Light Duty Technology Cost Analysis, Power - US Environmental ...

� Non-manufacturing, corporate facilities (building, office equipment, utilities,
maintenance expenses, etc.)
� Corporate salaries (President, Chief Executive Officers, Chief Financial Officers,
Vice Presidents, Directors, Corporate Manufacturing, Logistics, Purchasing,
Accounting, Quality, Sales, etc.)
� Insurance on non-manufacturing buildings and equipment
� Legal and public relation expenses
� Recall insurance and warranty expenses
� Patent fees
� Marketing and advertising expenses
� Corporate travel expenses
SG&A, like all mark-up rates, is an applied percentage to the Total Manufacturing Cost.
The default rates for this cost analysis range from 6% to 7% within each of the primary
processing groups. The actual values, as with the end-item scrap allowances, vary within
these ranges based on the size and complexity of the part, which in turn is reflected in the
size and complexity of the processing equipment as shown in Table C-1. To support the
estimated SG&A rates (which are based on generalized OEM data), SG&A values are
extracted from publicly traded automotive supplier 10-K reports.
Profit Mark-up is the supplier’s or OEM’s reward for the investment risk associated with
taking on a project. On average, the higher the investment risk, the larger the profit markup
that is sought by a manufacturer.
As part of the assumptions list made for this cost analysis, it is assumed that the
technology being studied is mature from the development and competition standpoint.
These assumptions are reflected in the conservative profit mark-up rates which range
from 4% to 8% of the Total Manufacturing Cost. The profit mark-up ranges selected
from this cost analysis are based on generalized historical data from OEMs and suppliers.
As detailed with the preceding mark-up rates, the actual assigned percentage is based on
the supplier processing equipment size and complexity capabilities (Figure C-2).
ED&T Mark-up: the ED&T used for this cost analysis is a combination of “Traditional
ED&T” plus R&D mark-up.
Traditional ED&T may be defined as the engineering, design and testing activities
required to take an "implementation ready" technology and integrate it into a specific
vehicle application. The ED&T calculation is typically more straight-forward because the
tasks are predefined. R&D, defined as the cost of the research and development activities
required to create a new (or enhance an existing) component/system technology, is often
independent of a specific vehicle application. In contrast to ED&T, pure R&D costs are
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