Analysis of Production Costs in Multi-Product Tomato Processing Plants1

Abstract

Abstract Comparison of unit production costs in 5 model multi-product tomato processing plants was completed using economic-engineering methods to synthesize the cost data. Fixed production costs were found to average 16% of total unit production costs for all model plants and products. Fixed costs were most sensitive to operational and seasonal scale effects. Variable production costs comprised the largest portion of total unit production costs, averaging 84% for all model plants and products. Processing supplies comprised the largest component of variable unit production costs for canned whole tomatoes, tomato juice, and catsup, while raw products supplies comprised the largest variable cost component for tomato puree and paste. Variable costs accounted for the largest regional differences in total unit production costs. The relative production cost differences derived in this study serve as a basis of evaluation of production strategies and comparative advantages at the plant, firm, and region levels.