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Title: Comparison of indirect cost multipliers for vehicle manufacturing

Abstract

In the process of manufacturing and selling vehicles, a manufacturer incurs certain costs. Among these costs are those incurred directly as a part of manufacturing operations and those incurred indirectly in the processes of manufacturing and selling. The indirect costs may be production-related, such as R and D and engineering; business-related, such as corporate staff salaries and pensions; or retail-sales-related, such as dealer support and marketing. These indirect costs are recovered by allocating them to each vehicle. Under a stable, high-volume production process, the allocation of these indirect costs can be approximated as multipliers (or factors) applied to the direct cost of manufacturing. A manufacturer usually allocates indirect costs to finished vehicles according to a corporation-specific pricing strategy. Because the volumes of sales and production vary widely by model within a corporation, the internal corporate percent allocation of various accounting categories (such as profit or corporate overheat) can vary widely among individual models. Approaches also vary across corporations. For these purposes, an average value is constructed, by means of a generic representative method, for vehicle models produced at high volume. To accomplish this, staff at Argonne National Laboratory's (ANL's) Center for Transportation Research analyzed the conventional vehicle cost structure andmore » developed indirect cost multipliers for passenger vehicles. This memorandum summarizes the results of an effort to compare and put on a common basis the cost multipliers used in ANL's electric and hybrid electric vehicle cost estimation procedures with those resulting from two other methodologies. One of the two compared methodologies is derived from a 1996 presentation by Dr. Chris Borroni-Bird of Chrysler Corporation, the other is by Energy and Environmental Analysis, Inc. (EEA), as described in a 1995 report by the Office of Technology Assessment (OTA), Congress of the United States. The cost multipliers are used for scaling the component costs to retail prices.« less

Authors:
; ;
Publication Date:
Research Org.:
Argonne National Lab., IL (US)
Sponsoring Org.:
US Department of Energy (US)
OSTI Identifier:
755848
Report Number(s):
ANL/ES/RP-101898
TRN: AH200016%%81
DOE Contract Number:
W-31109-ENG-38
Resource Type:
Technical Report
Resource Relation:
Other Information: PBD: 16 May 2000
Country of Publication:
United States
Language:
English
Subject:
33 ADVANCED PROPULSION SYSTEMS; ELECTRIC-POWERED VEHICLES; HYBRID ELECTRIC-POWERED VEHICLES; MANUFACTURING; PRICES; COST ESTIMATION; CALCULATION METHODS

Citation Formats

Vyas, A., Santini, D., and Cuenca, R. Comparison of indirect cost multipliers for vehicle manufacturing. United States: N. p., 2000. Web. doi:10.2172/755848.
Vyas, A., Santini, D., & Cuenca, R. Comparison of indirect cost multipliers for vehicle manufacturing. United States. doi:10.2172/755848.
Vyas, A., Santini, D., and Cuenca, R. Tue . "Comparison of indirect cost multipliers for vehicle manufacturing". United States. doi:10.2172/755848. https://www.osti.gov/servlets/purl/755848.
@article{osti_755848,
title = {Comparison of indirect cost multipliers for vehicle manufacturing},
author = {Vyas, A. and Santini, D. and Cuenca, R.},
abstractNote = {In the process of manufacturing and selling vehicles, a manufacturer incurs certain costs. Among these costs are those incurred directly as a part of manufacturing operations and those incurred indirectly in the processes of manufacturing and selling. The indirect costs may be production-related, such as R and D and engineering; business-related, such as corporate staff salaries and pensions; or retail-sales-related, such as dealer support and marketing. These indirect costs are recovered by allocating them to each vehicle. Under a stable, high-volume production process, the allocation of these indirect costs can be approximated as multipliers (or factors) applied to the direct cost of manufacturing. A manufacturer usually allocates indirect costs to finished vehicles according to a corporation-specific pricing strategy. Because the volumes of sales and production vary widely by model within a corporation, the internal corporate percent allocation of various accounting categories (such as profit or corporate overheat) can vary widely among individual models. Approaches also vary across corporations. For these purposes, an average value is constructed, by means of a generic representative method, for vehicle models produced at high volume. To accomplish this, staff at Argonne National Laboratory's (ANL's) Center for Transportation Research analyzed the conventional vehicle cost structure and developed indirect cost multipliers for passenger vehicles. This memorandum summarizes the results of an effort to compare and put on a common basis the cost multipliers used in ANL's electric and hybrid electric vehicle cost estimation procedures with those resulting from two other methodologies. One of the two compared methodologies is derived from a 1996 presentation by Dr. Chris Borroni-Bird of Chrysler Corporation, the other is by Energy and Environmental Analysis, Inc. (EEA), as described in a 1995 report by the Office of Technology Assessment (OTA), Congress of the United States. The cost multipliers are used for scaling the component costs to retail prices.},
doi = {10.2172/755848},
journal = {},
number = ,
volume = ,
place = {United States},
year = {Tue May 16 00:00:00 EDT 2000},
month = {Tue May 16 00:00:00 EDT 2000}
}

Technical Report:

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