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