C3, C4 (Variable and Fixed Labor Overhead)

The system displays these calculations as rates. If you indicate on the Work Center Master Revisions form that variable and fixed labor overhead costs should be calculated as a percent of labor costs, multiply the work center labor rate by the percent divided by 100 to obtain the labor overhead rate. For example:

(Operation variable labor overhead rate) = (work center variable labor overhead percent) ÷ (100) × (work center direct labor rate)

These costs are calculated only if you have set the manufacturing constants for the branch/plant to include variable and fixed labor overhead in the cost. In this table, you must also determine whether labor overhead costs are calculated from manually entered rates in the Work Center Master table (F30006) or as a percent of labor costs.

In addition, you can set the manufacturing constants to factor labor overhead by work center efficiency:

• Parent variable and fixed labor overhead cost = sum of all variable and fixed labor overhead calculations for all operations on the item's routing.

• (Variable and fixed labor overhead cost) = (direct labor overhead cost) + (setup labor overhead cost)

  Direct labor overhead cost by rate:

  • Without labor efficiency: ((direct labor hours) ÷ (accounting cost quantity)) × (work center variable and fixed labor overhead rate)

  • With labor efficiency: ((direct labor hours ÷ (accounting cost quantity)) + (work center efficiency) × work center variable and fixed labor overhead rate

  Note: (Release 9.2 Update) Divide the direct labor hours by the accounting cost quantity only if the accounting cost quantity is not zero and time basis is fixed (time basis code is 0).

• (Work center efficiency) = (labor hours) − ((work center efficiency percent) ÷ (100)) × (labor hours)

• (Setup labor overhead cost by rate) = (operation setup labor hours ÷ accounting cost quantity) × (work center variable and fixed labor overhead rate)

  Accounting cost quantity is factored if it is not equal to zero.