INCURRED IN-HOUSE OR PURCHASED TO
PROVIDE SERVICES FOR PLANT MAINTENANCE AND REPAIRS OF FACILITIES AND EQUIPMENT.
•
OTHER SERVICES - PURCHASED OUTSIDE SERVICES AND RENTALS SUCH AS THE COST OF
SECURITY, GROUND MAINTENANCE, ETC.
•
DEPRECIATION - OF PLANT AND EQUIPMENT UTILIZING THE STRAIGHT-LINE METHOD OF
CALCULATION.
ii
•
INSURANCE - COST OF INVENTORY INSURANCE, COMPREHENSIVE INSURANCE AND OTHER
INSURANCE NECESSARY FOR THE SAFEGUARD OF MANUFACTURING PLANT AND EQUIPMENT.
•
TAXES - EXPENSE INCURRED FOR TAXES ON REAL AND PERSONAL PROPERTY (MANUFACTURING
SITE, BUILDINGS AND THE FIXED ASSETS OF EQUIPMENT, FURNITURE AND FIXTURES,
ETC.). IF MANUFACTURING SITE INCLUDES OTHER OPERATIONS (MARKETING, R&D, ETC.),
TAXES ARE ALLOCATED TO MANUFACTURING ON THE BASIS OF TOTAL REAL AND PERSONAL
PROPERTY.
•
COST OF MANUFACTURING, SERVICE DEPARTMENTS - SUCH AS:
(WHERE APPLICABLE)
•
PACKAGING ENGINEERING
•
MANUFACTURING MAINTENANCE
•
INDUSTRIAL ENGINEERING
•
RECEIVING AND WAREHOUSING
•
PURCHASING AND ACCOUNTING
•
PRODUCTION SCHEDULING
•
INVENTORY MANAGEMENT
•
PLANT MATERIALS MANAGEMENT
•
CENTRAL WEIGH
•
MANUFACTURING ADMINISTRATION
•
REGULATORY AFFAIRS DIRECT SUPPORT TO
MANUFACTURING
(NOT TO EXCEED $80,000 PER YEAR FOR A THREE(3) YEAR PERIOD)
iii
•
ALLOCATED COSTS OF SERVICES PROVIDED TO MANUFACTURING INCLUDING: (WHERE
APPLICABLE)
•
CAFETERIA
•
PERSONNEL OPERATIONS
•
HEALTH AND SAFETY SERVICES
•
DIVISION ENGINEERING AND OPERATIONS
SERVICES
•
PLANT SERVICES (HOUSEKEEPING)
•
MANUFACTURING INFORMATION SYSTEMS
•
PLANT POWER
•
OFFICE OF V.P. MANUFACTURING
VARIOUS BASES ARE USED FOR ALLOCATING THESE COSTS TO MANUFACTURING OPERATING
DEPARTMENTS INCLUDING HEADCOUNT, SQUARE FEET, METERED UTILITIES USE, ESTIMATED
SERVICES RENDERED, EDP COMPUTER HOURS, ETC.
4.
QUALITY ASSURANCE COSTS
DIRECT LABOR AND INDIRECT COSTS FOR QUALITY ASSURANCE DEPARTMENTS TESTING AND
APPROVING MATERIALS USED IN MANUFACTURING AND COMPLETED MANUFACTURING BATCHES
AND FINISHED PRODUCTS.
THIS INCLUDES ALL MANUFACTURING IN-PROCESS TESTING AND
TESTING OF FINISHED MATERIALS.
EXCLUDED FROM PRODUCT COSTS ARE QA COSTS RELATED
TO RESEARCH AND DEVELOPMENT, STABILITY TESTING, ETC.
THE FOLLOWING EXPENSES ARE NOT INCLUDED IN MANUFACTURING COSTS:
A)
INVENTORY CARRYING COSTS
B)
REGULATORY AFFAIRS COSTS (EXCEPT AS SET
FORTH ABOVE)
C)
PILOT PLANT COSTS, RESEARCH BATCHES AND
OTHER SIMILAR COSTS PRIOR TO TURNOVER TO MANUFACTURING.
THESE ARE HANDLED AS
DEVELOPMENT COSTS AND EXPENSED TO R&D.
THIS EXCLUDES COMMERCIAL GOODS PRODUCED
BY A RESEARCH FACILITY.
iv
D)
COSTS INCURRED BY MANUFACTURING FOR
SPECIAL PROJECTS, OR FOR SCHERING-PLOUGH RESEARCH INSTITUTE REQUESTS, TO
ESTABLISH AND CERTIFY NEW PRODUCTION PROCESSES, BATCH SIZES AND PRODUCT LINE
IMPROVEMENTS, AND NEW VENDOR CERTIFICATION OF EQUIPMENT AND PRIMARY MATERIALS
COMPONENTS.
THESE COSTS ARE EXPENSED TO R&D.
E)
MANUFACTURING START-UP COSTS AND INITIAL
ONE-TIME EXTRAORDINARY MANUFACTURING COSTS INCURRED PRIOR TO PLANT OPERATION AND
ACHIEVEMENT OF A NORMAL PRODUCTION ACTIVITY LEVEL.
INCLUDES COSTS OF TRAINING,
TESTING, QUALIFICATION/VALIDATION OF NEW EQUIPMENT AND FACILITIES AND INITIAL
TRIAL BATCHES.
THESE COSTS ARE DEFERRED AND THEN AMORTIZED TO OTHER PRODUCTION
COSTS OVER FIVE YEARS.
F)
SIGNIFICANT IDLE CAPACITY IS
ELIMINATED FROM FACTORY OVERHEAD AND PRODUCT COST.
IDLE OR EXCESS CAPACITY
COSTS ARE CULLED OUT OF THE MANUFACTURING BUDGET AND EXPENSED AS A PERIOD COST
TO OTHER PRODUCTION COSTS.
G)
FINISHED GOODS WAREHOUSING, SHIPPING AND
OTHER
DISTRIBUTION COSTS.