Re: Standard cost

The answer to your question has got to be industry related & the nature of
how your factory is laid out.

We have work that is done by machines.
The standard rate of some machines are 100,000 units in a matter of seconds.

We have work that is done by human beings.
The standard rate of a human being is much much slower than that.
It is like a different universe.

We have to capture human costing in different work center than machine work,
because the rates are so alien to each other.

If your factory is extremely labor intensive with no need to track stuff by
machine, or everything tracked by machine with no real human labor, then
perhaps you not need different work center for human vs. machine work.

We have machines that go at different speeds & we used to route them in
different work centers so that we can capture accurate costs & more
importantly incorporate this data in Capacity Planning.  However, shop floor
supervisors were not using the machines most efficient for a given task, but
rather using the machines that would be idle when the job needed to be done,
so we ended up putting all machines for a department in the same work center.

But we still capture our costs by factory department.
We make wiring harnesses.
We have departments that cut wires to particular lengths, that "terminate"
ends of the wires with particular connectors, that do plastic molding,
assemble many wire leads into a complex harness, etc..  Each of these
departments is a separate cost center.

If your factory is 100% one department that does all the same kind of stuff &
does not have any need for tracking costs for different kinds of operations
like we do, then perhaps it is acceptable to have all your labor costs in one
humongous collection.

> From: kusman@takeda.co.id (Kusman Lim)
>
>  BPCS 6002 plf cum Mar98.
>
>  We are planning to re setup all of our costing. Currently we need to change
>  our Work Center. Our Finance consoultant (Not BPCS Consultant) want to pool
>  all labor hour into one W/C.
>
>  Can you give me some opinion on that ?
>  What is the affect if we use labor into one W/C ?
>  What is the common  practice ?
>
>  Thanks
>  Regards
>  KUSMAN

MacWheel99@aol.com (Alister Wm Macintyre) (Al Mac)
BPCS 405 CD Manager / Programmer @ Global Wire Technologies Incorporated
http://www.globalwiretechnologies.com = new name same quality wire
engineering company: fax # 812-424-6838