This document provides an example of actual cost data from a plant over three years as it underwent projects to reduce energy, scrap, management and direct labor costs. The data shows the effects of the projects and changes in volume over time, with the variable cost associated with the slope of the cost curve. The example can be used to estimate actual costs for new significant jobs by adding work to the plant.
2. Actual Cost Example
• The enclosed example shows three years worth of data in plant
undergoing a strategic transformation.
• Projects included reducing energy cost, improving scrap, reducing
management and reducing direct labor.
1. You can see the effects of the projects over time.
2. You can see the effects of volume on the cost.
3. The variable cost is associated with the slope of the cost curve.
4. If you have to quote a new significant job to add work to this plant you
can get a good estimate of what your actual cost will be.
