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Dynamics 365 Community / Forums / Microsoft Dynamics AX (Archived) / Add fixed labor cost t...
Microsoft Dynamics AX (Archived)

Add fixed labor cost to a production order

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Posted on by Fabrice Marletaz 25

Hello.

A client produces batches of items. The amount of items produced for each batch changes (30 one time, 25 the next time).

The cost of the produced goods includes the cost of labor for producing the batch. This cost must be the same, if we produce 30, 25 or 40 items per batch.

I tried doing this via routes, but I can't find a way, since my cost is always multiplied by the quantity of item produced.

I want the same mechanism as when I have an item set as a constant in a BOM.

I know It's possible to do it with adding a stock service to the BOM, but is there another way?

Thank you

Best regards,

*This post is locked for comments

  • Fabrice Marletaz Profile Picture
    Fabrice Marletaz 25 on at
    RE: Add fixed labor cost to a production order

    Hello, 

    I tried using setup cost and it works perfectly for my needs.

    Thank you very much

    Best regards, 

    Fabrice

  • guk1964 Profile Picture
    guk1964 10,877 on at
    RE: Add fixed labor cost to a production order

    To clarify I am suggesting there is a fixed cost for  a defined range, and that cost will be the same for any quantity within the range.

    To take an analogy with a BOM  - you need  a pallet and the pallet can hold from 1 to a 100 boxes. the cost of the pallet is the same no mater whether I make 5 , 50 90 etc.

    However if I go over 100 then I need another pallet.

    So I could have a different quantity based BOM version depending  on whether the order size greater than or less than 100.

    For a BOM I would handle that by specifying a rounding quantity of 100, and the same could be done for a service cost collector item.

    'If you want to do it in the route then a fixed set up cost seems the obvious answer to get a fixed cost per order. For some continuous  industries e.g starting up blast furnace that may run for days weeks or month then that seems to work.

    However there are other industries e.g pizza manufacturing where I might have a fixed cost every time I stop and start the line e.g for a QA or H@S check. If I can make the full order quantity before Is top the line then one such setup cost will suffice whether I run for 1 hour or 20 hours. However, because of the need to defrost a freezer, to clean down for hygiene reasons then I may need to stop halfway through, then I have another cost to restart. So now its not one fixed cost but 2 x. the first run might last 20 hours the second for the balance maybe 5. its all done as one production order. Hence why I suggested  might not always be the case that the cost is fixed for the total order but only for a specific quantity range within the order..

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Add fixed labor cost to a production order

    Hello Fabrice,

    Is that right that you can differentiate your fixed labor costs by product and site?

    If so, they do not seem to be fixed costs to me but can rather be specified as variable costs in the form of an element included in the BOM as suggested by magic1949.

    Best regards,

    Ludwig

  • Verified answer
    guk1964 Profile Picture
    guk1964 10,877 on at
    RE: Add fixed labor cost to a production order

    if the cost is fixed irrespective of quantity then set up cost is the right answer and makes no difference for cost purposes whether done in the route or as a BOM service line.

    I assume it does not affect your capacity planning.

    I assume its not infinitely scaleable so you could also use quantity dependent bom/route versions e.g for any quantity up to 100 use route version1 with set up x , for 100-500 use route version 1 with set up cost y, etc,

  • Fabrice Marletaz Profile Picture
    Fabrice Marletaz 25 on at
    RE: Add fixed labor cost to a production order

    Hello.

    I think it's not precise enough for the client needs.

    They produce multiple products on multiple sites. Ans the cost of labor is different for each combination product x site.

    Wirh the costing sheet I can have only one cost of labor per site, but it would be the sale for all product ?

  • Suggested answer
    Richard Wehmeyer Profile Picture
    Richard Wehmeyer 1,002 on at
    RE: Add fixed labor cost to a production order

    Depending on your reliance on scheduling you could use the setup time in the route step or in another route step. 

    Set the run-time category to a non-value added cost category, use the costed category for the setup cost category.

  • Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Add fixed labor cost to a production order

    Hi,

    Have you checked whether you can add those fixed costs via the costing sheet?

    Best regards,

    Ludwig

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