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Routing Costs

Problem Definition

To capture and record costs during production for labor and or machines (collectively known as Value Add Costs) without incurring any penalty for data entry.

Proposed Solution

Without recording actual costs through labor time entry, actual costs cannot be capture. However, a standard cost for labor can be calculated and added into costing calculations for production by using the routing record associated with make items. All cost item records are defined for the CUR - current record set.

The following items have been defined in the test system.

A - Top level make item consisting of 2 * B and 1 * C99.
B - Make item consisting of 5 * D
C99 - Make item consisting of 1 * E
D - Buy item with a material cost of $1
E - Buy item with a material cost of $5

In addition, 3 cost centers are defined.

STEVE1 $10/h labor run rate
STEVE2 $10/h labor run rate (not really needed, could have used STEVE1 again)
STEVE3 $15/h Labor run rate

The routing records for A, B and C99 are defined as follows...

Item A uses STEVE3 cost center and therefore has a run rate of $15/h. Standard Labor run rate of 1 pieces per hour.
Item B uses STEVE1 cost center and therefore has a run rate of $10/h. Standard Labor run rate of 100 pieces per hour.
Item C99 uses STEVE2 cost center and therefore has a run rate of $10/h. Standard Labor run rate of 10 pieces per hour.

Performing a multilevel cost roll up of Item A for the CUR cost record set gives the following...

Item B
Material Cost: 5 (5qty from BOM * $1 component cost)
Labor Run cost: .1 (Labor run time of 100 pieces per hour @ $10/hour = 1/100 * 10 = .1 Labor Run Cost)

Total Cost: $5.1

Item C99
Material Cost: 5 (1 qty * $5 component cost)
Labor run cost:1 (Labor run time of 10 pieces per hour @ $10/hour = 1/10 * 10 = 1 Labor Run Cost)

Total Cost: $6

Item A
Materal Cost: 15 (2 * B + 1 * A = 2 * 5 + 1 * 5)
Labor run cost: 16.2 (1.2 from sub assemblies and 15 from Labor run time  of 1 piece per hour @ $15/h = 1/1 * 15 = 15 Labor run cost)

Total Cost: $31.2











Activities




1. Define Cost Center Record - EGCCS

Why?
This is a place holder for the rates to be used to assign to routing operations. Easier to change rates (just change work center not all of the individual routings).

2. Define Cost Center Rates - EGCRATES


3. Setup Functions - SYFUNCTS
Required for routings. Defines the general activity being performed at this routing step (operation).


4. Define Work Centers - EGWCS
Represents a physical place on the shop floor.



Routing Record.
HR = Hours per piece.
PC = Pieces per hour

This only affects the run cost calculations.

HR. The Labor Run calculation is Run time * labor run hourly rate.
E.g.
Labor run time of 1 hour per piece @ $10/hour = $10 Labor Run Cost

PC. The Labor Run calculation is 1 / Run time * labor run hourly rate.

E.g. 
Labor run time of 100 pieces per hour $10/hour = 1/100 * 10 = .1 Labor Run Cost



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