Analyzing Efficiency Variances and Work Center Utilization

If you record actual labor and machine hours, you want to analyze efficiency variances and work center utilization. The Efficiency/Utilization report details variances and utilization by work center. Within work centers, the production ID or schedule that utilized the work center is specified.

Efficiency variance is the difference between the actual hours that are expended for an operation and the earned hours for the operation. Earned hours are based on the standard costing labor and machine setup, run, fixed-run, and postproduction times that are specified in the production operation list and on the quantity that is completed at the operation. The system reports efficiency variances for both labor and machine.

Utilization compares the available hours for a work center to the actual hours that are recorded for a work center. Available hours are equal to the scheduled hours (if entered for the work center) during actual labor and machine time recording. If scheduled hours are not entered, available hours are derived from the work center, production, or five-day workweek calendar. The system reports utilization measurements for both labor and machines by work center.