| In recent past, globalization and increasing competition forced manufacturing industries to undergo many changes to provide customers with low cost products at rapid speed. Firms are having multiple facility locations to reduce transportation costs and proximity with customers. But labor, facility, and energy costs will vary to a great extent depending on automation level and facility locations and firms will need to consider these factors while introducing assembly lines. For this, an accurate, simple, and quick cost estimation tool will be needed by firms. Unlike conventional costing methods, which estimate costs based on production or labor hours, Activity-Based Costing (ABC) method provides estimates based on individual activities and resource utilization by activities. This research provides a methodology to estimate assembly costs at three different multi-national locations for three different automation levels using ABC approach. Sensitivity analysis was performed to analyze the effects of variations in labor and energy costs. |
