| # Costs distribution of production order hours – examples Example 1 Peg distribution on the production order:
Peg | Quantity
--- | ---
A | 2
B | 3
C | 5
Operation rates:
Type of Operation | Cost Rate ($) | Cost Component
--- | --- | ---
Labor | 40 | LB1
Overhead on Labor | 4 | LB2
Machine | 50 | MC1
Overhead on Machine | 10 | MC2
If, for this production order, 20 man hours and 10 machine hours are entered when these hours are processed, costs and hours are retrieved per peg and cost component:
Cost Component | LB1 | LB2 | MC1 | MC2
--- | --- | --- | --- | ---
Peg |  |  |  |
A | $160 (4h) | $16 (4h) | $100 (2h) | $20 (2h)
B | $240 (6h) | $24 (6h) | $150 (3h) | $30 (3h)
C | $400 (10h) | $40 (10h) | $250 (5h) | $50 (5h)
Example 2 If different types of operation have the same cost component, costs and hours are aggregated. Operation rates:
Type of Operation | Cost Rate ($) | Cost Component
--- | --- | ---
Labor | 40 | LAB
Overhead on Labor | 4 | OVH
Machine | 50 | MACH
Overhead on Machine | 10 | OVH
If, for this production order, 20 man hours and 10 machine hours are entered when these hours are processed, costs and hours are retrieved per peg and cost component:
Cost Component | LAB | MACH | OVH
--- | --- | --- | ---
Peg |  |  |
A | $160 (4h) | $100 (2h) | $36 (4+2=6h)
B | $240 (6h) | $150 (3h) | $54 (6+3=9h)
C | $400 (10h) | $250 (5h) | $90 (10+5=15h)
Related topics Project pegging overview |