Standard cost include labour in Manufacturing

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Does the standard cost of a production order item include labour?

My understanding of it is that it should include the labour cost but when I looked at the statistics on a production order and I looked at the material variances It showed the standard cost versus the expected cost versus the actual cost and the expected and the actual were only looking at pure materials used. Therefore I am somewhat confused as to what standard cost is supposed to comprise of?

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Dynamics 365 Business Central

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OussamaSabbouh 11,495 Super User 2026 Season 1 on at

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Hello,

Yes, standard cost does include labor, but only if it’s set up via routings and work/machine center costs. In Business Central, standard cost is made up of materials (BOM) + capacity costs (labor/machine) + overhead. The confusion comes from the Production Order statistics: material variances show materials only, while labor and machine costs are shown separately under capacity/routing variances, not in material variance. If you only see materials in expected/actual, either you’re looking at the material section only, or routing/work center costs are missing or zero—also make sure Update Standard Cost was run.

Regards,

Oussama Sabbouh

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YUN ZHU 98,306 Super User 2026 Season 1 on at

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Hi, hope the following can give you some hints.

https://www.crestwood.com/blog/tracking-production-costs-with-business-central-a-guide-to-enhanced-financial-visibility/

https://www.randgroup.com/insights/microsoft/dynamics-365/business-central/understanding-manufacturing-costing-in-dynamics-365-business-central/

Thanks.

ZHU

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