize for my tardy reply. Pretty hectic right now.

My responses below
1. Do you use Standard Costing? Not sure what you mean by "standard costing". If it means you use machine rates, labor rates, and than use a % for SGA to calculate your quote we do not. Activity based costing uses machine rates but they are focused on their costs and you do not add any overhead costs into them. Instead we have separate costs for overhead activity - launch, admin, etc.
2. Is your ABC model just for quoting purposes? Yes. We have used an ABC model for quoting for over 15 years. You do have to update every few years to make sure you are keeping current to your improving operations.
3. Have you incorporated that into the Standard Cost? Same response at #1. We do not use a "standard cost" model for quoting.

If you would like to discuss in more detail please let me know.

Regards,
Craig

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