Bad Cost Data
Symptoms (What do you see...)
- Low, negative or unexpectedly high margins.
- Unreasonable costs for sub-assemblies and finished goods.
- Missing costs.
- Purchase price, materials variances.
- Unexpected manufacturing variances.
Causes (What you’ve got...)
- Poor bills of materials.
- Poor routings.
- Inadequate computer system support.
- Material or labor costs not input, incomplete or incorrect.
- Changes to bills and routings not being recorded.
- Transaction reporting errors or incorrect cost method selection.
Solutions (What might work...)
- Improve bills of material and routings.
- Review material and labor costs for completeness and accuracy.
- Improve cost update methods.
- Improve engineering change process.
- Evaluate variances.
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