Chapter Nine OVERHEAD, GENERAL, AND （第九章开销,一般,）.pdf

Chapter Nine OVERHEAD, GENERAL, AND ADMINISTRATIVE COSTS INTRODUCTION Much of the attention to improvements in the factory goes to the most obvious source of cost, the actual production process, which includes manufacturing labor and purchased materials and parts. But direct manufacturing makes up only part of total weapons sys- tem cost. Less visible costs in the overhead, general and administra- tive (GA) categories are larger than direct labor costs at the prime level, often by a factor of two or more. In this chapter, we discuss how the lean philosophy affects the indirect costs. We present some examples of how companies participating in this study have attempted to cut these costs and the results they achieved. The CCDR definitions for overhead and GA costs can be found in Appendix C. THE OVERHEAD AND GA CCDR CATEGORIES Overhead and GA costs provide a catchall for incurred costs that do not fit into the previous cost categories. Overhead costs are those related to fabrication and assembly activities but which cannot real- istically be charged on a direct basis to a particular product. Over- head is normally allocated to a base (such as direct labor hours) using a forecast rate (in dollars per hour) called a wrap rate. In gen- eral, overhead costs are between 150–250 percent of the cost of a direct labor hour. Factory overhead covers such expenses as electric- ity, cleaning, heat, plant depreciation, and factory support labor (depending on the company). GA expenses relate more to the com- 103 104 The Effects of Lean Manufacturing pany as an entity and may not be related to activity levels at only one plant, especially i