Industrial Engineering Approach

Industrial Engineering Approach

Where there are no previous cost records, for example, the launching of a completely new product-or where conditions have changed substantially any form of statistical analysis is likely to be of little or no value. It is in such circumstances that engineering approach can be used. This method uses a detailed, elemental approach to establish the required level of inputs (materials, labour. facilities, capital equipment) for a particular level of output. These physical inputs are then converted into money cost. The engineering approach is lengthy and can be expensive but when used for the right purpose it can be quite accurate.

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