The total cost of Production operations are 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 screen > Resources. The default Cost per Hour will automatically be populated to your Resource when you add to any Production operation steps.

Time - The duration of an operation step to produce one unit of a product. This can be edited on the 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 rather add Production operations costs to the total manufacturing cost of a 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.

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