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Variable & Fixed Cost in Work Centres/Routings

Posted on by 15
Hi
 
I need a variable (time) cost and a fixed cost applied to a work centre. should be simple, but i dont seem to have that option at a work centre level?

second thought was to apply multiple operations to the routing, but production orders then complain that outputs are missing
 
can anyone shed any light on how to get multiple costs fixed/variable applied?
 
Thanks 
  • Suggested answer
    Jun Wang Profile Picture
    Jun Wang 5,014 Super User on at
    Variable & Fixed Cost in Work Centres/Routings
    I was able to get the same error by not posting the outputs and finish the production order directly. Not sure what your steps are, but if you fill out the output qty on the routings and post final output, then finish the production order, the error should not be happen again.
     
    Jun Wang
     
     
  • Suggested answer
    Jun Wang Profile Picture
    Jun Wang 5,014 Super User on at
    Variable & Fixed Cost in Work Centres/Routings
    my impression is your setup for the work center is correct, where you define a unit cost based on time, and a fixed cost per output. However, the error might be caused by not filling out qty of output for the operations preceding the final operation. in the below example, the final operation is the bottom one, which user output 10 finished products. the preceding operations produce output as well. In this example, each produces 10 on the routing. Since you defined a fixed cost for each output per routing, BC needs the qty to calculate the total cost on each routing, then roll up costs to the final finished product. 
     
    So the fix is to put a qty on each of the routing, post it, then finish the production order,
  • DustyRM Profile Picture
    DustyRM 15 on at
    Variable & Fixed Cost in Work Centres/Routings
     
    The new 'overheads' work centres need to be above the actual work centre, this resolved the unfinished output warning.
     
    cheers
     
     
  • Suggested answer
    Valentin Castravet Profile Picture
    Valentin Castravet 6,056 Super User on at
    Variable & Fixed Cost in Work Centres/Routings
    This is where i have ended up with multiple operations, however when i do this and try to end a manufacturing order i get the following message, which i do not get if i have a single operation. i will do some more testing and see if i can figure out how to get around this
     
    These are the typical steps - you create a new overhead work center. You add this work center to your existing routing. In the routing you now have multiple work centers. In the production journal or in the output journal you have to post output for this work center (it seems your error is related to this, not all work center output was posted).
     
     
  • DustyRM Profile Picture
    DustyRM 15 on at
    Variable & Fixed Cost in Work Centres/Routings
    @Jun Wang
     
    apologies I was not clear. I am talking about variable and fixed costs of a finished output.
     
    For example, I may have a variable rate, lets say direct labour, this is based on time, and thus the runtime of the routing, so I set this up as the direct unit cost of £1.50 based on the 'unit cost calculation' of 'Time'.
    I then have some other costs, these may or may not be fixed but for the purposes of this post I am asking about fixed costs, lets say that I want to include the fixed carriage cost of a finished goods of £0.50. This is not a percentage of the direct unit cost, it is always £0.50, whereas my variable labour cost mentioned above can change based on the workcentre/routing. (for reference, i cannot use item charges as i am standard cost, and quite frankly they are way more complicated than they should be)
     
    @Valentin Castravet
     
    This is where i have ended up with multiple operations, however when i do this and try to end a manufacturing order i get the following message, which i do not get if i have a single operation. i will do some more testing and see if i can figure out how to get around this

  • Suggested answer
    Jun Wang Profile Picture
    Jun Wang 5,014 Super User on at
    Variable & Fixed Cost in Work Centres/Routings
    not entirely clear about what your fixed cost and variable cost refer to, it could mean different things without further details. But in general, the highlighted part defines the total cost of a work center. the overhead rate is a fixed amount, and indirect cost is %. The total unit cost of this example is 3.26. This would be a fixed total cost/per unit of finished item.
     
    but if you refers a variable unit cost of a finished item, it usually set up for subcontracting, where the unit cost varies depending on negociation.
    If this is the case, you could keep the cost fields blank and enable specific unit cost. then you need to manually fill out the unit cost on the routing line or fixed cost as the total unit cost of a work center, it could not be defaulted from the work center. 
     
    Hope it helps.
     
    Jun Wang
     
     
  • Suggested answer
    Valentin Castravet Profile Picture
    Valentin Castravet 6,056 Super User on at
    Variable & Fixed Cost in Work Centres/Routings
    This article did it by adding a separate fixed cost work center, so thats one option - Variable and Fixed Overhead Absorption in Microsoft Dynamics NAV
     

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