University of Delaware Office of Public Relations The Messenger Vol. 6, No. 1/1996 Students create new cost- accounting tools How do you accurately measure the cost of making something that doesn't exist? UD accounting Prof. Scott Jones has been working for five years with the University's Center for Composite Materials to come up with the answer to that question. Because composites are made to fill a specific and unique need, like the Army's need for a lighter and safer armored tank, there is no historical manufacturing data from which an accurate assessment of costs can be made. So, producers of composite materials have trouble estimating the best, most cost-effective techniques to use. That hit-or-miss approach can keep a composite product from becoming affordable enough to be offered to the general public. Jones, with the help of his graduate students, is trying to create a new method of accounting that will give composite manufacturers an accurate assessment of cost at each level of the manufacturing process. "We're starting from scratch. We have no existing facility. The manufacturing process exists only on paper, so accounting tools that are conventionally used aren't applicable," Jones says. Finding modern methods of accounting to accommodate a totally new process is important, according to Jones, because, with conventional cost- accounting tools, cost estimates are too high or too low. The time, labor, skills, overhead and tooling required are all different when manufacturing composites. So, Jones and his students have had to create new cost-accounting tools. "We've developed 'activity-based cost-models', or cost- models taken from the actual and experimental production of the composite materials," Jones says. To do that, his students had to became the factory. Graduate students Diane Wright, Delaware '94M; Susan Flint, Delaware '96M; and Andreas Eggert, a visiting scholar from the University of Kaiserslautern, Germany, have built composite parts in the lab at the UD composites center. As they did, they created sets of accounting equations for each step of the production process. In essence, they developed a computer program that simulates a composite factory. The equations are fed into the computer-simulated factory along with yield rates and quality measures. "We end up with a cost model where we've integrated many of the modern costs of business," Jones says. And, when his figures were compared to those from other labs, his were more useful in guiding design. Recently, Eggert completed work on cost estimates for the manufacture of a composite that will become part of the rear, upper hull of a space-age tank being designed for the Army. The armor is made up of many layers of composite materials. The outside layer is covered with a quarter-inch coating that absorbs radar signals, making the tank invisible to electronic detection. Inside, the coating is a white ceramic substance about three-quarters-of-an-inch thick, which is attached to another material of equal thickness that resembles wood. The ceramic block keeps artillery from penetrating the tank. The composite hull is about one-third lighter than the armor of metal tanks. Coming up with accurate figures for the production of invented materials will affect the future, Jones says. If estimates don't realistically reflect the true cost of each detail of manufacturing, the product can't be made affordable. The goal, says Jones, is to produce a composite material that is superior to other materials and affordable enough for commercial application. And, there's an added bonus. Jones says this kind of research is an incredible learning experience. "UD's Center for Composite Materials is one of the best in the world," he says. "For our accounting students to be able to work with the research center means they are exposed to cutting-edge manufacturing technologies. They're getting the chance to do original work, while learning how to create very contemporary business practices adapting the conventional wisdom they're taught in the classroom." -Barbara Garrison