8.1. Factors Affecting the Cost of Manufacturing a Chemical Product

There are many elements that influence the cost of manufacturing chemicals. A list of the important costs involved, including a brief explanation of each cost, is given in Table 8.1.

Table 8.1. Factors Affecting the Cost of Manufacturing (COM) for a Chemical Product (from References [1, 2, and 3])

The cost information provided in Table 8.1 is divided into three categories:

1. Direct Manufacturing Costs: These costs represent operating expenses that vary with production rate. When product demand drops, production rate is reduced to less than the design capacity. At this lower rate, a reduction in the factors making up the direct manufacturing costs would be expected. These reductions may be directly proportional to the production rate, as for raw materials, or might be reduced slightly—for example, maintenance costs or operating labor.