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Machine Monitoring System

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Jennie Miller

For many years, engineering costs have been included in the “standard burden rate” of the shop. Nowadays, manufacturing is so competitive and technical that the standard burden rate of the shop cannot include all costs associated with the engineering costs.

Direct Engineering Costs

Direct engineering costs include things like design work, engineering, prototyping, testing, and tooling design. Many job shops today have become “turnkey”—meaning they don't just produce a single small widget that is easy to engineer, cost, and manufacture. The jobs that manufacturing companies must be able to handle can be very extensive and include everything from a small box to an entire machine tool made up of of 100's—or even 1000's—of components.

The costs associated with doing the initial engineering can be very extensive in these cases, which makes sense based on the amount of components. Many job shops require CNC machinery and, to arrive at the most accurate costs during the estimating process, they often program and sometimes even manufacture the prototype.

Indirect Engineering Costs

Indirect engineering costs include the computers, software, and manpower required to assist in manufacturing the product. The costs of these indirect engineering items can be extensive and should be allocated across the job that uses these tools.

MIE Solutions provides software resources to help you manage your direct and indirect labor throughout the product life cycle, from quoting and estimating to job costing, and then to invoicing.

Source: https://www.mie-solutions.com/founders-blog/estimating/engineering-costs

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Jennie Miller
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