High

Alloy: Conversio Die Steel: Die Steel: Speed

Condition n:- Roller Chipper Round Machine
Units Round Wire Knife bar Coil

Production Lb 478679 2081543 2413299 6697682 2530552

Number of SKUs 311 473 418 172 102
Number of orders 957 4163 3218 3349 1012

Bill of material (lb used/lb

output)
Steel scrap
Alloys

Machine Time (min/lb)

Melting-Electric Arc Furnace (min/lb) 0.2 0 0.09 0.09 0.09
Refining (VOD) (min/lb) 0.21 0 0.1 0.1 0.1
Molding/Breakdown
(Ingot/PFF) (min/lb) 0.12 0 0.07 0.08 0.07
Rolling (CRM) (min/lb) 0.1 0.15 0.33 0.09 0.03
Finishing (Multiple) (min/lb) 0.06 0.02 0.07 0.08 0.05
Total Time (min/lb) 0.69 0.17 0.66 0.44 0.34
 Alloy Condition Conversion: Die Steel: Die Steel:
Standard Cost ($/lb) Round Round Wire Chipper Knife Round Bar

Production (lb) 478679 2081543 2413299 6697682

Price 2.31 0.77 1.02 0.93

Materials 0.54 0 0.12 0.21

Direct Labour 0.29 0.07 0.28 0.18
Direct Manufacturing Expense 0.24 0.06 0.23 0.16

Contribution Margin 1.24 0.64 0.39 0.38

Contribution Margin (%) 53.68 83.12 38.24 40.86
Total Cotribution 593561.96 1332187.52 941186.61 2545119.16

Manufacturing & administrative

overhead 0.64 0.64 0.64 0.64

Operating profit 0.6 0 -0.25 -0.26

operating profit (%) 25.97 0.00 -24.51 -27.96
Total operating profit 287207.4 0 -603324.75 -1741397.32

Proportions

Alloy Condition Conversion: Die Steel: Die Steel:

Standard Cost ($/lb) Round Round Wire Chipper Knife Round Bar

Production (lb) 478679 2081543 2413299 6697682

Price 2.31 0.77 1.02 0.93

Materials 0.54 0 0.12 0.21

Direct Labour 0.29 0.07 0.28 0.18
Direct Manufacturing Expense 0.24 0.06 0.23 0.16

Contribution Margin 1.24 0.64 0.39 0.38

Contribution Margin (%) 53.68 83.12 38.24 40.86
Total Cotribution 593561.96 1332187.52 941186.61 2545119.16

Manufacturing & administrative

overhead 0.64 0.64 0.64 0.64

Operating profit 0.6 0 -0.25 -0.26

operating profit (%) 25.97 0.00 -24.51 -27.96
Total operating profit 287207.4 0 -603324.75 -1741397.32
 High Steel:
Machine Coil

2530552
2.33

1.58
0.14
0.12

0.49
21.03
1239970.48

0.64

-0.15
-6.44
-379582.8

High Steel:
Machine Coil

2530552
2.33

1.58
0.14
0.12

0.49
21.03
1239970.48

0.64

-0.15
-6.44
-379582.8
 Driver Driver Volume

A
Production
Melting Depreciation Melt Machine Minutes 5145632
Maintenance Melt Machine Minutes 5145632
Utilities Melt Machine Minutes 5145632

Refining Depreciation Refine Machine Minutes 5691042

Maintenance Refine Machine Minutes 5691042
Utilities Refine Machine Minutes 5691042

Molding Depreciation Mold Machine Minutes 4226965

Maintenance Mold Machine Minutes 4226965
Utilities Mold Machine Minutes 4226965

Rolling Depreciation Roll Machine Minutes 8258382

Maintenance Roll Machine Minutes 8258382
Utilities Roll Machine Minutes 8258382

Finishing Depreciation Finish Machine Minutes 4057311

Maintenance Finish Machine Minutes 4057311
Utilities Finish Machine Minutes 4057311

General & Administrative Pounds 50299420

Material Handling & Setup Orders 57147
Order Processing orders 57417
Production Planning orders 57147
Technical Support SKU 6642
 Amount per
Amount ($) unit driver
volume
B C=B/A

2139865 0.42
975130 0.19
2036477 0.40

1711892 0.30
780104 0.14
1745551 0.31

427973 0.10
390052 0.09
290925 0.07

2995811 0.36
975130 0.12
872776 0.11

1283919 0.32
780104 0.19
872776 0.22

5400955 0.11
4936068 86.37
3953709 68.86
3339500 58.44
5766579 868.20
 ACTIVITY BASED COSTING FOR 5 PRODUCTS O

Driver Driver Volume

A
Production
Number of SKUs
Number of Orders
Melting-Electric Arc Furnace
Refining (VOD)
Molding/Breakdown (Ingot/PFF)
Rolling (CRM)
Finishing (Multiple)
Melting Depreciation Melt Machine Minutes 5145632
Maintenance Melt Machine Minutes 5145632
Utilities Melt Machine Minutes 5145632

Melting cost (per Lb)

Refining Depreciation Refine Machine Minutes 5691042

Maintenance Refine Machine Minutes 5691042
Utilities Refine Machine Minutes 5691042

Refining cost (per lb)

Molding Depreciation Mold Machine Minutes 4226965

Maintenance Mold Machine Minutes 4226965
Utilities Mold Machine Minutes 4226965
Molding cost (per lb)

Rolling Depreciation Roll Machine Minutes 8258382

Maintenance Roll Machine Minutes 8258382
Utilities Roll Machine Minutes 8258382
Rolling Cost (per Lb)

Finishing Depreciation Finish Machine Minutes 4057311

Maintenance Finish Machine Minutes 4057311
Utilities Finish Machine Minutes 4057311
Finishing Cost (per lb)

General & Administrative Pounds 50299420

Material Handling & Setup Orders 57147
Order Processing orders 57417
Production Planning orders 57147
 Technical Support SKU 6642

Total Cost (per Lb)

ACTIVITY BASED COSTING OF FIVE PRODUCTS OF LEHIGH STEEL

Conversion: Round
Alloy Condition Round Wire

A Price (per lb) 2.31 0.77

B Material cost (per lb) 0.54 0
C Direct Labour (per lb) 0.29 0.07
A-B-C Gross Profit 1.48 0.7
Manufacturing and other overheads-
D Operating Expenses 1.59 0.84
Operating profit (per lb) -0.1114 -0.1371
Total Operating Profit/loss -53331.1576152439 -285326.296825872

Process Driver

Melt Machine
Melting Depreciation Minutes
Melt Machine
Maintenance Minutes
Melt Machine
Utilities Minutes

Driver Driver Volume

Material Handling & Setup Orders 57147

Technical Support SKU 6642
COSTING FOR 5 PRODUCTS OF LEHIGH STEEL
Amount per Alloy Die Steel:
Conversion: Die Steel: High Steel:
Amount ($) unit driver Condition Chipper
Round Wire Round Bar Machine Coil
volume Round Knife
B C=B/A
478679 2081543 2413299 6697682 2530552
311 473 418 172 102
957 4163 3218 3349 1012
0.2 0 0.09 0.09 0.09
0.21 0 0.1 0.1 0.1
0.12 0 0.07 0.08 0.07
0.1 0.15 0.33 0.09 0.03
0.06 0.02 0.07 0.08 0.05
2139865 0.42 0.08 0.00 0.04 0.04 0.04
975130 0.19 0.04 0.00 0.02 0.02 0.02
2036477 0.40 0.08 0.00 0.04 0.04 0.04

0.20 0.00 0.09 0.09 0.09

1711892 0.30 0.06 0.00 0.03 0.03 0.03

780104 0.14 0.03 0.00 0.01 0.01 0.01
1745551 0.31 0.06 0.00 0.03 0.03 0.03

0.16 0.00 0.07 0.07 0.07

427973 0.10 0.01 0.00 0.01 0.01 0.01

390052 0.09 0.01 0.00 0.01 0.01 0.01
290925 0.07 0.01 0.00 0.00 0.01 0.00
0.03 0.00 0.02 0.02 0.02

2995811 0.36 0.04 0.05 0.12 0.03 0.01

975130 0.12 0.01 0.02 0.04 0.01 0.00
872776 0.11 0.01 0.02 0.03 0.01 0.00
0.06 0.09 0.19 0.05 0.02

1283919 0.32 0.02 0.01 0.02 0.03 0.02

780104 0.19 0.01 0.00 0.01 0.02 0.01
872776 0.22 0.01 0.00 0.02 0.02 0.01
0.04 0.01 0.05 0.06 0.04

5400955 0.11 0.11 0.11 0.11 0.11 0.11

4936068 86.37 0.17 0.17 0.12 0.04 0.03
3953709 68.86 0.14 0.14 0.09 0.03 0.03
3339500 58.44 0.12 0.12 0.08 0.03 0.02
 5766579 868.20 0.56 0.20 0.15 0.02 0.03

1.59 0.84 0.97 0.54 0.47

F LEHIGH STEEL

Die Steel: Die Steel: High Steel:

Chipper Knife Round Bar Machine Coil

1.02 0.93 2.33

0.12 0.21 1.58
0.28 0.18 0.14
0.62 0.54 0.61

0.97 0.54 0.47

-0.3524 0.0046 0.1428

-850552.45143 30942.8525086 361467.6157

Amount per Alloy Condition

Driver Volume Amount ($) unit driver Round
volume

A B C=B/A

5145632 2139865 0.42 0.08

5145632 975130 0.19 0.04

5145632 2036477 0.40 0.08

Amount per Alloy

Amount ($) unit driver Condition
volume Round
4936068 86.37 0.17
5766579 868.20 0.56
 IDENTIFICATION OF CONSTRAINTS IN THE STEEL MAKING PROCESS FOR DIFFERENT PRODUCTS OF LEH
STEEL

Alloy: Die Steel:

Condition Conversion:- Chipper
Machine Time (min/lb) Round Roller Wire Knife
0.2 0 0.09
Melting-Electric Arc Furnace (min/lb)
0.21 0 0.1
Refining (VOD) (min/lb)

Molding/Breakdown 0.12 0 0.07

(Ingot/PFF) (min/lb)
0.1 0.15 0.33
Rolling (CRM) (min/lb)
0.06 0.02 0.07
Finishing (Multiple) (min/lb)
0.69 0.17 0.66
Total Time (min/lb)
0.21 0.15 0.33
Cycle Time

Alloy: Die Steel:

Condition Conversion:- Chipper
Round Roller Wire Knife
Operating Profit (Standard 287207.4 0.0 -603324.8
costing) USD
-53331.2 -285326.3 -850552.5
Operating Profit (ABC costing) USD

Throughput/min (TOC) USD/min 8.4 5.1 2.7

OR DIFFERENT PRODUCTS OF LEHIGH

Die Steel: High Speed

Round bar Machine Coil
0.09 0.09

0.1 0.1

0.08 0.07

0.09 0.03

0.08 0.05

0.44 0.34

0.1 0.1

Die Steel: High Speed

Round bar Machine Coil
-1741397.3 -379582.8

30942.9 361467.6

7.2 7.5
 THROUGHPUT CALCULATIONS FOR LEHIGH STEEL AS PER TOC PRINCIPLES
Alloy: Die Steel: Die Steel:
Condition Conversion:-
Roller Wire Chipper Round bar
Round Knife
A Price ($ per lb) 2.31 0.77 1.02 0.93
B Material Cost ($ per lb) 0.54 0 0.12 0.21
C=A-B Throughput 1.77 0.77 0.9 0.72

Maximum Time taken at

D 0.1 0.15 0.33 0.09
Bottleneck (cycle time)

Throughput per unit

E=C/D 17.70 5.13 2.73 8.00
time(min)
PRINCIPLES

High Speed
Machine Coil

2.33
1.58
0.75

0.03

25.00