Assignment on of production system cost breakdown and cost management.

Contribution of production system cost breakdown and cost management.

            The design developed and explained in the technical report is concerned with production system cost breakdown and cost management. The objective of the design was to create an effective budget for Willie’s Workshop to better comprehend and analyze the costs involved with the product. In the process of design, it was ensured to adhere to all ethical and safety standards. In addition to it, the design was effective in providing cost insights for gaining a competitive advantage in the market. Ulrich and Pearson's cost model was utilized in the production system cost breakdown. These modifications have enabled the model to run and operate within a specific budget and time that are not unsustainable to the business. For instance, additional costs are not incurred by the use of this design. In fact, instead of incurring extra costs, it provides insights into costs, which allow Willie’s Workshop to gain a competitive advantage. With modifications, it can contribute to the success of any small business and enable it to gain a competitive advantage.

            It has been determined that Willie’s Workshop should increase their selling point to $80 or consider the use of cheaper handles for generating profits. If these changes are not made and recommendations are not considered, negative profits should be experienced by the business. For every project, there are some specific constraints that have to be managed in an effective manner. One of the major constrains, in this case, is the inability to interact and communicate. Still, this project was completed while keeping health and safety requirements in mind. It was ensured that interaction would be limited to prevent the spread of coronavirus. In addition to it, some other standards had been set in terms of sustainability and ethics to ensure that this project would be completed in a sustainable and ethical manner.

Personal Insights of production system cost breakdown and cost management.

I have learned several things from the production system cost breakdown project. The cost formula is created after searching all the cost which are being incurred in the shop. I have learned regarding various costs that are incurred in the business. After the establishment of the cost formula cost breakdown of the business is performed. The Pearson model was applied in the project to done cost breakdown. It was informative how we designed and did all the cost analysis that included the assembly, inventory, tooling, supervising, and other steps we performed. I have to look at the one-time investments and then I have to look at the recurring investments or cost as well.

Along with cost breakdown, the sensitivity analysis and breakeven analysis is also performed so that various costs which are estimated to incur can be analyzed.  The breakeven analysis has provided deep insights regarding the profitability of the business. With the current price of $60, the business was not in the position to create profit at all. If the business wants to create profit than it is necessary that it should increase its selling price to $80. Overall I can say that I have learned how business can improve their current situation and what strategies businesses can adopt to become profitable in the future.

Various tests which are applied to analyze the costs have increased my understanding regarding how costs of the organizations can be measured. It was interesting for me to know that the organization will have to change its current situation in order to sustain it in the long run.

Summary of production system cost breakdown and cost management.

It has been determined that Willie’s Workshop should increase their selling point to $80 or consider the use of cheaper handles for generating profits. If these changes are not made and recommendations are not considered, negative profits should be experienced by the business. For every project, there are some specific constraints that have to be managed in an effective manner. One of the major constrains, in this case, is the inability to interact and communicate. Still, this project was completed while keeping health and safety requirements in mind. It was ensured that interaction would be limited to prevent the spread of coronavirus. In addition to it, some other standards had been set in terms of sustainability and ethics to ensure that this project would be completed in a sustainable and ethical manner. I have learned several things from the production system cost breakdown project. The cost formula is created after searching all the cost which are being incurred in the shop. I have learned regarding various costs that are incurred in the business. After the establishment of the cost formula cost breakdown of the business is performed. The Pearson model was applied in the project to done cost breakdown. It was informative how we designed and did all the cost analysis that included the assembly, inventory, tooling, supervising, and other steps we performed. I have to look at the one-time investments and then I have to look at the recurring investments or cost as well.