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Using indirect cost multipliers to estimate the total cost of adding new technology in the automobile industry

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  • Rogozhin, Alex
  • Gallaher, Michael
  • Helfand, Gloria
  • McManus, Walter

Abstract

In addition to the direct costs incurred during the vehicle production process, a manufacturer incurs certain indirect costs. These costs may be related to production, corporate operations, or selling. Cost analysts often use markup factors that relate indirect costs to the changes in direct costs. These factors are often called retail price equivalent (RPE) multipliers. However, there are concerns in using RPE multipliers in cost analysis. This study develops modified multipliers, referred to as indirect cost multipliers, and estimates them to range from 1.05 to 1.45 in the short run and from 1.02 to 1.26 in the long run.

Suggested Citation

  • Rogozhin, Alex & Gallaher, Michael & Helfand, Gloria & McManus, Walter, 2010. "Using indirect cost multipliers to estimate the total cost of adding new technology in the automobile industry," International Journal of Production Economics, Elsevier, vol. 124(2), pages 360-368, April.
    • Handle: RePEc:eee:proeco:v:124:y:2010:i:2:p:360-368
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    References listed on IDEAS

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    1. Brierley, John A. & Cowton, Christopher J. & Drury, Colin, 2006. "A comparison of product costing practices in discrete-part and assembly manufacturing and continuous production process manufacturing," International Journal of Production Economics, Elsevier, vol. 100(2), pages 314-321, April.
    2. D. Lamberton & B. Lapeyre & A. Sulem, 2003. "Preface," Mathematical Finance, Wiley Blackwell, vol. 13(1), pages 1-1, January.
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    Cited by:

    1. Chou, Jui-Sheng & Tai, Yian & Chang, Lian-Ji, 2010. "Predicting the development cost of TFT-LCD manufacturing equipment with artificial intelligence models," International Journal of Production Economics, Elsevier, vol. 128(1), pages 339-350, November.
    2. Ranjit R. Desai & Eric Hittinger & Eric Williams, 2022. "Interaction of Consumer Heterogeneity and Technological Progress in the US Electric Vehicle Market," Energies, MDPI, vol. 15(13), pages 1-25, June.
    3. Anselma, Pier Giuseppe, 2022. "Electrified powertrain sizing for vehicle fleets of car makers considering total ownership costs and CO2 emission legislation scenarios," Applied Energy, Elsevier, vol. 314(C).
    4. Bishop, Justin D.K. & Martin, Niall P.D. & Boies, Adam M., 2014. "Cost-effectiveness of alternative powertrains for reduced energy use and CO2 emissions in passenger vehicles," Applied Energy, Elsevier, vol. 124(C), pages 44-61.

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