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    Armando Castro
    BOM Labor cost vs labor cost in WO
    Topic posted November 7, 2019 by Armando CastroRed Ribbon: 250+ Points, tagged Cost Management 
    38 Views, 11 Comments
    Title:
    BOM Labor cost vs labor cost in WO
    Summary:
    Differnce between labor standar cost (routing) and Labor cost in WO
    Content:

    The calculation of labor cost is totally different in Standard operations vs  what is reflected in WOs. 

    For instance

    Standard Operation:

    Resource labor

    Unist assigned 9 (employees)

    Usage .00325

    The standard cost of labor is 9 X .00325 = .02925 total time usage 9 employees

    WO

    1 x .00325 = .00325 time usage

    WO reflects only 1.  Standar cost reflect the 9 operators cost

    Why WO does not do the same  9 X .00325?????

     

     

    Version:
    ERP Oracle fusion

    Comment

     

    • Srinivasa Raghavan

      Hi,

      Can you share some screen shots of the work order where the resource usage transactions have been reported to understand the behavior?

      Srini

    • Sritama Sarkar

      Hi Armando,

        What release is this? Per this bug, cost rollup no longer inflates the resource cost by # of units assigned. Can you give screenshots of -

      1. Resource usages setup

      2. View Rolled-up costs

      • Armando Castro

        Hi Sritama,

        We are in release Oracle Fusion 19C

        I will send you the screenshots as soon as I can

        Thanks

        Armando

         

        • Sritama Sarkar

          This should not be an issue in 19C. Also, please go through my reply to another post on this thread where I explain the intended behavior with an example. Please verify that this is different from your current observation of the system.

      • Sam Napoli

        Hi Sritama,

        Do you have an external link for this bug? This link doesn't work for me. I'd like to check it and make sure it doesn't affect us too.

        Sam

        • Sritama Sarkar

          Hi Sam,

            My apologies for forwarding the internal bug link. We don't have an external link for this issue logged as this was identified internally. But here is the most important update that explains the change and the rationale behind that change -

          When we set up an operation, we have to specify the resource usage as well as
          the # of resource units assigned.

          Let's assume that the resource Drill is specified to be used for 2 hours
          (Usage) and has 2 units assigned. Assuming that drill has an hourly rate of
          $3, the resource consumption would be costed as $3 {rate/hr} * 2 {hrs} * 2
          {units} = $12.
          However, if you look at the manufacturing documentation
          (docs.oracle.com/en/cloud/saas/supply-chain-management/r13-update17d/faumf/man
          aging-production.html#FAUMF2014090), the formula to calculate the operation
          duration is different. The more the assigned units, the lesser the time it
          takes for the resource to complete that operation. Manufacturing team
          confirmed that this is the behavior in EBS as well.
          In EBS, cost rollup disregarded the resource units which seems to be logical,
          going through the above formula. In the given example, the total resource
          cost should be $3 {rate/hr} * (2/2) {hr/unit} * 2 {units} = $6.
          Therefore, the cost rollup should disregard resource units while calculating
          the cost of resource usage.

          • Sam Napoli

            Hi Sritama,

            That's ok. Sorry, I'm still confused on how it will it work in 19C and onwards?

            $3 {rate/hr} * 2 {hrs} * 2 {units} = $12.

            or

             $3 {rate/hr} * (2/2) {hr/unit} * 2 {units} = $6.

            • Sritama Sarkar

              Hi Sam,

                This change has already made its way in 19B, there is no change in behavior in 19C.

              The expected results in the above example - $3 {rate/hr} * (2/2) {hr/unit} * 2 {units} = $6

          • Armando Castro

            Hi Sritama,

            Your explanation is clear about how Oracle Fusion makes the calculation and disregard units assigned. Same calculation was performed in Feb 2018 (when we implemented Oracle Fusion) but then in some release the formula was changed only in standard cost roll up calculation not in WO input cost. I remeber that becasue I had a big problem in my inventory valuation @ std cst and the reason was that the units assigned in std operation were multiplied by the usage time. The problem was that my usage time considered the 13 operators (as shown in my example) and in increased the inventory value. Then I had to change my usage time in all my standard operations to be alingned with Oracle calculation. Now there is a new change in this release 19 C in order to leave the calculation as it was in Feb 2018 when we implemented Oracle.

            Now no matter I indicate X number of units assigned (13 employees in my exapmple) I am not get my real labor cost considering the 13 employees because oracle only takes 1. 

            Question: What should I do to get the time of the 13 employees in order to get my std cost more accurate??

            Attached you will see an excel fshowing the following:

            Calculation (oracle calculation and the assumption of how the calculation should be)

            WO7295

            StdOperation

            Std Cost

            All related to the same item # 918195

            Thanks