As more and more companies offer product families rather than individual products, the competitive advantage of product platforming is shrinking. In order to compete companies need to link marketing and engineering so that designers are able to make decisions about critical trade-offs between cost and performance. The current methods for market-driven platform designs use traditional product costing where indirect costs are assigned to individual products based on relative production quantities. Because of increasing product diversity and decreasing direct labor costs, the ratio of indirect costs to total cost of products is increasing. A method for use during the design stage of top-down product family design is needed to assign indirect costs to individual products based on the product’s consumption of indirect resources. An activity-based costing method for top-down product family design is presented here. This method allows the designer to model indirect costs as a function of engineering attributes, creating a framework for top-down product platform optimization that provides a more accurate estimation of cost than traditional product costing methods. An illustrative example shows that an activity-based costing model predicts different profitability from a traditional costing system for a number of different motor designs.

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