In Cetec ERP, estimated cost is tracked on a per BOM, per Quote/Order/Job basis, segmented along the following lines:

Estimated Material

• Sum of each component’s default cost * qty per top

Estimated Labor

• Total labor estimate * Default Labor Rate (Maintained in ADMIN » Config Settings » Config Settings and search for Labor Rate) (or)

• Location path estimate * Work location labor rate (Maintained in ADMIN » Maintenance » Data Maintenance » OrdlineStatus)

Estimated Overhead

• Total labor estimate * Default Overhead Rate (Maintained in ADMIN » Config Settings » Config Settings and search for Overhead Rate) (or)

• Location path estimate * Work location overhead rate (Maintained in ADMIN » Maintenance » Data Maintenance » OrdlineStatus)

Estimated Misc Charges And/Or Outsource Fees

• Total amount of estimated outsource fees or misc charges (e.g. tooling, excess material, etc.)

Total Estimated Cost of a BOM

• Estimated material + estimated labor + estimated overhead + estimated misc charges

To understand Cetec ERP’s estimated costing, click on the BOM Overview link to the left side of a part screen. In it, you will see estimated material, labor, overhead, and total costs for building an assembly that trickles down into its sub-assemblies if the part is a multilevel BOM. To click on a sub-assembly’s costing information, click on the arrow to the left side of a subassembly to expand the table. To understand how multi-level BOMs are costed, please refer to the Multi-level BOM Costing section below.

Notice that for sub-assemblies/components we track two different kinds of costing. One is based off of subassembly’s default cost information, and displays under the Cost Record/Ext Cost columns and the other is based off of the sub-assembly/raw component’s own estimated cost, and displays under the Rollup column. Costing for the part you are looking at, which is displayed near the bottom right side of the screen, works off of the rollup values.

When preparing a manufacturing quote, material costs are only part of the equation. Production planners and estimators also need to determine how long a job will take, which equipment and workstations it will require, and what those resources will cost.

Missing setup time, using the wrong labor rate, or underestimating machine time can result in a quote that looks profitable but leaves little margin once production begins.

Cetec ERP supports estimated manufacturing costs at the BOM and quote level, allowing manufacturers to account for labor, overhead, materials, and additional charges before committing to a customer order.

A labor plan, also called a build path or router, defines the production operations required to manufacture an assembly.

In Cetec ERP, labor plans can be created and maintained directly on a BOM revision or through the BOM worksheet during quoting. Estimators can define the work locations involved, the sequence of operations, and the estimated time required at each step.

For example, a machine shop quoting a batch of 100 machined parts might estimate:

• Setup: 90 minutes to prepare tooling, fixtures, and equipment.
• Machining: 4 minutes per part, totaling 400 minutes.
• Inspection: 1 minute per part, totaling 100 minutes.

The total estimated production time is 590 minutes, or approximately 9.83 hours.

Accounting for setup separately is particularly important in high-mix, low-volume manufacturing. A 90-minute setup represents a much larger cost per part on a 10-piece order than on a 500-piece order.

Different production operations may have different costs. Assembly, machining, inspection, and other work locations can require different labor rates and overhead assumptions.

Cetec ERP allows manufacturers to maintain default labor and overhead rates or define rates for individual work locations.

These rates are used with estimated production time to calculate labor and overhead costs.

Manufacturers evaluating machine costing should also account for equipment-related expenses such as depreciation, maintenance, utilities, and other machine burden. Depending on the company's costing method, these expenses may be incorporated into work-location overhead rates

Separating direct labor from machine-related overhead helps estimators evaluate the cost of each operation without overlooking expenses associated with equipment usage.

Cetec ERP combines estimated material, labor, overhead, and miscellaneous charges into the total estimated BOM cost.

For multi-level BOMs, estimated costs can roll up from subassemblies into the top-level assembly. This allows estimators to review the expected manufacturing cost of the complete product, including the work required at different assembly levels.

The BOM Overview provides a breakdown of estimated costs, while the BOM worksheet allows users to refine labor estimates and additional charges during quoting.

Once a quote becomes an order, Cetec ERP retains the originally quoted labor estimates for comparison against production activity. Shop floor labor tracking then provides actual time records that manufacturers can use to evaluate estimating accuracy.

This gives production planners and cost accountants a repeatable process for improving future quotes based on completed work orders.

In Cetec ERP, actual cost is tracked per work order basis, segmented along the following lines:

Actual Material

• Sum of each picked component’s cost (Cetec ERP job cost details leverage actual receipt costs; for financial cost reports, Cetec can be configured to use either the actual receipt cost or the average cost of material, and may also be configured to post variances from actual receipt costs to standard costs in a variance account on your financial statements)

Actual Labor

• Actual labor (Sum of all labor segments added) * Work location Labor Rate (Maintained in ADMIN » Maintenance » Data Maintenance » OrdlineStatus)

• Alternatively to actual labor, Labor estimate (via total labor estimate or location path estimate) * Default Labor Rate (Maintained in ADMIN » Config Settings » Config Settings and search for Labor Rate) may be posted by using the Apply Labor estimate checkbox at the time of closing an order.

Actual Overhead

• Actual overhead (Sum of all overhead segments added) * Work location Overhead Rate (Maintained in ADMIN » Maintenance » Data Maintenance » OrdlineStatus)

• Alternatively to actual overhead, overhead estimate (via total overhead estimate or location path estimate) * Default Overhead Rate (Maintained in ADMIN » Config Settings » Config Settings and search for Overhead Rate) may be posted by using the Apply Labor estimate checkbox at the time of closing an order.

Actual Outsource

• Sum of outsource labor added to an outsource PO (See: http://www.cetecerp.com/support/how-to/outsourcing.html)

In Cetec ERP the estimated cost of a BOM does not always match its actual cost in manufacturing it. This is because the estimated cost works without specific data as to what parts were consumed and how much labor has been logged.

The actual cost of an order gets calculated at the point of closing (i.e. invoicing or complete/receiving) an order. This is the cost that displays on invoice and updates accounting. If you are working with an internal build for stock order, then at the point of invoicing the corresponding internal PO would be received in automatically with this actual cost as its receipt cost.

To get an overview of actual invoice costing, click on the Details/Serials link to the left side of an invoice screen. This screen will break down costing and give you an overview of how Cetec ERP came up with its values. NOTE! If your order/job used materials from subassemblies and/or multi-level BOMs, use the “View Cost Details” screen for a thorough breakdown and aggregation of all subassembly (and constituent materials/labor/overhead/outsource costs) that were used in the top level job / project / order. This report is useful when needing to aggregate multi-level build structures used against a single parent project or sale.

You can also opt to change any of these costing values by going into the Invoice Edit screen. You will see the costing section divide into four fields: Material, Labor, Overhead, and Outsource. By putting in numbers here you can choose to override any number that Cetec ERP has generated. Beware that editing costs could have far reading implications e.g. editing costs for an internally built assembly which has been consumed already.