Product costing allocates every cost — material, labour, power, overhead and scrap — to the products that caused it. Most SME cost sheets stop at material and a rough overhead percentage, which is why loss-making products often look profitable. We rebuild the cost sheet so the answer is honest.
Almost every manufacturer we work with is selling at least one product at a loss and does not know it, because the overhead is spread evenly across everything instead of following the work that caused it.
Ask three people in your company today. Write down what they say.
The company had been growing that product line for two years, because everyone agreed it was the profitable one.
We start on the shop floor, not in the ledger. Which machines run which products, how long the setup takes, what the rejection rate really is, and where power and manpower are actually consumed.
Then we allocate. A product that ties up a machine for six hours and needs three changeovers should not carry the same overhead as one that runs unattended overnight.
A budget nobody compares against actuals is a wish. We set periodic budgets at a level your managers can influence, then run the comparison every month and explain the difference.
Over a couple of quarters this changes behaviour more than any policy document, because people start seeing the consequence of their own decisions in a report with their name on it.
Should you machine that component in-house or buy it? The answer depends on marginal cost, spare capacity, quality cost and what else that machine could have been doing — not on the full absorbed cost, which is the number most businesses use and the reason they get it wrong.
We build the comparison properly and put the assumptions in writing, so the decision can be revisited when volumes or input prices change.
Client names are held back for obvious reasons.
Manufacturing · costing study
Three people quoted three different costs for the same item. Once machine time, setup frequency and rejection were allocated properly, the flagship product turned out to cost ₹2,970 against a selling price of ₹2,650. It was repriced within the quarter.
Most SME accounts teams calculate material cost accurately and then apply a flat overhead percentage. That is not costing, it is averaging. The difference shows up when you compare two products with very different machine time, setup frequency or rejection rates — one is subsidising the other, and pricing decisions are made blind.
Usually not. We build the costing model alongside your existing system first and prove it. If it should then live inside the ERP, we help configure it, but we would rather get the logic right before it gets automated.
Four to eight weeks for a single-plant manufacturer, depending on the number of SKUs and how much production data is already captured. You get the first meaningful findings well before the end.
That happens more often than you would expect, and it is the most valuable outcome. It usually leads to a price revision, a process change, or a decision to stop taking that order — all of which are better than continuing to fund it unknowingly.
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