Josh,
Work Centers and Machine Centers carry the following costs that will be used when calculating Standard Cost (roll-up) and comparing estimated Cost and Actual Cost of a Production Order:
In the Direct Unit Cost field, enter the cost of producing one unit of measure at this work center, excluding any other cost elements. This cost is often referred to as the direct labor rate.
In the Indirect Cost % field, enter the general operation costs of using the work center as a percentage of the direct unit cost. This percentage amount is added to the direct cost in the calculation of the unit cost.
In the Overhead Rate field, enter any non-operational costs, for example maintenance expenses, of the work center as an absolute amount.
The Unit Cost field contains the calculated unit cost of producing one unit of measure at this work center, including all cost elements, as follows:
Unit Cost = Direct Unit Cost + (Direct Unit Cost x Indirect Cost %) + Overhead Rate.
In the Unit Cost Calculation field, define whether the above calculation should be based on the amount of time used: Time, or on the number of produced units: Units.
Hope this helps.
Thanks,
Steve
