Good morning,
Please excuse the simplicity of these questions but accounting is not my forte.
Question #1
In employee maintenance there is a spot for the employee’s labor rate, pretty straight forward. But each resource group also has a spot for a labor rate. When I look at the production detail for a specific job I can see that Epicor is using the Employee labor rate to calculate the labor cost foe the job. So what does the resource group labor rate do?
Question #2
The hot topic around the water cooler lately has been hourly breakeven cost and there is a debate as to how this should be calculated. Since everything we do is one off and quoted we know how many estimated hours the job should take. In my, very undeveloped, accounting mind I think the breakeven should be calculated by dividing the total overhead by the quoted (Estimated) hours for a given time period. Others think it should be calculated by dividing the total overhead by the actual labor hours for a given time period.
My logic for this is as follows. We quote a job and say it is going to take 10 hours to manufacture it. There is $100 in total overhead for this job. The job actually took 20 hours to make. If we used the actual labor hours $100 / 20h = $5 per hour breakeven. But if we use the estimated (billed) time $200 / 10h = $10 per hour breakeven. In my mind using the actual hours means the worse we do on a job the better the breakeven which doesn’t make sense.
Again let me reiterate my lack of knowledge when it comes to the accounting side of things but I really want to understand this so any insight would be greatly appreciated.
