Determination of Product Cost in a Steel Plant...

Determination of Product Cost in a Steel Plant The term ‘product cost’ means the amount of expenses [actual or notional] incurred on or attributable to the production of the specified product. Product cost refers to the costs used to produce the product. It is the measurement in monetary terms of the amount of resources used for the purpose of production of the product. For effective monitoring, specific product cost (cost per unit of product produced) is usually determined. A steel plant consists of several processes which are integrated. These processes produce many intermediate products as well as semi-finished and finished products. Many of intermediate products and semi-finished products along with all the finished products are saleable products. There are also a large number of by-products which are being produced from these processes. These by-products are used either internally within the plant or are being sold to different customers. In such a situation, the cost of the saleable products is determined in the steel plant in several stages. Each stage has a product for which the cost is determined. This product may be a saleable product or may be an intermediate product used as a raw material for the next stage. In case the intermediate product of a certain stage is the raw material for next stage then the determined cost of the product along with the cost of handling losses for the product is assigned to the next stage to the extent the product is consumed in the next stage. The product cost in a steel plant is determined the way it is done in any other manufacturing organization. The total cost of producing a product basically consists of two components (Fig 1) namely (i) fixed cost, and (ii) variable cost. Fig 1 Component of...

Contract and Contract Management...

Contract and Contract Management  Contract is defined in short as an agreement between two or more parties enforceable under the law. A contract is a legally binding agreement between the parties identified in the agreement to fulfill all the terms and conditions outlined in the agreement. A prerequisite requirement for the enforcement of a contract, amongst other things, is the condition that all the parties to the contract accept the terms and conditions described in the contract. Historically, this was most commonly achieved through signature, but in many jurisdictions – especially with the advance of electronic commerce – the forms of acceptance have expanded to include various forms of electronic signature. Party/parties awarding the contract are known as the purchaser or employer. Party/parties agreeing to execute or perform the contract are known as the supplier or contractor. Contracts are of several types. They are normally classified as supply contracts, service contracts, management contract, transport contract, sales contracts, purchase contracts, design and engineering contract, training contract, maintenance contract, civil contract, and erection contract etc. Contract life cycle management is defined as the process of systematically and efficiently managing contract creation, execution and analysis for maximizing operational and financial performance and minimizing risk. Contract management life cycle is shown in Fig 1 Fig 1 Contract management life cycle  A contract life cycle has two distinct phases namely pre signing phase and post signing phase. The pre signing phase consists of activities before the signing of the contract. The activities in this phase are dominated by the purchaser/employer. There is no supplier/contractor in this phase but there are bidders. One of the bidders becomes supplier/contractor after the award/signing of the contract. The activities involved in this phase are identification and approval of a requirement, preparation of a...