Methodology - Lexmark T656dne Manual

Technology
Cost Consulting
Production Cost Analysis
"Technology Cost Consulting
provides highly qualified estimates
for component cost and
manufacturing cost for the
products analyzed. The end result
is a powerful estimate of what it
should cost any "world class"
OEM or Contract Manufacturer to
manufacture the product at a
specific production volume, within
a specific country."
As component suppliers must be able to compete on a global basis, components are manufactured wherever it makes
the best economic sense. Therefore, component costs are similar whether purchased in the US, Asia or Europe. The
same concept applies to tooling and factory equipment. They also compete on a worldwide basis, which tends to level
the overhead costs of product manufacturing.
The labor rates and overhead rates used in this report intend to reflect the location of the manufacture as much as
possible. Direct labor rates tend to change from one country to another. This reflects the difference in labor cost.
However, these are very small numbers when compared to the cost of the tooling required for high volume fabrication
and manufacturing of the piece parts, components, and product subassemblies.
Manufacturing Labor Cost
The Labor Summary reflects the hourly labor costs for mechanical assembly and electronics assembly for this report .
The basic hourly rate is determined by the manufacturing geographical location. The more comprehensive overhead
rate is a function of the location as well as the estimated annual production volume for the product. The sum of these
two amounts determines the hourly manufacturing assembly cost for both the mechanical and electronics assemblies,
taking into account the location and estimated production volume of the subject report.
Technology Cost Consulting research tracks the labor costs of various countries that manufacture for the hi-tech
industries. Currently, the labor costs for over 20 countries are tracked in our database. Production volume change and
manufacturing location can dramatically affect the product cost estimates.
Overhead Costs
The overhead (OH) rate estimates shown on the Labor Summary sheet is applied to the ASSY and PCB labor hourly
rates. This includes major elements of overhead costs such as: employee benefits, facilities, factory capital expense,
product specific tooling, production engineering expense (test, methods, sustaining), and all material support including
purchasing, receiving, warehouse, and shipping & receiving expenses.
Overhead costs are also included in the value entered for fabricated parts such as molded plastic, sintered metal,
stampings, extruded, sheet-metal, castings, welded assemblies, machined parts, or other fabricated parts. These entries
include the material, labor, and the estimated overhead cost (including tooling amortization over 3 years) required for
fabricating the part in an in-house machine shop facility. Also included is the depreciation of capital equipment such
as presses, general case shears, brakes, dies, fixtures, jigs, test systems, test computers and software, and Etc.
Purchased fabricated parts costs are estimated just like 'in house' parts. When it is obvious that a subcontractor made
the part, a mark-up for the manufacturer margin is estimated and added.
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Report Methodology
The labor and overhead rates applied reflect regularly updated labor costs in the
country of manufacture (see the Labor Summary for location and rates). Some
individual components may be manufactured elsewhere, if so the cost estimates
and location will be reflected in that line item. This report is standardized to
represent a typical world class manufacturer large enough to operate in the
highly competitive worldwide electronic manufacturing industry. This company
is considered able to afford the level of tooling and purchasing power required
for very high volume and low manufacturing costs. This normalization process
results in a cost estimate which fairly represents a typical world class
manufacturer.