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The Bill of Materials (BOM) is just a subset of the Cost of Goods Sold Labor costs often exceed BOM costs, and cycle time for a process.


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Bill of materials - Wikipedia
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If you already know the reasons why the BOM cost has (almost) nothing to do with the profitable selling price, you are allowed to skip directly to the next article in.


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It is organized according to the BOM structure to reflect at which levels the individual costs apply. Each item level can be collapsed or expanded to obtain an.


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It's also an important tool to assess quality and nail down your product costing and pricing. Read on for a complete refresher on Bill of Materials.


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If it is not accurate, it can cause production to halt or cause delays, which increase operation costs because a company has to locate the missing.


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Order BOM cost estimates are supported for all individual requirements materials in the BOM structure. Order BOM costing is recommended in complex make-to-.


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For a single user to organize BOMs and parts, easily create BOM from Excel, add cost and other properties to BOMs. Number of Users, one. Bill of Materials &.


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China is hardly communist at this point, they have fallen for the free market story hook line and sinker resulting in the cutthroat competition and lack of concern for people and the environment. I get you but a product is only worth what someone is willing to pay for it. This will rarely be the case if your BOM is large. Other tools will eventually wear down as well or need parts replaced. Only then will you have a hope of understanding the complexity and cost of putting it all together. Each of these things contributes to COGS. Going to production is an entirely different equation. Defect parts that are resold from non-certified vendors 6. There is a cost associated with the circuit board assembly, the complete build, test, and packaging. Eventually they will fully consume the Chinese work ethic and even quality labor will become scarce. The easiest way to figure this out is to take the development costs and divide it into the number of units sold and add it to the COGS. The common conception that a product is only worth little more than the cost of the raw materials that goes into it absolutely drives me nuts. People there are crushed under a system that punishes taking care of stuff jet again building something up. There is also a cost associated with setting up the assembly line for each batch. When you add up all these costs, your product might look a lot more expensive than you first thought, but you have a much more realistic picture of the viability of your business, and whether you can sell your product at the price you want, or if you are forced to either cut costs or raise prices. I used to hear people all the time complaining that they could buy a similar product for much less at walmart, not realizing or caring that the small local joint pays its employees a living wage, provides them with insurance, and has to cover their rent and shipping expenses along with a million other little expenses. Stop right there. Some parts will fluctuate more than others, but you have to expect parts prices to change. Swallowing our pride and moving forward as a species is more important than arguing over who is using words right. I find it hard to believe the stuff on aliexpress etc follow this formula, it seems like electronics on there are barely above component prices. The US declaration of independence is a good read no matter where you live. Never mind bothering to change the oil in any gas engine to actually do maintenance. Material handling is a cost. An example assembly process. You may have to pay duties or tariffs. These are additional costs associated with the COGS, and when you count your injection mold for plastic parts, die for packaging, cliche for pad printing, and in-circuit test fixture, functional test fixture, and other assembly jigs, that cost gets pretty high. It really comes down to who is regarded as the highest level of government, the individual soul or the bass-ackward concept that the central government is the top. Communist governments are naturally aggressive, especially as resources run out because of their internal inefficiency. On the plus side, for the first few runs, you can count on labor time to go down, sometimes drastically as you learn better ways of assembling your marvel. When it comes to cheap Chinese electronics we are dealing with heavy government subsidization and just general logistical over-achievement that comes from disregard for the environment and a willingness to break any rule if it gets the product sold and shipped. The prices we see are not the real cost. We can buy parts and sub assemblies very inexpensively from China. Parts coming out the back doors of factories 5. The BOM needs to include every component; every bit of wire, every screw, every piece of plastic and resistor, including the amount of glue dispensed. In settings where there is no such guarantee, its living in the moment, and to heck with the environment or the future. Some day we will find ourselves mining our landfills that are full of them. The other place people screw up is expecting to have fixed costs. Everyone in a communist country is equal, but we know some are more equal than others and its that elite group that fears neither God nor man who has evil intent. The Chinese have been buying a lot lately Sometimes we capitalists can be real suckers and at other times spectacular champions. The comments made here demonstrate how little you know about China, its people, its government and its society. Every component in your BOM must be attached to the rest of the BOM somehow, making your simple assembly process an extensive production. Also, parts being scrapped through user mistakes and assembly errors should start to decline as you start to get better at assembling things. Perhaps the resellers overestimated how much profit SJM was making. It should be the same price! Their government if driving them down into an economic hell-hole while other countries are becoming better exporters. It is not going to be pretty for them. It seems they are selling stuff from China at stupid-cheap prices. We are nasty bourgeois pigs, you know. You choose your words. Then you have to pay for the shipping from the manufacturer to you, and you have to pay for the bulk packaging as well. I include myself in all of this as well. This is how long it takes to repeat that process. When will peoople learn that Carl Marx was an idiot? Of course they may choose to forgo buying it at all in favor of buying something else more entertaining or needful. Stop saying the word communist. In years no one will remember this argument. It has nothing to do with it. The more units you sell, the more distributed that NRE cost gets, until you are eventually profitable. The difference here, though, is that you can make it up in volume. Even socialism by itself without the antitheistic assault is seriously hugged up. That willingness may be based on wrong thinking but that wrong thinking is just rationalization. A vast majority of Chinese people are wonderful souls but many in the leadership would be just as glad to shoot you as take your money for dirt cheap low-quality parts. One way to do it is to list EVERY step in the process, from taking a part out of a box to handing it to the next station. The thing we can not replicate on a mass scale is the near free labor. Companies like Allwinner not paying royalties to ARM. My heart goes out to the Chinese people. Reclaimed parts from meltdown PCBs 4. With a total of 10 minutes of labor per unit, you have an idea of your labor costs. Nor is any other guestimate.

Someone asks how much it cost, and you throw out a ballpark number. Injection molds can have a lifespan from 5, shots up to 1 million shots depending on how much you want to pay, and after that you need a new mold.

Yea, we were really being short-sighted. Understanding the labor cost is essential to understanding the total COGS. Screwing over your fellow source for profits is the MO of free market capitalism. Stop acting like a communist by telling other people what they may or may not say.

You are correct in observing this irregularity. Those who love it and want to force it on others can go hug themselves but leave the rest of us alone. Divide by the labor rate, and you have the labor cost per unit, not including the overhead of the labor.

Add all the cycle times for your entire process, and you have the total amount of time it takes to get a product ready. Bom cost addition, you will have waste and excess; a bom cost of your production will fail bom cost get scrapped, eating into your overall margins, and at the end of production you will have extra components due to minimum order sizes you have to order 1, yards of fabric but only needso the cost of those 50 extra yards gets distributed among the In most cases the tools used to make the product have a limited lifetime.

People in the US demand a lot more for their time. Off-reels from PCBA shops 2. Counterfeit silicon 3. The reason those parts are so cheap are because of these reason. So people can pay whatever SJM asks, or do without. You are forgetting bom cost near free labor costs.

Just look at the sickness taking over our own society. I did that on my way to the supercon.

Calculate ahead of time! Its the places where people have real liberty where the environment is best off. Whatever you feel like calling it, collective action and supporting each other is the only way we will be able to move forward as a society and reach the next stage in our humanity. China is deliberately trying to take over specific industries for strategic purposes that are not entirely benign. Their communist way of doing things does not respond well to the needs of customers or citizens and they are always behind the curve at making good decisions if the decisions are good at all and not just political. Every step then gets a cycle time. In-process inventory is a cost. Have you ever been in China? When you buy a component, you have to pay for shipping from the distributor to your manufacturer. This is why we design plastics to have snaps instead of screws, locating features that speed up assembly and reduce errors, and parts that perform multiple tasks rather than multiple parts.