## ESTIMATION AND COSTING

**COURTLY: DTE BOARD**

**Subject Title : Estimation and Costing**

**Subject Code : M-**

**Hours Per Week : 04**

**Hours Per Semester : 64**

#### TOPIC ANALYSIS

Sl.No | Major Topics | Hours Allotted | Weightage of Marks |

PART-A | |||

1 | Introduction to Estimation and costing | 05 | 15 |

2 | Elements of costs | 08 | 20 |

3 | Indirect expenses and depreciation | 05 | 15 |

PART-B | |||

4 | Mensuration and Estimation of materials cost | 08 | 20 |

5 | Mechanical estimation | 15 | 38 |

PART-C | |||

6 | Wages and incentives | 06 | 15 |

7 | Introduction to financial management | 03 | 07 |

8 | Project planning and Break even analysis | 04 | 15 |

9 | Environmental concerns and Industry Innovations | 06 | - |

Tests and Revision | 04 | - | |

Total | 64 | 145 |

**OBJECTIVES**

**On the completion of the course the students should be able to:**

1. Understand the estimation and costing procedure in industries

2. Know the actual costing process and calculation of selling prices

3. Understand the depreciation of equipments, plants and to know the different methods

of calculating depreciation

4. Know the procedure for calculating material cost of various components

5. Understand the procedure for estimation of various shops

6. Know the labour wages and incentives

7. Know about basics of financial management

8. Understand the concepts of project planning and breakeven analysis

**1.0**

**Introduction to Estimation and costing**

1.1 Estimation - Definition, Importance and Aims

1.2 Qualities and functions of an Estimator

1.3 Source of errors in estimation

1.4 Constituents of Estimation

1.5 Costing - Definition and Aims

1.6 Standard cost and its Advantages

1.7 Difference between estimation and costing

1.8 Advantages of efficient costing

**2.0**

**Elements of costs**

2.1 Elements of cost- material, labour, expenses

2.2 Material - Direct material, indirect material and examples

2.3 Calculation of Material cost

2.4 Labour - direct, indirect labour and examples

2.5 Calculation of labour cost

2.6 Expenses - direct, indirect expenses and examples

2.7 Classification of expenses - factory, administrative, selling and distribution expenses and examples

2.8 Fixed and variable expenses and examples

2.9 Components of cost - prime cost, factory cost, office cost, total cost

2.10 Selling price

2.11 Block diagram to show the relationship between elements and components of cost

2.12 Simple problems on above

2.13 Allocation of on-cost - methods and simple problems

**3.0**

**Indirect expenses and depreciation**

3.1 Indirect expenses - depreciation, obsolescence, inadequacy, idleness, repair and maintenance

3.2 Depreciation - causes, methods of calculating depreciation

3.3 Simple problems on each method

**4.0**

**Mensuration and Estimation of material cost**

4.1 Area of regular plane figures

4.2 Volume and surface area of solids (formulae only)

4.3 Estimation of material costs of step pulley, spindle lathe centre, Rivets,

Fly wheel, Crankshaft, Chain link, Wedge and Gib-headed key,

**5.0 Mechanical Estimation**

5.1 Estimation in machine shop - Definition of cutting speed, feed, depth of cut

5.2 Estimation of time for various operations like Turning, Knurling, Facing, Drilling,

Boring, Reaming, Threading, Tapping, Milling, Grinding, Shaping and Planning

5.3 Estimation in sheet metal shop - Sheet material and gauge number, Sheet metal joints, Select suitable formula for estimation

5.4 Estimate the material required for preparation of container open on one side

Cylindrical drum, funnel and tray

5.5 Estimation in foundry shop-pattern allowances, estimation of pattern cost, simple problems on C.I pulley and C.I. Wheel

5.6 Estimation in welding shop - estimation of gas welding cost, estimation of arc welding cost - Simple problems

**6.0 Wages and incentives**

6.1 Definition of wages, normal wages, real wages, living wages, fair wages

minimum wages, methods of wage payment

6.2 Incentives - definition of incentive, types of incentives, examples

6.3 Characteristics of a good wage and incentive systems

6.4 Standard time - work measurement

6.5 Bonus system - collective bonus system, group bonus system

**7.0**

**Introduction to financial management**

7.1 Definition of terms such as assets, liabilities, current and long term assets and liabilities, capital, income, expenses, gain

7.2 Working capital - definition - net and gross working capital - factors affecting working capital.

7.3 Maintenance of accounts through journal ledger, cash book, balance sheet.

7.4 Transaction with bank - credits, payments overdraft, current account,

securities.

**8.0**

**Project planning and Break even analysis**

**8.1**

**Concept of project work**

8.2 Project planning like market survey, project capacity, selection of site, plant

layout, product design, drawing, specification, material requirement operation

planning,

8.3 Break even analysis - break event chart, diagram to illustrate break event point, Simple problems on break even analysis

**SPECIFIC INSTRUCTIONAL OBJECTIVES**

**1.0 Introduction to Estimation and costing**

1.1 Define estimation

1.2 Explain the importance of estimation

1.3 List the aims of estimation

1.4 List the qualities of Estimator

1.5 List the functions of Estimator

1.6 Classify the source of errors in estimation and explain avoidable and

un avoidable errors with example

1.7 Mention the constituents of Estimation, explain time allowances only

1.8 Define costing and state its aims

1.9 Define Standard cost and state the advantages of standard cost

1.10 List the differences between estimation and costing

1.11State the advantages of efficient costing

**2.0 Elements of costs**

2.1 Mention the elements of cost- material, labour, expenses

2.2 Define: Direct material, indirect material with examples

2.3 Calculation of material cost: Direct material cost and indirect material cost

2.4 Define: direct, indirect labour with examples

2.5 Calculation of labour cost: Direct labour cost and indirect labour cost

2.6 Define- direct, indirect expenses and examples

2.7 Classify indirect expenses-factory, administrative, selling and distribution expenses and examples

2.8 Explain Fixed and variable expenses and examples

2.9 Explain the Components of cost-prime cost, factory cost, office cost, total cost

2.10 Explain Selling price

2.11 Draw the Block diagram to show the relationship between elements and components of cost

2.12 Solve Simple problems on above

2.13Explain the allocation of on-cost- methods and simple problems

**3.0 Indirect expenses and depreciation**

3.1 Explain indirect expenses- depreciation, obsolescence, inadequacy, idleness, repair and maintenance

3.2 Define depreciation and state its causes, (Physical and functional)

3.3 Explain methods of calculating depreciation

3.3 Solve simple problems on each method

**4.0 Mensuration and Estimation of material cost**

4.1 Mention Area of irregular and plane figures with sketches

4.2 Mention Volume and surface area of solids (formulae only)

4.3 Estimate the material costs of step pulley, spindle lathe centre, Rivets,

Fly wheel, crankshaft, chain link, wedge and Gib-headed key-Simple problems only

**5.0**

**Mechanical Estimation**

5.1 Estimation in machine shop-Define cutting speed, feed, depth of cut

5.2 Estimate the time for various operations like turning, knurling, Facing, Drilling,

Boring, Reaming, Threading, Tapping, Milling, Grinding, shaping and planning -Simple problems only

5.3 Estimation in sheet metal shop - explain sheet material and gauge number, Sheet metal joints, select suitable formula for estimation

5.4 Estimate the material required for preparation of container open on one side,

Cylindrical drum, funnel and tray (Simple problems)

5.5 Estimation in foundry shop - explain pattern allowances, estimation of pattern cost, simple problems on C.I pulley and C.I. Wheel

5.6 Estimation in welding shop-estimation of gas welding cost, estimation of arc welding cost (Simple problems)

**6.0 Wages and incentives**

6.1 Define: wages, nominal wages, real wages, living wages and fair wages

Minimum wages and Mention methods of wage payment

6.2 Define incentives - Mention types of incentives with examples

6.3 List the characteristics of a good wage and incentive systems

6.4 Define Standard time and work measurement

6.5 Explain the procedure for work measurement

6.5 Explain bonus system - collective bonus system, group bonus system

**7.0**

**Introduction to financial management**

7.1 Define: assets, liabilities, current and long term assets and liabilities, capital, income, expenses and gain

7.2 Working capital - definition - Explain net and gross working capital - List the factors affecting working capital.

7.3 Explain the maintenance of accounts through journal, ledger, cash book,

7.4 Explain balance sheet.

7.5 Define: credits, payments, overdraft, current account, securities.

**8.0**

**Project planning and Break even analysis**

**8.1**

**Explain the concept of project work**

8.2 Explain the steps in project planning - market survey, project capacity, selection

of site, plant layout, product design, drawing, specification, material requirement

and operation planning.

8.3 Describe break even analysis - Draw break event chart, diagram to illustrate break event point, Solve simple problems on break even analysis

__REFERENCE BOOKS__1. Mechanical estimation and costing- T.R.Banga and S.C.Sharma

2. Estimation and costing – by Acharya and Narang

3. Industrial Organisation and Engineering Economics by Banga and Sharma

4. Mechanical Estimation by Malhotra