What are the ingredients in your cost of production?
For manufacturing companies, it’s critical to understand your production costs. If you know your costs, you’ll have better control over your profitability and make better business decisions. I’ve had conversations where companies thought certain customer orders were critical to their business, but after understanding their costs better, they decided to turn those orders away because they were NOT profitable.
To help you determine what your cost of production actually is (versus what you think it is), here are the four primary factors to consider: