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Cost-Efficient Design

By
Klaus Ehrlenspiel
Klaus Ehrlenspiel
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Alfons Kiewert
Alfons Kiewert
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Udo Lindemann
Udo Lindemann
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Editor
Mahendra S. Hundal
Mahendra S. Hundal
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ISBN:
9780791802507
No. of Pages:
560
Publisher:
ASME Press / Springer
Publication date:
2007

The knowledge of costs and their origin is a prerequisite for cost management. Cost accounting represents how cost originate. Therefore, the basics of cost accounting [Wöh96, Sch96] are presented here in view of their importance in product development. For a deeper understanding of the material, suitable literature for engineers is [VDI90, War80, War90] recommended.

The terms and perspectives of cost accounting are presented according to the common business practices. Every company is different, has different emphases, etc., and can use its own costing model. In practice, terms such as cost allocation can vary in the details from what is given here. The basic scheme, however, is the same.

In the foreground is the calculation of the costs for realizing a product in a company-defined frame. To consider the influence of costs in the entire company, wide-ranging deliberations are necessary. The costs to be considered in each case and the costing procedures to be employed depend on the decision situation.

The central problem of cost accounting is to assign the cost (cause-based) to the cost units (causation principle). As shown below, this is very expensive and sometimes nearly impossible. Since cost accounting itself must not be too expensive (economic efficiency principle), in view of this reality it must charge the costs with simplified procedures.

After an overview of costs and cost accounting, cost unit accounting with differentiating overhead costing is central since it represents the common costing procedure in the machine industry. The limits of differentiating overhead costing for cost management are shown, and newer approaches are presented for costing that is more cause-based, such as process costing. In conclusion, direct costing is explained.

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