02-09-2010, 04:22 AM
I have accounted for itemized manufacturing costs per item. Recently the suppliers have decreased their rates and I want to know the expected decrease in costs for the coming months. Supplier costs are fixed per unit and not variable to volume.
Here is where it gets tricky. The input to have one item is not always constant. Some require more, some less. So we average the cost per unit. One way to estimate the savings for the coming months is to run all the individual units from CY2009 and replace it with the new prices and voila I can get the savings. But this is too time consuming.
The questions is, for the purposes of projection, can I simply interpolate the difference and apply that percentage decrease to the averaged actual costs to get the expected savings?
Here is where it gets tricky. The input to have one item is not always constant. Some require more, some less. So we average the cost per unit. One way to estimate the savings for the coming months is to run all the individual units from CY2009 and replace it with the new prices and voila I can get the savings. But this is too time consuming.
The questions is, for the purposes of projection, can I simply interpolate the difference and apply that percentage decrease to the averaged actual costs to get the expected savings?
