The total cost of Production Operations is calculated as a sum of the cost of operations steps.
The cost of an operation step is calculated based on the average hourly cost and the duration of performing the operation step.
Cost = Cost per Hour x Time
Cost per Hour - the average hourly cost of performing a Production Operation step. Each step can use a different Cost per Hour. The cost typically includes salary (labor cost), and could also include the average hourly maintenance and electricity usage of a workstation. It should not include material costs.
When first entering the Cost per Hour for a Resource, the entered value will automatically be saved as the default Cost per Hour for that Resource. You can assign and edit the default Cost per Hour for Resources in Settings > Resources. The default Cost per Hour will be populated to your Resource automatically when you added to any Production Operation steps.'
Time - the duration of an operation step to produce one unit of a product. This can be edited on each Manufacturing Order if the actual time spent in production is different from the default value defined in the Production Operations tab of a product.
The Cost cannot be manually inserted and can only be calculated based on the formula above.
Note: Don't want to create step-by-step Production Operations, but instead add the Production Operations costs to the total manufacturing cost of the product as a single number? We recommend creating a single step under Production Operations, adding the desired cost to the Cost per hour field and 1 hour to the Time field.