| Author |
 Topic  |
|
|
etdaddy
New Member
USA
12 Posts |
 Posted - 03/29/2008 : 12:12:42
|
Just curious...
Why does it cost almost 2 cents to make a penny and 10 cents to make a nickel currently? I know this seems self-explanatory on the surface but...
Consider:
The cost of materials for the penny is 0.61 cents.
The cost of materials for the nickel is 6.95 cents.
The overhead costs of producing a penny are a little over 1 cent.
The overhead costs of producing a nickel are about 3 cents.
It doesn't inherently make sense why it costs 3X to make a nickel. Are these just truths that we take for granted from ignorant public officials at the Mint, Treasury and Fed?
Thanks for any help you can offer in this dilemma.
|
A person who won't read has no advantage over one who can't read. |
|
|
Ardent Listener
Administrator
USA
4841 Posts |
Posted - 03/29/2008 : 14:27:33
|
A 1 to 3 production or minting cost ratio between the two doesn't seem to make sense unless maybe it is because nickel is such a hard metal (high temps.) in which to work with compaired to zinc/copper. Plus all the dam changes they continue to make in the nickel's design. |
Realcent.forumco.com disclosure. Please read.
All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
 |
|
|
HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 04/01/2008 : 00:50:48
|
That does seem like a pretty high ratio. I would think the nickel dies would wear out faster because of the harder material. Also, they probably have more coins minted at once when the press mints pennies. They may also get some economies of scale from the large amounts of pennies minted.
Another possibility.. it depends on how they allocate overhead cost in their accounting method. They might be allocating based on total coins produced, or they might be doing it based on face value. Maybe they are using the Paramount method of accounting. Studios tend to load up costs on some projects. According to Paramount, Gone With the Wind still has not turned a profit.
I think the real answer is that those production costs were based on a time last year when the cost of nickel was much higher. |
If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
|
|
|
swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 04/01/2008 : 14:30:36
|
why don't they just go to steal for pennies and do away with the nickel? Add in a half dime using the clad mix.
That should make all the coins profitable to make, and then lifting the melting ban would be done. That way the mint would be forced to make more pennies and nickels----creating a profit for the mint.
It shouldn't matter if the coins wear out and get thrown away. I bet very few coins actual get sent back to the mint for replacement. They are going to mint new ones to replace them at a profit.
SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
|
|
|
knibloe
1000+ Penny Miser Member
USA
1066 Posts |
Posted - 04/01/2008 : 22:06:36
|
| My question for the mint is this: If everything else that the gov. touches loses money why do they feel the need to turn a profit? |
|
|
|
moboman
1000+ Penny Miser Member
USA
2555 Posts |
Posted - 04/01/2008 : 22:13:29
|
lol.
knibloe. I wish that was not true. Our government sucks at trying to even balance a budget!!!
|
"99% of all lawyers give the rest of them a bad name"
|
|
|
|
El Dee
Penny Hoarding Member
USA
547 Posts |
Posted - 04/04/2008 : 14:11:34
|
quote:
Originally posted by etdaddy
Just curious...
Why does it cost almost 2 cents to make a penny and 10 cents to make a nickel currently? I know this seems self-explanatory on the surface but...
Consider:
The cost of materials for the penny is 0.61 cents.
The cost of materials for the nickel is 6.95 cents.
The overhead costs of producing a penny are a little over 1 cent.
The overhead costs of producing a nickel are about 3 cents.
It doesn't inherently make sense why it costs 3X to make a nickel. Are these just truths that we take for granted from ignorant public officials at the Mint, Treasury and Fed?
Thanks for any help you can offer in this dilemma.
You are talking about overhead. Overhead is fixed costs divided by the units produced. Fixed, being those costs irrespective of number produced.
They make several times more pennies than nickels. It follows that nickels have more overhead APPLIED to them than pennies.
Say you have a huge factory. On one end there sits a production line that makes East Outer Craphole 5 Denarii coins. Ten million are made each year.
On the other end of the factory is an identical production line that makes 100 Wombus proof coins for the People's Republic of Carphargius. Due to lack of demand, last year only one was minted. ONE.
Now, what overhead should be applied to each kind of coin?
Let's see...our factory overhead is twenty million dollars, half goes to Denarii production, the other half to the Wombus, being that they share identical equipment and space requirements.
The Denarii would have overhead applied of $1 each. The Wombus would have overhead applied of 10 million for its only piece. |
Trust the government? Ask an Indian. |
|
|
| |
Topic |
|
The true cost of penny/nickel production?
Forum Locked
