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Thursday, March 28, 2013 4:25:46 AM
I doubt it. First off, the production process utilizes the concept of machine time, does it not? Each barrel of oil uses so much machine time at some standard cost. Direct Cost. All the costs of P2O go into that.
THe only overhead is the lights, utilities etc. I am not a CMA, but.. I would guess that OH is no more than 5 or 10% of the Total Cost. So, with increased throughput, 10% becomes 5%. Total cost per barrel does not change that much. Margins are slightly better.
The main advantages of mass production is better efficiency and throughput. More output means more margin which means more money. It is a question of repaying invested capital with a decent rate of return.
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