Calculating Production Costs

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raybaudi
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Calculating Production Costs

#1 Post by raybaudi » Jul 24 2011

At times, it is useful to really calculate production costs for a determined commodity.

My question is as follows:

Take the example of METAL ORE

Production Cost shown in the Production Tab is 450$
Market Price is: 635$

Now. Any person would feel tempted to go and produce locally since the market price is over the production cost. However, according to what I've read, that production cost doesn't include row material costs. It's only like a fixed production cost per unit.

Once we try to calculate the real production cost, accounting for the row material prices, we have it as follows:

According to the DEFAULT.WMD file, METAL ORE requires 1 Unit of Power and 2 Unit of Oil. (I guess that's for a regular mine, don't know anything on Composite Ore)

so, calculating each usage of them at the current lowest price, we have 671$ that we have to add to the Production Fixed Costs.

Does that mean the real price to produce Metal Ore is of 1121$ ??? (671+450)

That's my question.

Is the production cost shown at the Production Tab a Price without Row Material??
Where can I read a detailed consumption of commodities to produce one unit of another commodity (sort of like 1 Ore and 1 Ind Goods for Cons Goods [bad example])??


Thanks

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BigWolf
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Re: Calculating Production Costs

#2 Post by BigWolf » Jul 24 2011

I'm quite certain that production costs do include the cost of it's raw materials, infact I've never heard of anything saying they, may I ask where you read that?

raybaudi
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Re: Calculating Production Costs

#3 Post by raybaudi » Jul 24 2011

Just searching for the source where I read it. Anyways, a confirmation on the matter would set this topic closed. Anyone who can actually confirm it would be great.

Thank you.

GIJoe597
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Re: Calculating Production Costs

#4 Post by GIJoe597 » Jul 25 2011

I cannot confirm or deny, what I can do is retype what I have seen before. Cost includes raw materials. It also includes the salary of the workers.

Now that I think about it I am certain I saw a thread once explaining this. The thread also went into how much of each item type makes up the end product. Example:

1 ton of Industrial Goods requires;
Coal
Elec
Petro
Ore

Each item was factored into the listed price. The key thing I seem to remember was it was not a 1 for 1 use. It might take 2 tons of coal or 1/2 ton of Ore.


*I am not going searching for the thread, but I have the original game manual in front of me, on page 15 under GDP/c, it points out that as your labor costs rise it may be better to purchase items from world market, rather than make them yourselves.

That indicates to me worker salaries are also incuded in the production cost.
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CheefCoach
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Re: Calculating Production Costs

#5 Post by CheefCoach » Dec 12 2012

It calculate cost of raw materials (not sure the production price of them or market price; it should be both in case do u import or produce raw materials). However it doesn't calculate opportunistic expenses (for example is it better to produce 1 t of consumer good and sell it or is it better to sell 15 MW of electric power used to produce consumer good).

By the way I am suggesting to developers that in future versions of supreme rulers create more expanded and accuracy (accounting type) of economic reports. That should include exactly how much raw material is needed, how much it cost, how much additional tax is getting from industry; and basically how praises are build up. Right now is rather difficulty to optimize, but maybe that is a game.

georgios
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Re: Calculating Production Costs

#6 Post by georgios » Nov 17 2015

The initial example is wrong.

Raw materials do not require other raw materials. They only require the production costs.

Industrial goods (and artificial raw materials) cost is the base cost plus the cost of the needed raw materials.

lorddrakenwode
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Re: Calculating Production Costs

#7 Post by lorddrakenwode » Feb 06 2017

Ore from an Ore Mine costs no resources to produce. However, Ore from a Composite Ore Plant DOES cost resources to produce.

It seems clear to me that the cost of resources consumed in the production of other resources IS reflected in the Production Price of all the resources. If you have any doubt of this, start up a country that has a high proportion of Petrol power plants, run them for a few days, and then scrap them all in one day. The next day, your Production Price for Electric Power will drop dramatically. I would imagine that facility maintenance costs are also included in this number, though of that, I am less certain.

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