Overhead Costs per Part

For all process groups, aPriori determines direct overhead cost per part with the following formula:

Direct Overhead Cost per Part =

((Labor Cost * Overhead Multiplier) + (Direct Overhead Rate * Cycle Time)) / Final Yield

Overhead multiplier is specified by the machine property Overhead Multiplier. aPriori determines direct overhead rate in one of two ways:

• Calculated using a group of formulas. aPriori calculates an annual work center budget and translates it into an hourly rate based on the planned number of earned machine hours for the work center. See Overhead Rates for more information. This method is used if the VPE variable Use Computed Overhead Rate is set to true (as it is in aPriori starting point VPEs).

• Taken directly from the machine property Direct Overhead Rate (adjusted by the factor specified by the cost model variable overheadRateAdjustmentFactor). This method is used if the VPE variable Use Computed Overhead Rate is set to false. (Note that if you have already overridden some overhead-related values before you set this VPE variable to false--or change to a VPE that sets it to false--Show Formula Dependencies may display overhead formulas that are no longer relevant. See the aPriori User Guide for more information.)

aPriori determines indirect overhead with one of the following two formulas:

• Based on indirect overhead rate:

Indirect Overhead Cost per Part =

Indirect Overhead Rate * (Cycle Time + Amortized Batch Setup) / Final Yield

This formula is used if the VPE variable Use Indirect Overhead Percentage is set to false (as it is in aPriori starting point VPEs). In this case, indirect overhead rate is determined in one of the following two ways:

o Calculated using a group of formulas. aPriori calculates an annual work center indirect overhead budget and translates it into an hourly rate based on the planned number of earned machine hours for the work center. See Overhead Rates for more information. This method is used if the VPE variable Use Computed Overhead Rate is set to true (as it is in aPriori starting point VPEs).

o Taken directly from the machine property Indirect Overhead Rate. This method is used if the VPE variable Use Computed Overhead Rate is set to false. (Note that if you have already overridden some overhead-related values before you set this VPE variable to false--or change to a VPE that sets it to false-- Show Formula Dependencies may display overhead formulas that are no longer relevant. See the aPriori User Guide for more information.)

• Based on indirect overhead percentage:

Indirect Overhead Cost per Part = Indirect Overhead Percentage * Piece Cost

This formula is used if the VPE variable Use Indirect Overhead Percentage is set to true. In this case indirect overhead percentage is taken from the VPE variable Indirect Overhead Percentage. (Piece cost includes material, labor, direct overhead, logistics, setup, and expendable tooling costs per part, among other costs.)