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<ManualTopic ID="/baanerp/ti/onlinemanual/000084" xml:lang="en">
	<Header>
		<Title xmlns:ssa="http://www.ssaglobal.com" xmlns:HTML="http://www.w3.org/TR/REC-html40">Calculating subcontracting costs</Title>
		<Keyword><Level1>Calculation costs</Level1>
			<Level2>subcontracting</Level2>
		</Keyword>
		<Keyword><Level1>Subcontracting calculation method</Level1>
		</Keyword>
		<Keyword><Level1>Subcontracting</Level1>
			<Level2>calculating costs</Level2>
		</Keyword>
	</Header>
	<GeneralSection><Paragraph>The calculation method for <Link href="/baanerp/tc/glossary/glossary#Subcontracti.tc" role="glossary">subcontracting</Link> costs, which is defined in the <GUIRef href="/baanerp/ti/cpr/ticpr1160m000" role="session">Subcontracting Rates (ticpr1160m000)</GUIRef> details session, determines how the subcontracting costs are calculated and how the <Link href="/baanerp/ti/glossary/glossary#SubcRate.ti" role="glossary">subcontracting rates</Link> must be interpreted.</Paragraph>
		<Paragraph>Four calculation methods are available:</Paragraph>
		<List><ListItem><GUIRef href="/baanerp/tc/domains/cmsc#fix.amount" role="enum">Fixed Amount by Product</GUIRef>
			</ListItem>
			<ListItem><GUIRef href="/baanerp/tc/domains/cmsc#oper.rate" role="enum">Operation Rate</GUIRef>
			</ListItem>
			<ListItem><GUIRef href="/baanerp/tc/domains/cmsc#man.hr.rate" role="enum">Man Hour Rate</GUIRef>
			</ListItem>
			<ListItem><GUIRef href="/baanerp/tc/domains/cmsc#mach.hr.rate" role="enum">Machine Hour Rate</GUIRef>
			</ListItem>
		</List>
		<GeneralSection><SectionTitle>Fixed Amount by Product</SectionTitle>
			<Paragraph>The estimated costs are calculated by multiplying the end item quantity displayed in the <GUIRef href="/baanerp/td/pur/tdpur4501m000#tdpur401.qoor" role="formfield" Update="No">Ordered Quantity</GUIRef> field in the <GUIRef href="/baanerp/td/pur/tdpur4501m000" role="session">Purchase Order - Lines (tdpur4501m000)</GUIRef> session by the <Link href="/baanerp/ti/glossary/glossary#SubcRate.ti" role="glossary">subcontracting rate</Link>. Choose this method if the subcontracting costs are directly related to the number of subcontracted items. The subcontracting costs are based on the gross input of end items.</Paragraph>
			<List><ListItem><Link href="/baanerp/ti/onlinemanual/000000000000019" role="manual">Examples of calculating subcontracting costs</Link>
				</ListItem>
			</List>
		</GeneralSection>
		<GeneralSection><SectionTitle>Operation Rate</SectionTitle>
			<Paragraph>The estimated subcontracting costs are calculated by multiplying the end item quantity displayed in the <GUIRef href="/baanerp/td/pur/tdpur4501m000#tdpur401.qoor" role="formfield" Update="No">Ordered Quantity</GUIRef> field in the <GUIRef href="/baanerp/td/pur/tdpur4501m000" role="session">Purchase Order - Lines (tdpur4501m000)</GUIRef> session by the <Link href="/baanerp/ti/glossary/glossary#000000000000050" role="glossary">subcontracting rate factor</Link> and the subcontracting rate. The subcontracting rate factor is defined in the <GUIRef href="/baanerp/ti/rou/tirou1102m000" role="session">Routing Operations (tirou1102m000)</GUIRef> session, or in the <GUIRef href="/baanerp/ti/sfc/tisfc2210m000" role="session">Subcontract Operations (tisfc2210m000)</GUIRef> session.</Paragraph>
			<List><ListItem><Link href="/baanerp/ti/onlinemanual/000000000000019" role="manual">Examples of calculating subcontracting costs</Link>
				</ListItem>
			</List>
			<Paragraph>Choose this method if the subcontracting costs relate to the number of products, but an extra factor is required. For example, the painting of the item is subcontracted. The subcontracting rate is defined as $50 per square meter painted. Each item has a surface area of 2.5 square meters, which is entered as the rate factor. In addition, the subcontracting rate is based on the end item quantity displayed in the <GUIRef href="/baanerp/td/pur/tdpur4501m000#tdpur401.qoor" role="formfield" Update="No">Ordered Quantity</GUIRef> field in the <GUIRef href="/baanerp/td/pur/tdpur4501m000" role="session">Purchase Order - Lines (tdpur4501m000)</GUIRef> session.</Paragraph>
			<List><ListItem><Link href="/baanerp/ti/onlinemanual/000000000000019" role="manual">Examples of calculating subcontracting costs</Link>
				</ListItem>
			</List>
		</GeneralSection>
		<GeneralSection><SectionTitle>Man Hour Rate</SectionTitle>
			<Paragraph>If the method is man-hour rate, the estimated subcontracting costs are calculated by multiplying the estimated man-hours by the subcontracting rate. The estimated man-hours are calculated by using operation planning data such as, gross end-item quantity, <Link href="/baanerp/ti/glossary/glossary#000000000000057" role="glossary">cycle time</Link>, and man occupation.</Paragraph>
			<List><ListItem><Link href="/baanerp/ti/onlinemanual/000000000000019" role="manual">Examples of calculating subcontracting costs</Link>
				</ListItem>
			</List>
		</GeneralSection>
		<GeneralSection><SectionTitle>Machine Hour Rate</SectionTitle>
			<Paragraph>If the method is machine-hour rate, the estimated subcontracting costs are calculated by multiplying the estimated machine-hours by the subcontracting rate. The estimated machine-hours are calculated by using the operation planning data, such as gross end-item quantity, cycle time, and machine occupation.</Paragraph>
			<List><ListItem><Link href="/baanerp/ti/onlinemanual/000000000000019" role="manual">Examples of calculating subcontracting costs</Link>
				</ListItem>
			</List>
		</GeneralSection>
	</GeneralSection>
	<RelatedTopics><SectionTitle>Related topics</SectionTitle>
		<RelTopic><Link href="/baanerp/ti/onlinemanual/000081" role="manual">Subcontracting</Link>
		</RelTopic>
	</RelatedTopics>
</ManualTopic>
