David Krause
The calculation chain of the book
Three ways in
Build hour ratesFrom the income statement to a sound machine hour rate≈ 36 min · Abgrenzungs-Mapper for chapter 4 (German)
The book
Table of contents
Every chapter works through the same company — Präzisionsteile Muster GmbH, a fictional CNC contract manufacturer. Every figure has an origin, every chain closes.
Part I · Fundamentals Chapters 1–3≈ 14 min
- Ch 01Why accounting isn't enoughFinancial accounting tells you what the year brought — not what a part costs4 min
- Ch 02The three-stage modelWhich costs? Where incurred? What for? Three questions, three stages — each building on the last4 min
- Ch 03The ten most expensive costing errorsTen recurring costing errors that push hour rates 15–35 % off reality — each with a worked example in euros6 min
Part II · Cost-type accounting Chapter 4≈ 9 min
- Ch 04From income statement to cost-type planSubject and imputed reconciliation: the four cost categories, what the P&L conceals, and the 24-node cost-type plan for …Tool: Abgrenzungs-Mapper9 min
Part III · Capacity & hour rate Chapters 5–8≈ 32 min
- Ch 05The cost center accounting sheetWhere overhead is incurred and at what rate it returns to costing10 min
- Ch 06Machine hour rate: the fundamentalsSeparating machine cost from labor cost, the six cost components, replacement value as the depreciation base, and why …9 min
- Ch 07Machine hour rate: step by stepA complete MHR calculation in five steps — from replacement value through productive hours to €46.37/MH, with sensitivity …8 min
- Ch 08Self-diagnosis and correction calculationsTen questions to your own costing. Each 'no' flags a correction need with a concrete euro figure — derived from the methods of …Tool: Self-test5 min
Part IV · Quotation costing Chapters 9–12≈ 25 min
- Ch 09Which costing method fits?Four costing methods, one decision: when a differentiated overhead surcharge is enough and when the machine hour rate becomes …5 min
- Ch 10The costing schemeSeven positions from material to invoice price: the full costing scheme on one order, including the lot-size effect and the …7 min
- Ch 11Three case studiesThe costing scheme applied to CNC titanium milling, plastic injection molding and aluminum die casting — each with its own …6 min
- Ch 12Post-calculation: the plan-actual comparisonWhere the pre-calculation was off and what it cost: plan-actual on the titanium order, variance causes systematized, and the …7 min
Part V · Steering & decisions Chapters 13–17≈ 22 min
- Ch 13Contribution margin accountingSplitting cost into variable and fixed answers what full costing cannot: orders below total cost, make-or-buy, break-even …8 min
- Ch 14Spindle time instead of machine timeA machine is occupied far longer than its spindle turns. Two views of one machine: the costing rate for quotes, the spindle …4 min
- Ch 15Recording tooling costs correctlyFour maturity levels of tool costing, the cost per spindle hour, the regrind posting rule and the scrap credit that quietly …3 min
- Ch 16Shift models and labor costThe shift model changes the labor rate — and the machine hour rate the other way4 min
- Ch 17Recording planning and CAM costsDirect cost or overhead? The CAM hour rate at full cost, and the lot-size effect that makes programming nearly a third of unit …3 min
Part VI · Digitalization Chapter 18≈ 5 min
- Ch 18Digitalizing cost accountingLocal AI in cost accounting: rule before model, three sensible use cases, an ROI that amortizes in under 2.3 months, and why …5 min
Deep-dives
Specialist articles
Eight deep-dives in four topics — each linked to the chapter it builds on.
Assets & productivity
- Measuring OEE, TEEP and labor productivity correctlyThree metrics that are often confused — and one calculation few people make: what does a percentage point of loss cost?7 min · builds on Ch 7
- Calculating maintenance intervals, not guessing themMaintenance intervals worth calculating, not guessing: how the Weibull shape parameter picks the strategy — and why …8 min · builds on Ch 6
Costing & contribution
- Costing scrap and rework correctlyWhy the scrap surcharge is 1/(1−q) and not q, why the moment of detection sets its size, and why rework must be carried separately5 min · builds on Ch 10
- Toll machining and free-issue materialThe customer supplies the material, we only machine. Why the contribution-margin ratio misleads and the margin per bottleneck …5 min · builds on Ch 13
Capital & return
- ROIC: What the capital in a plant actually earnsReturn on invested capital from a controller's perspective: how ROIC is calculated, why it only becomes meaningful against the …7 min · builds on Ch 13
- The yield curve and the imputed interest rateWhere the interest rate in cost accounting comes from: how the yield curve grounds the imputed rate — and how a rate shift …9 min · builds on Ch 6
Knowledge, software & AI
- Book value and economic value — the replacement-value parallelWhy book value misses true worth — for an intangible asset as for a machine7 min · builds on Ch 6
- Local language models in cost accountingHow a 0.5-billion-parameter model on an ordinary office PC assigns DATEV posting texts to cost types — and why the …10 min · builds on Ch 18
Calculate
Tools
Calculate instead of read — all three run in the browser, no sign-up, no data transfer.
- Self-test: where does your costing stand?10 questions with live evaluation and a euro figure for each gapbelongs to chapter 8
- Abgrenzungs-Mapper (German)Map a DATEV trial balance to the 24-node cost-type reconciliationbelongs to chapter 4
- ROIC calculatorReturn on capital, economic profit and the effect of an investmentbelongs to the ROIC article · chapters 6 and 13
How this knowledge base works
All content comes from first-hand professional practice and the author's own records. Material from employment relationships stays confidential — only general expertise appears here, rewritten and worked through on the fictional reference company. Forecasting errors are documented rather than deleted. Articles and calculators from an investor's perspective — valuation, metrics, the Freebird Rating — are on freebirdcapital.org.