Understanding Machine Hours And Its Effect On The Cost Of...

Understanding Machine Hours At its core, a cost driver is any factor that is literally driving or influencing the cost of something. Over the past century, there has been a shift from single cost drivers to companies now reviewing several cost drivers. The combination of more sophistication in manufacturing and growth in customers needs and demands means that direct labor can no longer be the central cost driver. Overhead costs have increased drastically and have had a dramatic effect on the profit and competitiveness of manufacturing organizations. They account for a large percentage of a company’s total value and as a result, they have forced management to recognize its effects. â€Å"Manufacturing overhead, which includes all manufacturing costs other than direct materials and direct labor, has increased significantly due to automation, product diversity and product complexity† (p. 14-18,). When accounting for these costs, a machine hour is defined as â€Å"th e operation of one machine for one hour used as a basis for cost finding and for determining operating effectiveness† *Merriam-Webster. A company that employs the use of machines extensively, such as a manufacturing company, would be best served by using machine hours to analyze costs. Schemes, Machine Hours and ABC Should ABC opt to utilize machine hours as a cost driver, they would be operating under the most well-known classification schemes, known as the manufacturing cost hierarchy. The manufacturing costShow MoreRelatedThe, A Fusion Of Animal And Machine1707 Words   |  7 PagesIn You Are a Cyborg (Harl, Kunzru, 2013), Donna Haraway claims that humans are cyborgs; â€Å"a fusion of animal and machine†. Not robots like artificial intelligence Ava in Ex Machina (Garland, 2015), but cybernetic organisms or information machines. 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