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<ManualTopic ID="/baanerp/ti/onlinemanual/000137" xml:lang="en">
	<Header>
		<Title xmlns:ssa="http://www.ssaglobal.com" xmlns:HTML="http://www.w3.org/TR/REC-html40">Calculating operation costs (labor, machine, overhead)</Title>
	</Header>
	<GeneralSection><Paragraph>Labor, machine, and overhead costs are calculated to determine the operation costs.</Paragraph>
		<Paragraph>If the work center is either a main work center or sub-work center, SSA ERP first checks the setting of the <GUIRef href="/baanerp/ti/cpr/ticpr0100m000#ticpr000.kort" role="formfield">Type of Operation Rates</GUIRef> field in the <GUIRef href="/baanerp/ti/cpr/ticpr0100m000" role="session">Cost Price Calculation Parameters (ticpr0100m000)</GUIRef> session. If the parameter value is <GUIRef href="/baanerp/tc/domains/kort#wc.rate" role="enum">Work Center Rate</GUIRef>, SSA ERP reads the work center's operation rate code. A number of labor, machine, and overhead rates have been recorded using the above-mentioned operation rate code for the selected cost price calculation code in the <GUIRef href="/baanerp/ti/cpr/ticpr1150m000" role="session">Operation Rates (ticpr1150m000)</GUIRef> session.</Paragraph>
		<Paragraph>Based on this data, SSA ERP calculates the labor and machine costs required to carry out the relevant operation using the following formulas:</Paragraph>
		<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">Labor costs = man hours	x labor rate</Paragraph>
		</Formula>
		<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">Machine costs = machine hours x machine rate</Paragraph>
		</Formula>
		<Paragraph>Depending on the method used to calculate overhead costs (set via the <GUIRef href="/baanerp/ti/cpr/ticpr1150m000" role="session">Operation Rates (ticpr1150m000)</GUIRef> session), SSA ERP calculates the overhead costs on the basis of the man-hours or machine-hours. This is done using the following formula:</Paragraph>
		<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">Overhead costs = man-hours or machine-hours x overhead rate</Paragraph>
		</Formula>
		<Paragraph>According to the direct costing principle, no overhead costs are included in the cost price calculation code.</Paragraph>
		<Paragraph>The operation costs for the operation comprise labor, machine, and overhead costs.</Paragraph>
		<Paragraph>If the <GUIRef href="/baanerp/ti/cpr/ticpr0100m000#ticpr000.kort" role="formfield">Type of Operation Rates</GUIRef> field is <GUIRef href="/baanerp/tc/domains/kort#task.rate" role="enum">Task Relationship Rate</GUIRef>, SSA ERP reads the task's operation rate code and goes through the same cycle, as described above.</Paragraph>
	</GeneralSection>
</ManualTopic>
