UPDATING UNIT COSTING METHOD FOR INJECTION MOLDED PRODUCT X

The thesis project was offered by the case company UK-Muovi Oy, a plastic product manufacturer located in Iisalmi, Finland. Difficulties were found in the product costing phase. The current costing system became obsolete and left unchecked for a long period. The calculation methods fell behind and were no longer precise in cost es-timation. As a result, the measured product unit costs were not reliable, and many recalculations had to be made to ensure the product’s profitability. This correction project was necessary due to fast and constant inventory flow, where product prices were required to be informed to customers as soon as demanded. Risks of losses in sales might arise when products were not priced in time and properly to generate profit. The main objective of the study was to investigate the current costing system to understand how it measured the product costs, especially the product unit cost. Later, with the data collected from the study, an improvement roadmap for the cost estimator was suggested. The study covered three major determinants of product costing. These were labor, raw material and energy cost allocations. As a result, key improvements were identified in the production cost determinants, mostly in the cost calculation formulas, providing more accurate cost information to support production and sales department in manufacturing cost controlling. The implementation of updated formulas was suggested to the cost estimator. The new cost tracking methods were integrated into the current Excel cost simulator instead of the company’s ERP system due to its instability. Further development work was discussed to implement new changes to correct the ERP system’s cost calculation