Page 233 - Plant design and economics for chemical engineers

204 PLANT DESIGN AND ECONOMICS FOR CHEMICAL ENGINEERS

Operating Supplies
In any manufacturing operation, many miscellaneous supplies are needed to
keep the process functioning efficiently. Items such as charts, lubricants, test
chemicals, custodial supplies, and similar supplies cannot be considered as raw
materials or maintenance and repair materials, and are classified as operating
supplies. The annual cost for this type of supplies is about 15 percent of the
total cost for maintenance and repairs.

Laboratory Charges
The cost of laboratory tests for control of operations and for product-quality
control is covered in this manufacturing cost. This expense is generally calcu-
lated by estimating the employee-hours involved and multiplying this by the
appropriate rate. For quick estimates, this cost may be taken as 10 to 20 percent
of the operating labor.

Patents and Royalties
Many manufacturing processes are covered by patents, and it may be necessary
to pay a set amount for patent rights or a royalty based on the amount of
material produced. Even though the company involved in the operation ob-
tained the original patent, a certain amount of the total expense involved in the
development and procurement of the patent rights should be borne by the plant
as an operating expense. In cases of this type, these costs are usually amortized
over the legally protected life of the patent. Although a rough approximation of
patent and royalty costs for patented processes is 0 to 6 percent of the total
product cost, the engineer must use judgement because royalties vary with such
factors as the type of product and the industry.

Catalysts and Solvents

Costs for catalysts and solvents can be significant and depend upon the specific
manufacturing processes chosen.

FIXEDCHARGES
4
Certain expenses are always present in an industrial plant whether or not the ’
manufacturing process is in operation. Costs that are invariant with the amount
of production are designated as fired costs or fired charges. These include costs ’
for depreciation, local property taxes, insurance, and rent. Expenses of this type !
are a direct function of the capital investment. As a rough approximation, these 1
charges amount to about 10 to 20 percent of the total product cost.