| # Subcontracting rates Two methods exist to calculate subcontracting purchase prices or subcontracting cost prices. The used method depends on the value of the Source of Price field in the Items - Purchase (tdipu0101m000) session: Subcontracting Rate Price Book / Contract If the Source of Price field in the Items - Purchase (tdipu0101m000) session is Subcontracting Rate, select one of the following methods in the Subcontracting Rates (ticpr1160m000) details session for calculating subcontracting cost or subcontracting purchase prices: Fixed Amount by Product Operation Rate Man Hour Rate Machine Hour Rate Subcontracting rates are defined for a specific price calculation code, by subcontractor, and by task. Fixed Amount by Product The costs or prices are calculated by multiplying the end item quantity displayed in the Ordered Quantity field of the Purchase Order Lines (tdpur4101m000) session by the subcontracting rate. 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. Examples of subcontracting rates Operation Rate The costs or prices are calculated by multiplying the end item quantity displayed in the Ordered Quantity field of the Purchase Order Lines (tdpur4101m000) session by the subcontracting rate factor and the subcontracting rate. The subcontracting rate factor is defined in the Routing Operations (tirou1102m000) session, or in the Subcontract Operations (tisfc2210m000) session. 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 Ordered Quantity field of the Purchase Order Lines (tdpur4101m000) session. Examples of subcontracting rates Man Hour Rate If the method is man-hour rate, the costs or prices 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, cycle time, and man occupation. Examples of subcontracting rates Machine Hour Rate If the method is machine-hour rate, the costs or prices 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. Examples of subcontracting rates Related topics Overview of subcontracting |