Manufacturing Labour codes are used to define the Labour based activities involved in your manufacturing processes. You can have as many or as few of them as you decide. The Labour details appear on Work Order dockets when printed.
The Labour rates provide for an Hourly Cost of the labour which is used in Manufacturing Specifications for the Estimated Labour Cost and in via the Time Cards system to determine the Actual Labour Costs on a given Finished ItemWork Order. This Labour value is added to the finished product cost of a Manufactured item to provide a more inclusive costing of the item when it is receipted into Inventory before being sold, and/or used to make another finished product.
Labour codes only need to be set-up for each “cost” value that you can identify and measure in your Manufacturing process. The value is essentially what it costs the business to provide that labour to the factory. You might decide to create Labour codes per activity e.g. Cutting, Welding, Drilling, Mixing etc. or by staff “type” e.g. apprentice metal worker, metal worker, senior metal worker, engineer etc.
The level of detail required is really up to you to determine what is appropriate. It is the value of the labour that is most important as that is what is used in the calculation of the finished product cost. Note: When adding labour to a specification the user is prompted for the “time” in hours required. That “time” is then multiplied by the labour rate and then by the specification (or Work Order) batch size to calculate the total value added to the finished product.
It should also be noted that the estimated labour required per Work Order can be compared with the Actual Labour required measured in both time and value/cost. These actuals flow from the Time Cards system when used to post to individual Work Orders as part of the entry of timecard detail. The system has a variety of display and report functions to assist the user to view and compare this information.
On Completion of the Work Order a recovery is posted to the P&L control account for the Value of the Labour for that Work Order. The P&L Control account is set in the Product Group Control Pointers.
The P&L can then show a comparison of Labour costs vs recoveries. This is particularly useful if the decision is made not to use the Time Cards package to record actual time. A comparison of Actual Costs vs Work Order costs can still be made on an overall basis.
Example
You manufacture an item that has $100 worth of raw material and takes 1 hour of assembly labour to put together. You determine the cost rate per hour for the assembly labour is $55. The total calculated cost of the manufactured product is therefore $155 once you record the labour component in the Specification.
Minimum Requirements
It is not necessary to set up labour codes and rates to create Specifications or Work Orders. But it is recommended in most cases so that you are generating a more accurate cost of manufacture.
Changing Established Data
You can set up labour rates if needed at any any future point and start adding them to Specifications.
Panel Options
- Standard panel features
- Maintenance
- Views
- Audit – shows an audit of data changes made over time to the labour code currently being viewed
- Where used – shows a list of Manufacturing Specifications and outstanding Work Orders with the on labour code currently being viewed.
- Reports
- List Labour Codes