How to Set Up a Work Center for Averaging Labor Costs by Total Production and Daily Worker Wages

Setting up a work center in Microsoft Dynamics 365 Business Central to calculate labor costs by averaging total production against the daily wage of a worker involves several key steps. You need to configure the work center to accurately reflect labor costs and ensure that the system calculates these costs according to your specified method. Below is a step-by-step guide to help you set this up.

Step 1: Create a New Work Center

1. Create the Work Center:

   • Begin by navigating to the Work Centers page and creating a new work center.

2. Configure Cost Calculation:

   • On the Work Center card, locate the Posting FastTab.
   • Turn on the Specific Unit Cost flag to ensure that costs are calculated based on specific units produced.

Example Calculation

For instance, if a worker’s daily wage is $100 and the work center produces 50 units in a day, the labor cost per unit would be calculated as follows:

$$\text{Labor Cost per Unit} = \frac{\text{Daily Wage}}{\text{Total Units Produced}} = \frac{100}{50} = 2 \text{ USD per unit}$$

This calculated value will be reflected in the production order’s cost records.

Step 2: Post Capacity Consumption

When posting capacity consumption:

1. Enter the Calculated Value:
   • Enter the labor cost per unit calculated above for each operation on the routing.
2. Post and Complete:
   • Post the routing to reflect the costs and then finish the production order.

Conclusion

By setting up the work center with the correct cost settings and linking it to your production routing, Business Central will accurately calculate labor costs based on the daily wage of workers and the total production output. This setup ensures that labor costs are precisely reflected in your production costs, allowing for effective cost management and reporting.