How are work order labor costs calculated?

If you are looking for the actual formulas used to calculate work order labor costs, you can find them in the following two database functions:
  • xtmfg.workcentersetupcost()
  • xtmfg.workcenterruncost()

Within the ERP application, the values specified on the Costs tab of the Work Center screen have the biggest impact on labor costing. Setup time is always fixed. If you post an operation for qty of 10 or qty of 100, the setup labor charged to the general ledger will be the same. Qty does not affect it. The opposite is true for the run time. The qty posted for the operation is used as a multiplier of the run time labor rate.

Note: In addition to the work center's defined setup labor rate and run labor rate, the overhead section can also impact labor cost, assuming you have any of the overhead labor fields filled in.

The labor calculations are performed as follows:

Setup Labor =
  • Routing item setup time (min) * ( (work center setup labor rate * work center overhead # of people / 60) + (work center setup labor rate * work center overhead # of people / 60 * work center overhead % of labor) + (work center overhead per labor hr * work center overhead # of people / 60) )

    If you remove the overhead, the setup labor calculation becomes more simple, as follows:
    • Routing Item Setup Time (min) * ( (Work Center Setup Labor Rate / 60)

Run Labor

  • ( (Work center run labor rate * work center overhead # of people / 60) + (work center run labor rate * work center overhead # of people / 60 * work center overhead % of labor) + (work center overhead per labor hr * work center overhead # of people / 60) + (work center overhead per mach. hr * work center overhead # of machines / 60) * routing item run time (min) + work center overhead per unit * qty posted for operation )

    Again, removing the overhead simplifies the run labor calculation:
    • (Work center run labor rate / 60) * routing item run time (min) + qty posted for operation