Resource costs

Resource costs

Once you have added a resource and set its capacity, you can start assigning resource costs. Resource costs in production are similar to labor and overhead costs for assemblies. The main difference is that rather than having a set cost per assembly, resource costs are time-dependent. This means that when production takes more or less time than planned, the resource costs reflect that.

You can bring your resources, components, and work centers together in a production BOM.

Prerequisites

Set up services

Cin7 Core uses service products to define costs for resources in production; these have a cost but do not allocate physical items from your inventory.

There are a few things to keep in mind about using services for resource costs:

  • Unit of measure: Resources costs are calculated according to their Unit of time. The most important thing is to be consistent between unit of measure of the service that will assign the cost and the unit of time for the resource. An example would be if your electricity costs are calculated per kWh, your service unit of measure would be kWh and your resource unit of time would be 1 hour.

  • Price tier: When assigning resource costs, you can select a service's price tiers. You can set different costs between different shop floor locations, or different costs for regular operation and unplanned downtime. An example would be worker wages being higher or lower in different locations.

You must create your services before using them to define resource costs. See Product and service management if you need help with this step.

Set resource cost

You can select any of your services to assign it as a resource cost. Each resource can have multiple costs.

  1. Select Production from the main menu and go to the Setup section.

  2. Select the Resources tab.

  3. Open your resource and go to the Costs tab.

  4. Enter a Unit of time. Many businesses work out the cost of machine usage throughout the year then divide it by the total number of hours used for an average cost per hour. Other businesses may prefer to set a machine’s cycle time as the unit of time instead. The most important thing is to be consistent between the unit of time here and the unit of measure you give to the service that will assign cost. You can also assign resource costs per unit of finished product.

  5. Use + Add to add one or more services to the resource costs. You can use more than one service to assign a resource’s cost. Most small or medium businesses can use the combined cost of all services per unit of time to calculate the total hourly operational cost.

  6. Select an Account. The resource cost is drawn from this account and transferred to the finished good's current asset account as part of its production cost.

  7. Assign costs to Production, Unplanned downtime, and Planned downtime. Costs are taken from the service's price tiers. You can use different price tiers for each type, or keep everything the same.

  8. Check the confirmation message to make sure that your unit of time is correct for your cost.

  9. Save your changes.

Assign resource cost per unit

It is more appropriate for some production processes to specify the cost of a resource by its cost per unit of finished product. If this is the case, we recommend making the unit of time for that resource as close as possible to the time to produce one unit to avoid confusion.

You can specify whether the cost per resource is applied as Cost per unit of time or Cost per finished product when you add it to a production BOM.

Editing resource costs

Editing the unit of time, services, service costs, and price tiers will recalculate the cost of the resource for all uncompleted operations. Any transactions executed before editing the costs are not recalculated. A warning message will appear informing you which orders will be affected.

Changing the account information will record all transactions made after the change to the new account. Historic transactions will not change.

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