Work Center Cost Factors
By default, work center hourly rates for setup, labor, and manufacturing overhead are equal to the hourly rates specified in the Shop Rates screen. If you wish to make exceptions to shop rates at the work center level, you can use the following work center cost factors to adjust the shop rate up or down.
Setup Cost Factor
This is a multiplier that is applied to the shop labor rate to calculate the work center Setup Rate. It is given a default value of ‘1’, which makes the work center setup rate equal to the shop labor rate. If you wish to adjust the work center rate higher or lower than the shop rate, change this setting accordingly. For example, if you want the setup rate to be 25% higher than the shop labor rate, enter ‘1.25’.
Labor Cost Factor
This is a multiplier that is applied to the shop labor rate to calculate the work center Labor Rate. It is given a default value of ‘1’, which makes the work center labor rate equal to the shop labor rate. If you wish to adjust the work center rate higher or lower than the shop rate, change this setting accordingly.
Examples - Using Standard Hours and Labor Cost Factor
Partially attended Work Center
Some work centers can be loaded and run without needing a worker to be present the entire time. Lets say the Work Center is attended 20% of the time. You can set the labor factor to .20 and the Mfg OH to 1 and this will adjust the absorbed labor costs but still provide the full burden rate for overhead.
One worker operating multiple machines
A work center may consist of four machines that are operated simultaneously by one worker. If you want to cost labor in this work center at 1/4 of the shop rate, you would enter a cost factor of ‘.25’. You can leave the Mfg OH factor at 1.
Fixed Team at the Work Center
Conversely, the work center might be a machine that is run by a team of four workers. All sequences should be set to Standard hours type. If you want to cost labor in this work center to reflect the cost of this team, you would enter a cost factor of ‘4’.
Mfg OH Cost Factor
This is a multiplier that is applied to the shop overhead rate to calculate the work center Mfg OH Rate. It is given a default value of ‘1’, which makes the work center overhead rate equal to the shop overhead rate. If you wish to adjust the work center rate higher or lower than the shop rate, change this setting accordingly.
Examples
A work center may consist of an expensive machine that occupies a larger share of floor space, consumes a higher share of electricity, and requires more maintenance than other work centers. In this case, you would enter a cost factor greater than ‘1’ (such as ‘1.5’ or ‘2’) to allocate a larger share of the overhead burden to this work center.
