Examples of subcontracting rates

The following data is used in the examples:

Subcontracting rate$ 50
Subcontracting factor2.5
Gross output170
Man hoursGross output * cycle time (hrs) = 170 * 0.1 = 17
Machine hoursGross output * cycle time (hrs) = 170 * 0.2 = 34

 

Fixed amount by product

Subcontracting costs =

gross output * subcontracting rate

= 170 * 50 = $8,500

Operation rate

Subcontracting costs =

gross output * subcontracting rate * rate factor

= 170 * 50 * 2.5 = $21,250

Man hour rate

Subcontracting costs =

man hours * subcontracting rate

= 17 * 50 = $850

Machine hour rate

Subcontracting costs =

machine hours * subcontracting rate

= 34 * 50 = $1,700

Note

If the currency system is Independent, which is defined in the Companies (tcemm1170m000) session, you see two currencies in the Subcontracting Rates (ticpr1160m000) details session. The displayed currency of the Subc. Rate Multi Curr. field is the default currency related to the currency system. In the Currency field, you can manually enter the currency of the supplier. This currency is used to generate the purchase order.