Estimating Direct Production Cost of PCB Assembly Job

Estimating direct production cost of PCB Assembly job in Sparrow ERP is accomplished via setting up some key parameters and attributes one time. Currently Sparrow ERP considers following items in calculating direction cost calculations.

  1.  Component costs (based on Bill of Material).
  2. Assembly Cost (based on cost added in Sales order).
  3. Labor cost (based on parameters set in workcenter).
  4. Equipment cost (based on parameters set in workcenter).

Direct costs are again of two types in the system. Pre-production cost and Post-production cost. Pre-production cost is derived by estimation of usage of material and resources. Post-production cost is calculated based on actual usage of components and resources.

Component Costs:

Cost of components is decided before actual production starts because sourcing should have been finished by then. Sparrow ERP’s Purchase plan module allows users to automatically fetch prices and stock availability of components from Bill of Material.

Assembly Cost:

Cost of assembly is either entered by operator by hand using offline calculation means or using Sparrow ERP’s assembly cost calculator. The cost is more or less fixed and almost never changes.

Labor Cost:

You can define hourly rate of operation in Sparrow ERP’s workcenter. Workcenter is a virtual/physical place where actual work is done. To carry out the work resources are added in workcenter. Each work center resource can carry cost attributes. For example, in Manual Soldering workcenter main resource is operator; an hourly cost of operator can be set in this case.

Equipment cost:

Same as Labor cost, equipment to carry out work is added in Workcenter. Each equipment carries cost of usage. The cost of usage per hour can be added per equipment.

All these parameters when set correctly, can result in pretty accurate calculation of direction cost of PCB Assembly. When production job starts, system knows which workcenter is being used. System also allows flexibility to choose particular resource at the start of operation. At end of all operations, we have a complete picture of how many resources are used and for how long and that gives us capability to calculate direct production cost.