Hello Qasim Habeeb Nashid

AI technologies, such as machine learning, can allocate indirect manufacturing costs by analyzing real-time production data—like machine usage, energy, labor, and maintenance—to model the true drivers of overhead. By identifying patterns across these variables, AI can distribute costs more accurately to product units, moving beyond static assumptions used in traditional costing methods.

However, challenges include fragmented data across legacy systems, the complexity of mapping indirect costs to dynamic processes, and ensuring AI models are explainable and trustworthy for financial reporting. Organizational adoption also requires a shift in mindset, as cost allocation is often seen as a rule-based, conservative process.

In summary, AI offers more precise cost allocation but needs reliable data, transparent models, and cultural alignment within the manufacturing facility.

Artificial Intelligence (AI) can allocate indirect manufacturing costs (like utilities, maintenance, or administrative expenses) to product units more accurately by using machine learning algorithms and data-driven cost modeling. AI can analyze data from sensors, ERP systems, and production logs to identify patterns in resource consumption across machines, products, and processes. This enables dynamic cost allocation based on real-time usage rather than static assumptions.Main challenges in industrial implementation include: Data quality and integration across legacy systems, Resistance to change in traditional cost accounting methods, Complexity of manufacturing processes that require robust, explainable models, And the high initial setup cost for AI infrastructure.Despite challenges, AI can significantly improve the accuracy and transparency of cost allocation in smart manufacturing environments.4o

Dear Qasim Habeeb Nashid ,

Artificial Intelligence (AI) enables machines to learn from data, identify patterns, and make decisions like humans. This is achieved through algorithms that analyze data, identify relationships, and adapt to new information. AI can automate tasks, improve decision-making, and even create new things, like images and videos.

Artificial intelligence (AI) is technology that enables computers and machines to simulate human learning, comprehension, problem solving, decision making, creativity and autonomy.

https://www.ibm.com/think/topics/artificial-intelligence

Regards,

Shafagat