Background: Overhead Rate Codes Maintenance
Use the Overhead Rate Codes Maintenance (TORC) program to add, change, copy, and delete codes with rate percentages that you can select to apply overhead to item costs and work centers. See Road Map for work flow.
This topic has these subtopics:
Work Center Overhead Cost
Item Overhead Cost
Cost Rollup
Audit Trail
Work Center Overhead Cost
In the Work Center Maintenance (WCM) program, you can select up to four overhead codes per work center. These codes are used to calculate the labor and machine overhead for a manufacturing order.
Labor Overhead
The system uses the rate associated with each code to calculate labor overhead costs for regular and batch operations: Labor cost per operation x Total overhead rates for work center x .01
For example, suppose that the labor cost, including setup, of an operation is 120.00. If the work center has three overhead codes with rates of 5.00, 8.00, and 10, the labor overhead is 120 x 23 x .01 = 27.60.
If you enter the actual hours that each employee works on a manufacturing order in the Labor Entry (LLE) program or import hours worked from an ASCII file with the Labor Import (LEI) program, the system uses the employee's labor rate rather than the standard rate for the operation sequence. However, the method of calculating labor overhead is the same.
Machine Overhead
For an unattended operation: (Hours per piece x Machine labor rate x Qty ordered) + (Hours per piece x Machine labor rate x Qty ordered x Total overhead rate for work center x .01)
Item Overhead Cost
In the Item Cost Maintenance (ICM) program, you can select up to four overhead codes to apply associated overhead costs to an item. These codes are typically used for purchased items.
Overhead rates are summed and applied as burden to the incremental material cost. Material overhead can be used to include costs incurred for materials such as purchasing, quality control, receiving, and stockroom.
Material overhead is the sum of the overhead percentages multiplied by the incremental material cost: Sum of overhead percentages x Incremental material cost
For a parent item, incremental overhead is the sum of material overhead and labor overhead for the item's components.
Cost Rollup
The Standard Cost Rollup (MCR) program uses overhead codes to calculate incremental overhead costs. The program sums the rates selected for an item in the Item Cost Maintenance program and applies them as burden to the incremental material cost.
If you have routings, Standard Cost Rollup also updates incremental overhead when you change overhead codes or rates for a work center. Labor overhead = Sum of overhead percentages x Incremental labor cost
Audit Trail
To activate an audit trail, select one of the files listed below in the Audit Trail Maintenance (XAT) program. The system records all transactions. You can then run the Audit Trails (ATR) program and select that file to print a report of these transactions.
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RTBO: Overhead Rate Codes