How to plan your production

• When planning for production it's important to include time management and cost control.
• These ensure production runs smoothly, stays within budget and meets customer expectations.
• Without them projects may face delays, increased expenses and poor quality outcomes.
• Proper planning helps avoid these issues and leads to efficient, successful production.

A Gantt chart is a visual tool used to plan and schedule projects. It displays tasks along a timeline, showing what needs to be done, and when and how long each task will take.

Key Features

Using a Gantt chart helps the individual or team understand the project timeline, stay organised and ensure tasks are completed efficiently and on schedule.

Calculating direct costs involves adding up the expenses that are directly associated with producing a product or service. This usually includes two main components: labour costs and materials costs.

Labour costs refer to the wages paid to workers who are directly involved in the production process. To calculate labour costs, you need to know

• The hourly wage of the workers
• The number of hours worked

Formula

Labour Costs = Hourly Wage × Hours Worked

Example

• Formula
  Labour Costs = Hourly Wage × Hours Worked
• Imagine you have a worker who earns £10 per hour and works for 40 hours in a week
• Calculation
  Labour Costs = £10 × 40 = £400

Materials costs are the expenses for the raw materials used to produce a product. To calculate materials costs, you need to know

• The cost of each material
• The quantity of each material used

Formula

Materials costs = (Cost of material 1 × Quantity of material 1) + (Cost of material 2 × Quantity of material 2) + …

Example

• Formula
  Materials costs = (Cost of material 1 × Quantity of material 1) + (Cost of material 2 × Quantity of material 2) + …

• Suppose you’re making a table and need the following materials
  
  Wood £50 for 2 sheets
  Screws £10 for 100 screws

• Materials costs = (Cost of wood × Quantity of wood) + (Cost of screws × Quantity of screws)
  Materials costs = (£50 × 2) + (£10 × 1) = £100 + £10 = £110

• Labour costs
  Calculate by multiplying the hourly wage by hours worked.

• Materials costs
  Calculate by summing the costs of all materials used.

• Labour costs + Materials cost = Total direct costs
  Add labour and materials costs together.

Calculating overhead costs involves determining the indirect expenses related to running a business or project that are not directly tied to producing a product or service. These costs might include rent, utilities and admin expenses. Often, overhead costs are calculated as a percentage of labour costs.

Calculating overhead costs

Formula

Overhead costs = Labour costs × (Overhead percentage ÷ 100)

• Start by calculating the total labour costs as above
• Find out the overhead rate, which is given as a percentage.
  For example, if the overhead rate is 20%, it means that overhead costs are 20% of the total labour costs

Example

• Formula
  Overhead costs = Labour costs × (Overhead percentage / 100)

• Let’s say the labour costs for a project are £500.
  Assume the overhead percentage is 20%

• Overhead costs = Labour costs × (Overhead percentage / 100)
  Overhead costs = £500 × (20 / 100)
  Overhead costs = £500 × 0.20
  Overhead costs = £100

To calculate total manufacturing costs, you need to combine both direct costs and overhead costs.

Formula

Total manufacturing costs = Direct costs + Overhead costs

Example

1. Calculate Direct costs
   Direct costs = Labour costs + Materials costs

   • Labour Costs £500
     Materials Costs £200
     Direct Costs = Labour Costs + Materials Costs
     Direct Costs = £500 + £200
     Direct Costs = £700

2. Calculate Overhead costs
   Overhead costs = Labour costs × (Overhead percentage / 100)

   • Overhead percentage 20% (applied to labour costs)
     Overhead costs = Labour costs × (Overhead percentage / 100)
     Overhead costs = £500 × (20 / 100)
     Overhead costs = £500 × 0.20
     Overhead costs = £100

3. Add Direct costs and Overhead costs together
   Total manufacturing costs = Direct costs + Overhead costs

   • Total manufacturing costs = Direct costs + Overhead costs
     Total manufacturing costs = £700 + £100
     Total manufacturing costs = £800

Producing and analysing data is extremely important when you are planning your production.

It is very useful to be able to understand mathematical process such as fractions, decimals and percentages, as well as interpreting and producing reports using graphs, tables and charts.

• learn about fractions

• learn about decimals

• learn about percentages

• learn about creating and interpreting charts, graphs and tables