List the costs associated with equipment breakdown?

QUESTION:

“List the costs associated with equipment breakdown”?


SOLUTION

Breakdown costs would include:

a. Cost of lost production capacity (when machines are down, production capacity is reduced accordingly).

b. Cost of employee idle time during machine downtime.

c. Cost of producing defective units, scraps and/or rework.

d. Cost of repairs (labor and spare parts).

e. Cost of customer service.

f. Cost of employee safety.

 

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