As a manufacturer, you have a good understanding of what your material and labor costs are. These costs play a big role when you price your products. However, these are not the only two costs that should be factored into your prices. What about equipment and overhead? If you aren’t basing these costs on labor hours/dollars or equipment time then you likely are not pricing your products profitably. The manufacturing accounting professionals at Doeren Mayhew offer the following seven signs it may be time for a product costing analysis:

  1. Your price is being driven by the market
  2. You don’t know the real drivers behind overhead costs
  3. You are unable to look at margin by product or margin by customer in your manufacturing accounting system
  4. You are implementing a new accounting system and are unsure of what rates to use
  5. You have not reviewed your rates in some time, and circumstances in the business have changed
  6. You are unsure of whether your process for establishing price aligns with how your manufacturing accounting system allocates costs
  7. You are unable to compare how much profit you think you made on a product with what was actually made

To help ensure your pricing fully captures your costs, Doeren Mayhew’s manufacturing accounting professionals in Michigan, Houston or Ft. Lauderdale can help you with a product costing analysis. Contact us today.