We manufacture many different kinds of athletic goods. Our factory is much more like a job shop than an assembly line. We have used labor as our driver for our overhead rate for years. We are now investing heavily in robotics. We are concerned that we are not allocating our costs appropriately across our products. Is anyone using a different driver (i.e. denominator, [Rate = Overhead Cost Pool/Labor Hours]) besides labor and if so, how do you implement in Epicor? In particular, is anyone using Activity Based Costing (ABC)?
This is a large topic to discuss within a forum - can I suggest we do a Teams call to discuss and understand if we can make progress through collaboration.
Userlevel 2
Labor Hours is by far the usual denominator for this calculation. But if you go with pure labor hours you’re right, you miss the contribution of the hourly consumption of a robotic machine being depreciated. I believe that would normally come in through expensing and burden hours; however, a Finance user with experience in depreciation and getting costs from specific machines to the Operations they perform, could provide a deeper dive into the options here.
Thanks,
…….Monty.
Userlevel 2
Best,
...Monty.
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