We have had some huge increases in burden costs, and to be honest we didn’t understand the Burden Hours concept. In our previous system, we had a value called "Split’ which would basically be calculated based on the number of jobs the operator was clocked in on.
But now, we’re seeing 200-300% increase in burden hours alone, not to mention burden costs assigned to the resource groups (by percent).
I’ve done some searching, and it seems to be related to quantity produced per hour. While we’re used to the labor hours * split * burden rate being the calculation, it now seems to add in the burden hours instead of the labor hours.
If we understood how the burden hours were calculated, we could better understand what we need to do to move forward.
I’ve read the help, but it isn’t very clear on how the burden hours are actually calculated.
Check what you have for the Burden Hours on the Resource Groups. I believe Split Burden is what you are looking for. Are they currently set up as Burden = Labor?
Check if your burden on the Resource Groups/Resources is set to % or flat.
Last thing you could check is under Site Configuration.
The main driver of how Burden is applied is the first thing above. That determines how burden is applied when an employee logs onto an operation. If you read the help for those specific fields, I think that would help.
No, the last one means that if you have more than 1 resource on an operation, the burden will be calculated on each resource.
So, op 10 has 3 resources required, say a machine and two tools. If an employee logs onto the operation, the burden for all 3 resources will be calculated.
Ok, I’m just trying to understand how burden hours can ever be > labor hours with a person working on 1 or multiple jobs at the same time. All of our crew sizes are 1, and there is never multiple people on the same activity.
If I understood what’s driving the burden hours to go higher than labor hours the we could come up with a solution.
Oh, and currently, our operations are all single resource operations.
It depends on what you think of as burden. If burden is paying for a running machine. It costs you more when the operator is running 3 machines at a time. (Like if you have 3 machining centers). The burden can be paying for overhead. So it depends on your business model.
Yes, some of the increases I’ve seen are 500% larger burden hours as compared to labor hours. I just can’t understand how 1 person working on 1 job can produce that many burden hours. Is it related to quantity reported? Is it related to the MOM estimation of time per unit being off?
We consider Burden to be more covering overhead. So we don’t want to count 1 operator as doing 3 operations for 2 hours to be 6 hours, we want it to be .333 * 2 hours for each yielding a total of 2 hours. Then our % burden rate will be used to cover the cost of running all three machines.
We are using percentages rates on our burden for the resource groups. Resources are set to use their parent group’s rates.
Our employees are using MES.
When we do Split Burden, we are seeing higher burden hours. If we do Labor = Burden then we get extra time counted for each part when we would want it to be split.
But it also counts the burden against the labor rate. So essentially it looks like it counts (labor hours * burden rate) * (hourly rate * burden rate).
In any event, if our burden rate is set to 150%, I’m seeing 200%-500% in my Burden Hours compared to my Labor hours. If anything I would expect it to be 150% or less (based on splitting time between operations).
I would expect it to be (Labor Hours * Labor Rate * Burden Rate) at a max.
My mistake, the Split Burden is for when multiple employees are working on 1 resource. You do not want this option.
Burden = Labor is what you want if the resources are in the same resource group. I believe that if an employee logs into 2 different resources in 2 different resource groups, it will count all burden hours. If the resources are in the same resource group, the burden should be equal to the actual labor performed by the employee (if your burden was 100%).
Have you already checked out the Job Costing Tech Ref Guide?
If not, you can find a link to the PDF in the E10 Help.
I think it will provide more details and examples than the basic help will.
There are also links in the help to a few other Tech Ref Guides…
Did you ever find a solution that worked. We are trying to obtain the exact same calculation and burben=labor doesn’t seem to make a difference. Our burden rate still is at 100% of production hours (prod std * burden rate) even if crew size is changed to something other than 1.
