Why are the engineers required to consider strictly all major cost elements while selecting the equipment?
Why are the engineers required to consider strictly all major cost elements while selecting the equipment?
The cost elements mainly for any equipments for a project can be fixed cost, variable cost and various other costs like labour costs, operating costs.
Fixed cost:This cost remains fixed irrespective of volume of production It includes cost of machines ,rent of buildings ,salary of employees, setup costs of equipments.
Variable cost: This cost increases proportionally or directly with volume of production and it includes running costs, direct labour costs(all types of costs while production is going on).
All these costs are necessary to analyse any production process and a very famous tool known as Break even analysis is used by the production manager to analyse the potential profit or loss possible in future.
Step by step
Solved in 2 steps with 1 images
