FAI Charge

[Ludsonline]

Hello,
My Company is looking at restructuring it's FAI charge system as they charge the same base rate if it's 20 dimension or 400. Is there a standard rate to charge?

Cheers

 

[Ron Rompen]

No standard rate that I am aware of. This would be (in my opinion) something that is unique to each company. It would be based on the time anticipated to complete the inspection, the cost of any consumables used, the cost of the part(s) which are used during the testing, and a reasonable markup.

 

[Scanton]

Absolutely agree with Ron Rompen.

If the component has few features and fairly loose tolerances you would expect the charge to be minimal, and if the component was complex, with some tight tolerances and/or difficult to evaluate features I would definitely expect the cost to be more substantial.

We charge different rates based on complexity of the component and the resource required to complete the documentation.

If you don't want to undertake a breakdown evaluation of every single job, you could just break it into a few basic tiers i.e. x£'s for an easy component, y£'s for a more involved component and z£'s for a very complicated component.

 

[William55401]

All feedback above is great. Early in my career the concept of Activity Based Costing was implemented in my org. Engineers charging time to projects related to specific project. It was eye opening and it resulted in some products being discontinued due to so much support. In this case, Finance can be your partner to help ensure the business plans for and recoups the actual FAI costs.