Our index of custom injection molders' machine-hour
rates rose 0.6% for the first half of the year.
In contrast, in the machine-hour
system the pad-pressing machine costs are combined with all other indirect costs in the single overhead cost pool and then divided among all machine hours, including sewing, cutting, and seam-sealing machines, so that much of the pad-pressing machine cost ends up absorbed by the tents, backpacks, and sleeping bags that dominate the cutting, sewing, and seam-sealing activities.
With respect to "Other Indirect Manufacturing Costs," Newell decided to allocate them on a machine-hour
basis since machine hours did drive these costs.
It represents a "middle way" between the small number of cost pools characteristic of traditional labor-based or machine-hour
allocation systems, and the overwhelming number of measurements and individual cost pools needed to calculate and charge truly accurate costs to each product.
Assuming a machine-hour
basis for applying overhead, the production variance is equal to the excess machine hours used for overproduction multiplied by the standard variable overhead rate.
Thanks to readers of the Plastics Technology blog and Twitter postings, we present the first update in a year of results from our exclusive Custom Injection Molders' Machine-Hour
Our index of custom molders' machine-hour
rates showed no change in the half-year period, after a 1.5% increase in the first half.
And the custom molding machine-hour
rate index rose only 0.7%--again, the lowest increase since the end of 2009 and about half the rate in three half-yearly surveys since then.
Our custom machine-hour
rates index rose (see chart) for the third six-month period in a row.
Custom injection molders' machine-hour
rates in the first half of 2010 showed their strongest performance since the same period in 2008.
Despite record-low machine capacity utilization last year, custom injection molders' machine-hour
races held more or less even.
After a precipitous drop in the second half of 2008, custom injection molders' average machine-hour
rates held firm in the first half of this year.