Overhead Costs

Overhead costs are further divided into machine-applied overhead and labor-applied overhead.  If the workcenter is machine paced, then it may contain both labor- and machine-applied overhead.  In a labor-paced workcenter, only labor overhead may exist. 

Planned Overhead

Quantity

·     Fixed Time Operation:  If the operation is labor paced, then

QUANTITY = Fixed Time Operation Labor Hours from the Routing File times MO Quantity.

If the operation is machine paced, then

QUANTITY = Fixed Time Machine Hours on the Routing File times MO Quantity.

·     Non Fixed Time Operation:  If the operation is labor paced, then

QUANTITY = Hours per Piece times MO Quantity times Number of People (if a crew operation).

If the operation is machine paced, then

LABOR OVERHEAD QUANTITY = Hours per Piece times MO Quantity times (Number of People divided by Number of Machines)

MACHINE OVERHEAD QUANTITY = Hours per Piece times MO Quantity.

Total Cost

TOTAL COST is calculated by the Job Cost Report Program using the accounting burden rate on the Workcenter File.

Note:    In a pieces-per-hour environment, the system will invert the pieces-per-hour rate to an hours-per-piece rate.

Actual Overhead

Quantity

If the operation is labor paced, then QUANTITY is labor hours reported.

If the operation is machine paced, then the machine QUANTITY is machine hours reported, and the labor QUANTITY is labor hours reported.

Total Cost

TOTAL COST is calculated by the Job Cost Report Program using the accounting burden rate from the Workcenter File.

Projected Overhead

Quantity

·     Fixed Time Operation.  If the operation is labor paced then QUANTITY is the greater of labor hours reported on LR or planned labor hours, unless the MO status is C or Z, in which case QUANTITY is labor hours reported.

If the operation is machine paced, then QUANTITY is the greater of machine hours reported on LR or planned overhead hours, unless the MO status is C or Z, in which case QUANTITY is labor hours reported.

·     Non Fixed Time Operation.  If the operation is labor paced, then 

QUANTITY = (Hours per Piece times (MO Quantity - LR Quantity) times Number of People, if a crew is required) plus Labor Hours Reported.

If the operation is machine paced, then

MACHINE OVERHEAD QUANTITY = (Hours per Piece times (MO Quantity minus LR Quantity)) plus Machine Hours Reported.

LABOR OVERHEAD QUANTITY = (Hours per Piece times (MO Quantity minus LR Quantity) times (Number of People divided by Number of Machines)) plus Labor Hours Reported.

Total Cost

The TOTAL COST is calculated by the Job Cost Report Program as follows:  If the actual quantity is greater than or equal to the projected quantity, then

TOTAL COST = Actual Total Cost.

Otherwise,

TOTAL COST = Actual Total Cost plus ((Projected Quantity minus Actual Quantity) times Standard Unit Cost)).

Percentage Complete

The Job Cost Generation Program calculates EARNED HOURS, which is the percent complete at an operation.  The calculation is as follows:

If the quantity completed on LR is less than MO quantity and the MO status is not equal to C or Z, then

EARNED HOURS = ((Quantity Complete on LR divided by MO Required Quantity) times Planned Overhead Hours) divided by Total Planned Overhead Hours.

Otherwise,

EARNED HOURS = Planned Overhead Hours.

The Job Cost Report Program then calculates PERCENTAGE COMPLETE as follows:

PERCENTAGE COMPLETE = Earned Hours divided by Planned Overhead Hours.