3. Detailed Analysis Method : This is the most accurate and reliable method of cost estimating. However, this is also the most time consuming method, and the total cost of a new product is estimated in the manner explained under articles 4.3 and 4.4.
The complete analysis involves :
(i) Calculating all raw material usage including scrap allowance and salvage material.
(ii) Processing each individual component of the product, i.e., writing the operation sheet.
(iii) Calculating the production time and hence the direct labour cost for each operation.
(iv) The equipment required.
(v) Tools, gauges and special fixtures or dies.
(vi) Inspection and testing equipment.
(vii) Packaging and shipping requirements.