Standard Labor Costs Formula Home | FAQs & Troubleshooting

 

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Step 0000 is always required because this record (from the WO3 Work Order Operation Detail file) holds the standard and actual material costs, as well as the labor and overhead costs associated with a step 0000 operation. Standard costs are established with the acceptance of a firm-planned work order. Actual costs are established with the material issue and labor transaction entries after the work order release.

The following formula can be used to calculate the standard labor cost.

Std Labor Cost = (Hourly Labor Rate x Planned Hours) +
(Planned Piece Qty x Piece Rate/Planned Cost Divisor)

 Standard Labor Cost Example

Work Center	Op. Code/ Step Code	Hrly Rate x	Pln Hrs	Pce Qty x	Pce Rte/	Pln Cst Divsr =	Cmpt Lab. Cst
SHER	0001/0000	9.00	4.167	50	20	5	237.50
FAB	0001/0010	15.00	33.333	100	30	20	650.00
ASSMB1	0001/0020	9.00	3.333	400	5	1	2030.00
ASSMB2	0002/0030	7.50	6.000	200	0	1	45.00
ASSMB3	0003/0040	0.00	20.000	100	20	10	200.00
Total Direct Labor Costs							3162.50

 

The following formulas can be used to calculate the fixed and variable overhead for labor.

Fixed Overhead for Labor = (Hourly Fxd Overhead Rate x Std Hrs for Step) +
(Computed Labor Cost for Step x Fixed Overhead% of Cost)

Var. Overhead for Labor = (Hourly Var Overhead Rate x Std Hrs for Step) +
(Computed Labor Cost for Step x Var. Overhead% of Cost)

 

 Overhead Calculations Example

The following overhead calculations are for noncrew labor transactions.

Work Center		Op. Code/ Step Code	Hrly Rte x	Pln Hrs	Comptd Lab Cst	% of Cost	Comptd Ovrhd Amt
SHER	FXD	0001/0000	8.00	4.167	237.00	6.00	47.59
	VAR		4.00	4.176	237.50	3.00	23.79
FAB	FXD	0001/0010	4.00	33.333	650.00	0.00	133.33
	VAR		6.00	33.333	650.00	0.00	200.00
ASSMB1	FXD	0001/0020	15.00	3.333	2030.00	7.50	202.25
	VAR		0.00	3.33	2030.00	0.00	0.00
ASSMB2	FXD	0002/0030	0.00	6.000	45.00	6.50	2.93
	VAR		0.00	6.00	45.00	10.00	4.50
ASSMB3	FXD	0003/0040	0.00	20.00	200.00	0.00	0.00
	VAR		5.50	20.00	200.00	6.50	123.00
Total Labor Overhead FXD							386.10 =====
	VAR						351.29 =====

 

Hourly and piece rates are defined in Operation Code Maintenance.

For more information, see:

Standard Costs Formulas

Operation Code Maintenance