“Sunk costs are irrelevant” is a principle stated in almost every book on decision science ever written. Despite this well-accepted principle of decision science, accountants continue to include their company’s biggest sunk cost as a major factor in determining its product, service and process costs....
In earlier blogs, I explained my views about depreciation; both its irrelevance in business decision-making and the way it is treated as a fixed annual cost. An organization does, however, need to provide for the preservation of its existing capital based as it sells products...
It's important to distinguish between measurements made from the financial accounting perspective and those made from the managerial accounting perspective. Periodicity is important in financial accounting. Expenses are measurements of the resources consumed during a specific period of time using measurable and auditable historical information...
During my four decades as a consultant, it has never ceased to amaze me how little attention manufacturing firms pay to the amount of time they use the equipment they’ve invested in to generate a return on that investment. The equipment uptime needed to drive...
Product costs, also known as cost of goods sold (COGS), are direct material, direct labor, and manufacturing overhead. COGS are typically the highest category of a manufacturing company’s cost, and they have a huge impact on the company’s competitiveness. COGS are inherently added to products as...
I spent eight years failing to act on an innovative idea that I knew would work. It was an idea that had not just technological promise but also societal value. It would help people contribute to the most important, impactful charities in the country. But I...
Economic incentives aren’t the answer; cultivating a vibrant local supplier base is. The typical intent of governmental economic development is to increase the number of manufacturing jobs and boost the positive economic contribution of manufacturing at either the state or federal level, or both. Such efforts...
Grant Thornton industry lens on: Global instability To keep business flowing, manufacturers need to manage a complex network of inputs and outputs. But it’s hard to know how to manage global instability. Many manufacturers are still struggling with ongoing pandemic impacts, and global instability introduces more complications....
Why have we created a cost engineering certification? Well, most industries have established and well-communicated standards for what it means to be an expert in the field. The ability to quickly communicate knowledge and skillsets is necessary for anyone in a professional environment to prove that...
Chip giants are ramping up spending by the billions as semiconductor demand booms Key Points: The world's largest contract chipmaker, TSMC, has committed to investing $100 billion over three years to ramp up production. Rival Intel announced last March that it plans to spend $20 billion on...