Entering the cost of Production Operations
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 * Time
Cost per Hour - the average hourly cost of performing a Production Operation step. A different Cost per Hour can be inserted for each step. Typically includes salary cost, but can also include the average hourly maintenance and electricity costs of the workstation, for example. It should not include material costs.
Time - the duration of an operation step to produce one unit of the product.
The Cost cannot be manually inserted, but can only be calculated based on the formula above.
Note: If you do not wish to create step-by-step Production Operations, but would like to add the cost of Production Operations to the total manufacturing cost of the product just as a single number, we recommend creating just one step under Production Operations, adding the desired cost to the "Cost per hour" field and 1 hour to the "Time" field.