Question

Question 3 (20 marks) Costing will eventually decide how much a customer will have to pay for a product and therefore is a must in any design. a. Differentiate between "design cost" and "product cost". (5 marks) b. Propose three cost objectives in the early design phase and another three for the later design stages. (5 marks) c. The list price of a product can be broken down into the following costs: discount, profit, selling expenses, overhead, tooling, labour, purchased part and material. These costs can be divided into the following categories: fixed and variable costs, direct and indirect costs, manufacturing cost, total cost and a selling price. Show the appropriate divisions of the cost into the categories. (10 marks)

Answer 1

Difference between design cost and product cost

Design cost :- it is those cost which is related with controlling the cost of products development and manufacturing systematically.it is part of cost management techniques.

It helps to avoid unnecessary cost expense on product design and development in concept phase of the product life - cycle.

Product cost:- while product cost are those cost which occure when product are create for the sale to customer

• they are consist direct materials, direct labor and manufacturing overheads.it consist both direct and indirect cost.