Profit Planning - Production Standards
 Make the Earnings You Estimate

Creating Machine Hour Rates that reflect everything budgeted in the Profit Plan is only half the equation for determining conversion cost. The second element is the time it takes to perform the conversion. This usually has a makeready, or setup component, and the run speed per hour. Naturally, the standards created to estimate cost must be as accurate as possible.

TMG believes that the people responsible for performing to standard in the plant should be intimately involved in the creation of production standards. Time and motion studies are not only expensive and time-consuming, but almost always difficult to "sell" to the people responsible for meeting the subsequent standards.

Our method for creating standards relies on a mixture of machine capabilities, observation, and finally participation by plant personnel. Make the operators and pressmen part of the process, and the estimates resulting from the standards they help create will be much more reliable. An example of a simplified estimate may be found by clicking on the image to the right.

For additional information, contact Howie Herbitter.