Production Cost Assessment

These notes are intended to support the teaching of the Manufacturing Processes II course unit of the Mechanical Engineering Degree at Instituto Superior Técnico. The document introduces the main concepts related to evaluating production costs, with a focus on their practical application in engineering contexts.
Structured in a progressive and accessible way for students with introductory knowledge of accounting and management, the text addresses topics such as cost structure in industrial companies, cost allocation methods, cost-volume-profit analysis, and production decisions based on the costs relevant for this purpose. Several illustrative examples are also presented, including the calculation of the breakeven point, the evaluation of special orders, and cost estimates for machined components and injection molded components.
The objective is to provide a solid foundation for understanding and applying economic analysis techniques in the context of production engineering, encouraging the integration of technical and economic decisions from the early stages of a product's design.