# Labour Cost Analysis

744 Words3 Pages
Assembly Cost (Labor)

Labor cost is a direct component of cost which specifies the time costs related to the manufacture of the product. Consideration of hours of work of employees and the required amount of time for each part and the final assembly is taken into account.
According to our prediction of sales, we need to manufacture about 14,085 units per year, in order to meet the demand. This means that we need to make 14,085/52/5 = 54 units per day and 54/8 = 6.77 units per hour.
In order to produce the required amount of units per hour and meet the predicted demand, we have to ensure appropriate human resource is allocated at different areas of manufacturing. We estimate that 6.77 units per hour implies approximately:

60 (min / hour) / 6.77 (units / hour) = 8.86
1 Injection Molding Machine 15530
2 Molds for injection molding 5500
3 Rod cutting and bending machine 650
4 Drilling machine 350
5 Welding Machine 126
6 Grinding machine 319
7 Fabric cutting machine 550
8 Sewing Machine 45
9 Screw drivers 64
10 Pliers and other tools 36
11 safety equipment 30

BILL OF MATERIALS:

The bill of material presents the finances involved for our product on an annual basis. It gives an estimate of the total manufacturing costs by consideration of material, labour and overheads. Presented below is our bill of material.
We have identified the cost/unit for each of the components, so as to have an idea of cost burden imposed from each unit of cost. Further details of components can be found above, where the materials, machinery, labour and overheads are discussed in more detail.

S/No. Item Total Annual Cost Cost /Unit Raw Materials Plastic 11,268.00 0.80 Steel 173,245.50 12.30 Fabric 271,699.65 19.29 Foam 19,719.00 1.40 Wheels 281,700.00 20.00 Bearings 112,680.00 8.00 Fasteners 35,212.50 2.50 Paint 14,085.00 1.00 Total Raw Materials 919,609.65 65.29

Equipment Investment Injection Molding Machine 15,530.00