Costing and Margin Control in Manufacturing

Know your unit cost

Direct materials, direct labour and a defensible overhead absorption rate. Guessing overhead is the fastest route to selling at a loss.

Track the three variances

Material usage, labour efficiency and overhead absorption. Reviewed monthly, these three tell you exactly where margin is being lost.

Control inventory

Cycle counts beat annual counts. Reconcile production output to raw material consumption and investigate yield loss promptly.

Price with data

Set a minimum margin per product line and review pricing whenever input costs move materially. In an inflationary environment, quarterly review is a minimum.