Processors face a formidable challenge in today's competitive global marketplace, where the impetus to cut costs is fiercer than ever. To meet the task, moulders are seeking improved methods of calculating costs and setting prices in order to bolster profitability and make more informed business decisions. The reality is that  if the don't do this, there competition will.
"More competitors understand the cause-and-effect connections which drive costs and are fine tunning their prices  the resulting price squeeze is making life much more difficult for businesses relative to the past".
Indeed the cost -containment forces that have taken hold throughout the economy especially in the Automotive industry, forces a moulder to know down to the last fraction of a cent what the true cost will be.
It's a matter of survival  in many instances, for without the information a moulder risks losing money or missing greater profits, In many cases he can be unaware of his best moneymaker or most unprofitable line ,sooner or later you have to analyse the data you can't just keep writing cheques.
Consequently, accurate costing is becoming  more critical as moulders wrestle with profitability and with meeting the demands of the global economy. One technique  for improving cost competitiveness that is being embraced by a growing number of moulders is an accounting system called activity based costing  (ABC), basically a line by line list of activities  and their associated costs which go into manufacturing a product.
This contrasts the traditional costing method  used by most manufacturers  typically assigning costs to hourly rates or direct labour costs, many injection moulders rely heavily on hourly rates to cost jobs - a practise that may explain why many earn a mere 5% or less before taxes on net sales annually.  Hourly rates capture labour costs, machine amortisation, and plant overhead, but usually ignore specific costs related to a particular job.
ABC makes an important recognition: costs are incurred by activities, measuring them, and tying them back to specific products, managers can determine a product's true cost and make intelligent decision's.
For instance, a typical overhead cost like engineering would be measured, costed,  and tied to a specific product, process or even customer. Other activities could include mold setup time, material handling, production  planning, purchasing and invoicing.
This information  yields more accurate product costs and enables better strategic planning regarding pricing. By mapping activities and tracing associated costs a moulder can focus more on the management of these tasks, such as improving the efficiency of high cost operations, and identify and reduce non value added activities.

a:  Product B consumed a greater quantity of indirect work and overhead (receiving, material handling, quality control ,shipping )relative to product A.
b:  Product B's orders required a significant amount of sales effort, invoicing, and collections work relative to product A.

Ultimately with this pinpoint accounting method moulder can identify the "point of no return" Activity based  costing  is being successfully used in many moulders around the world,.
Another key capability of ABC system is determining a more exact profitability picture of each product line. By tracing activities and costs to a particular product, a moulder can separately ascertain the financial strength of each product. For instance, consider a moulder that has sales of a $1000 and net profits of  $100 (see table). A traditional cost allocation would show that two product lines (A & B) had sales of $500 and net profit of $50. However, an ABC analysis would reveal that product A gained $300 in profits while B lost $200.
Strategically, activity-based costing positions your company to go after more A's, fix the B's, and adjust pricing.