CLASSWORK ASSIGNMENT

COURSE
CENG151
CODE:
COURSE Project Construction
TITLE: and Management

MODULE NO.: MODULE 1

UNDERSTANDING
MATERIAL COST,
TOPIC: LABOR COST AND
EQUIPMENT
COST

TABLE OF CONTENTS
CLASSWORK ASSIGNMENT NO. PAGE
ASSIGNMENT NO. 7

STUDENT INFORMATION
Full Name: ORLANDO S. VALLE
Year Level: BSCE 5A
Course: CIVIL ENGINEERING

Material Cost
 Base on my research Material is the most important element of cost. In
most manufacturing organizations, 50% to 70% of the total cost of a product
is represented by the cost of the material. Material cost was defined by the
Institute of Cost and Management Accountants as follows: “the cost of
commodities supplied to an undertaking.” Examples of material cost include:
Cost of cotton or cotton yarn for a textile mill, Cost of cotton cloth for a
hosiery factory and Cost of wood, other raw materials, and factory supplies
for a furniture manufacturer

There are two kind of Materials its either direct materials or indirect
materials. The characteristics of direct materials are, directly related to and
identified with cost centers or cost units. In other words, these are the items
that form part of the product itself. The other one is Purchased for a particular
job, work order, or contract and last is finished product of a particular process
that forms the raw material of the succeeding process.

Labor Costs
On our previews topic we already encounter this labor and cost and as
a future civil engineer I thinks this is very important things to know. So,
what is labor cost? The labor costs is the total cost of all labor used in
a business. It is one of the most substantial operating costs. These are
particularly important in any business which experience heavy human
resource labor costs: construction, manufacturing, and other industries which
have partially or non-automated operations. These costs include 2 main
subcategories. The direct labor costs definition is summarized as the cost
of labor which is used directly to make products. Meanwhile, the indirect
labor costs definition is simply explained as the cost of labor which is used
to support or make direct labor more efficient.

MODULE / PART COURSE CODE:

MODULE 1
: CENG151
CLASSWORK ASSIGNMENT COURSE TITLE:
CONSTRUCTION AND
NO.: ASSIGNMENT NO. 7 MANAGEMENT
 These costs are explained by many as the most important cost
a company will face, is a key factor in almost any business. This is due to the
fact that employee turnover is one of the main factors which causes
a business to fail. To begin, it is in the best interest of any owner that unit
labor costs and inflation are minimized to maximize profits.

The importance of labor costs does not stop here. They are a variable

cost. As such, they must also occur in a predictable cycle to avoid cash
flow problems. If a firm is seasonal and requires additional labor at peak
times, business controllers must have the cash on hand to afford this increase
in cost. If a business plans properly it will avoid many cash issues associated
with the cost of labor.

Equipment cost
For me the objective of equipment cost is defined as the cost involved
in making the machine ready for producing a product different in
characteristics from the one it is currently producing. Equipment cost is
directly proportional to the setup time of machine and hence increases with
increase in setup time. The setup time decides the flexibility of the
organization. Shorter setup time gives higher flexibility and vice versa.
Hence organizations generally prefer to reduce setup time which eventually
reduces the setup cost. Equipment costs involve the costs of material and
labor required to make the machine ready for new production lot. There are
two kinds of setup costs: fixed and variable. Fixed costs include the capital
expenditure like machine parts required to make the machine ready for new
lot. Variable costs include wages of workers, consumables used in setup
which vary with the skill-set of the people involved.

MODULE / PART COURSE CODE:

MODULE 1
: CENG151
CLASSWORK ASSIGNMENT COURSE TITLE:
CONSTRUCTION AND
NO.: ASSIGNMENT NO. 7 MANAGEMENT
MODULE / PART COURSE CODE:
MODULE 1
: CENG151
CLASSWORK ASSIGNMENT COURSE TITLE:
CONSTRUCTION AND
NO.: ASSIGNMENT NO. 7 MANAGEMENT